India's economic landscape over the past 24 hours has been dominated by the ongoing saga of global trade tensions, primarily with the United States, and India's proactive measures to diversify its economic partnerships. Minutes from the Reserve Bank of India's (RBI) Monetary Policy Committee (MPC) meeting revealed concerns over evolving risks from global trade tensions and tariffs, which are flagged as a key drag on growth. The RBI noted that while growth is projected at 6.5%, this is "certainly lower than what we can achieve," with external demand uncertainty hindering private investment intentions. India faces tariffs of up to 50% on exports to the US, effective August 27, following additional duties imposed by the US citing India's continued imports of Russian oil.
In a significant strategic move, India and the Eurasian Economic Union (EAEU), which includes Russia, signed the Terms of Reference (ToR) on Wednesday to launch negotiations for a Free Trade Agreement (FTA). This development comes amidst pressure from the US to reduce India's economic ties with Russia and is expected to expand market access for Indian exporters and benefit Micro, Small, and Medium Enterprises (MSMEs). Concurrently, there are reports of India and China agreeing to step up trade flows and resume direct flights, signaling a diplomatic breakthrough aimed at rebuilding ties. India is also reportedly planning to relax visa curbs for Chinese business professionals.
Domestically, the economic outlook remains largely positive despite external challenges. The Dun & Bradstreet Economy Observer report for August 2025 highlighted India's domestic resilience, with the Index of Industrial Production (IIP) estimated to have grown by 1.7% in July 2025. Inflation continues to moderate, with the Consumer Price Index (CPI) inflation easing to 1.1% in July 2025, driven by a consistent decline in food prices. The Indian rupee also showed strength, paring initial losses to settle higher against the US dollar at 87.07, supported by easing trade tariff worries and hopes of peace between Russia and Ukraine. Proposed GST reforms and a recent credit rating upgrade further bolstered confidence in the Indian economy.
In terms of policy and governance, the Centre has formed two new informal groups of ministers (iGoMs) under Home Minister Amit Shah and Defence Minister Rajnath Singh. These groups are tasked with recommending reforms in the economic and social sectors, respectively. Amit Shah's panel will focus on legislative and policy reforms in technology and economic sectors, including finance, industry, and commerce. Additionally, the Lok Sabha passed the Promotion and Regulation of Online Gaming Bill, 2025, aimed at regulating online games played with money to curb addiction and financial fraud.
Corporate developments also made headlines. Microsoft's 2025 Work Trend Index indicated that India's workforce is transitioning to an "AI-First" approach, with 93% of leaders intending to use AI agents to extend workforce capabilities. Honda Motor Co., Ltd. announced the establishment of a new subsidiary, Honda Finance India Private Ltd., to offer retail sales financing services for its products in India. In the defense sector, Hindustan Aeronautics Limited (HAL) secured a significant order worth ā¹62,000 crore for 97 Light Combat Aircraft (LCA) Tejas Mk1A fighter jets for the Indian Air Force. Other notable corporate news includes Indian Railway Finance Corporation (IRFC) sanctioning a loan for the Surat Multi-Modal Transport Hub, UltraTech Cement's plan to sell a stake in India Cements, and RailTel bagging multiple orders.