RBI Maintains Repo Rate Amidst Optimistic Growth Outlook
The Reserve Bank of India (RBI) concluded its 57th Monetary Policy Committee (MPC) meeting on October 1, 2025, deciding to keep the policy repo rate unchanged at 5.5%, maintaining a neutral stance. This marks the second consecutive time the rate has been held steady. Despite refraining from a rate cut, the RBI revised India's GDP growth forecast for FY26 upwards to 6.8% from an earlier estimate of 6.5%, citing strong consumption, investments, and government spending. The central bank also lowered its Consumer Price Index (CPI) inflation forecast for FY26 to 2.6% from 3.1%, attributing this moderation to lower food prices and rationalized Goods and Services Tax (GST) rates.
In a series of reforms, the RBI announced measures to expand credit access for companies, including easing rules for financing mergers, acquisitions, and IPOs. Limits on loans against shares and listed debt securities were significantly raised from ā¹20 lakh to ā¹1 crore per individual. Additionally, the RBI relaxed forex compliance norms for small exporters and importers and unveiled steps to further promote the internationalization of the Indian Rupee.
India-EFTA Trade Agreement Comes into Force, Attracting Investments
A landmark development in India's trade relations, the free trade agreement between India and the four-nation European Free Trade Association (EFTA) bloc officially came into force on October 1, 2025. Union Minister for Commerce and Industry, Piyush Goyal, hailed the India-EFTA Trade and Economic Partnership Agreement (TEPA) as a "defining moment" expected to unlock new opportunities for trade, investment, and job creation. As part of this agreement, EFTA has committed to investing USD 100 billion in India over the next 15 years.
Swiss healthcare major Roche Pharma has already pledged a substantial investment of 1.5 billion Swiss Francs in India over the next five years, focusing on core businesses including R&D. Other EFTA firms are also showing interest in investing across various sectors, signaling growing confidence in India's investor-friendly environment.
Robust Economic Growth and Key Indicators
The Indian economy continues to demonstrate resilience and strong fundamentals. Real Gross Domestic Product (GDP) growth picked up pace, reaching a five-quarter high of 7.8% (year-on-year) in Q1:2025-26, primarily driven by robust consumption expenditure and fixed investment activity. High-frequency indicators from late September 2025 point to continued expansion across key sectors. Net Foreign Direct Investment (FDI) inflows reached a 38-month high in July 2025, with major contributions from countries like Singapore, the Netherlands, Mauritius, the US, and the UAE, predominantly in manufacturing and services.
In other policy news, the Cabinet approved a hike in Minimum Support Prices (MSP) for all Rabi crops for the 2026-27 marketing season, with the sharpest increase for safflower. This move aims to provide remunerative returns to farmers and encourage crop diversification. The Cabinet also sanctioned an ā¹11,000 crore mission to boost pulses production over six years, targeting self-sufficiency by 2030-31.
Stock Markets Closed on October 2nd
Indian equity markets, including the BSE and NSE, remained closed on Thursday, October 2, 2025, in observance of Dussehra and Mahatma Gandhi Jayanti. Trading activity across equity, derivatives, and securities lending and borrowing segments was suspended for the day. Normal trading is set to resume on Friday, October 3.