As the curtain begins to fall in 2025, India’s economic story resists easy labels. Was it the year the country was squeezed by global trade wars and tariffs? Or was it a rare “Goldilocks” moment, marked by strong growth, low inflation and ample policy room to support the economy?The answer lies somewhere in between.The year-end economic review of India reads as a story of resilience, reform and recalibration. From record stock market highs to a weakening rupee, from expanding trade ties to sudden tariff shocks, the year revealed how India’s economic fortunes are increasingly shaped by forces far beyond its borders.India ended 2025 as one of the world’s fastest-growing economy — but not without scars!

8.2% GDP growth: A standout year for expansion

India’s economic ascent continued to capture global attention in 2025. Already the world’s fourth-largest economy, the country is firmly on track to become the third-largest by 2030, with GDP projected at $6628.0 billion, according to the latest IMF World Economic Outlook report.The headline moment came with the release of second-quarter GDP data for FY 2025-26. Real Gross Domestic Product expanded by a stunning 8.2% during the July–September period — a sharp acceleration from the 5.6% growth recorded in the same quarter last year.The print exceeded market estimates and even surpassed the Reserve Bank of India’s projections, marking a six-quarter high.Combined with a strong 7.8% expansion in the April–June quarter, the economy grew by around 8% in the first half of the financial year, reinforcing India’s position as the fastest-growing major economy globally. Economists expect growth to remain resilient in the December quarter, supported by stronger consumption following GST rationalisation. “Now we can comfortably say full year growth will be 7% or north of 7%,” Chief Economic Adviser V Anantha Nageswaran said after the data release.The National Statistics Office data cemented India’s position as one of the fastest-growing major economy in the world, even as global growth slowed and tariffs on Indian exports to the US intensified.In its official statement, the government highlighted “Real GDP, adjusted for inflation, rose 8.2% in Q2 FY26, compared with 5.6% in Q2 FY25. Growth in Q1 FY26 stood at 7.8%, up from 6.5% a year earlier. Nominal GDP expanded by 8.7% in Q2, with all major sectors contributing to the expansion. The primary sector grew 3.1% year-on-year, while the secondary and tertiary sectors posted strong growth of 8.1% and 9.2%, respectively.“Prime Minister Narendra Modi described the numbers as validation of policy continuity and reform-led growth. “The 8.2% GDP growth in Q2 of 2025-26 is very encouraging. It reflects the impact of our pro-growth policies and reforms. It also reflects the hard work and enterprise of our people. Our govt will continue to advance reforms and strengthen the Ease of Living for every citizen,” he posted on X.

A rare ‘Goldilocks’ phase

If growth was the headline, inflation was the surprise.The Reserve Bank of India has described the current macroeconomic environment as a “rare goldilocks” phase, marked by strong growth alongside low inflation.India achieved a historic milestone in October 2025 when retail inflation fell to just 0.25%, the lowest year-on-year print in the current CPI series, according to government data. The print marked a sharp 119-basis-point fall from September, reflecting a dramatic easing in price pressures.Inflation edged up modestly to 0.71% in November, a 46-basis-point increase from October, but remained comfortably below the Reserve Bank of India’s 4% target, underscoring a prolonged period of price stability.The cooling was driven largely by deflation in food prices. CPI inflation stayed benign through 2025-26, prompting the RBI to project average inflation at around 2% for the fiscal year, the lower bound of its tolerance range.The combination of inflation and a growth-oriented monetary stance has created space for further policy support, with expectations building around a complementary demand boost in the Union Budget 2026-27.

RBI cut repo rate

With inflation firmly under control, the central bank moved decisively to support growth. The RBI cut the repo rate during FY 2025-26, lowering it from 6.25% to 5.25%.The Monetary Policy Committee cut the repo rate by a cumulative 125 basis points during the calendar year 2025, bringing it down to 5.25%, while revising its inflation forecast to around 2% and nudging up full-year growth projections to about 7.3%.Including earlier actions, the RBI has now lowered rates by a total of 125 basis points since February 2025, marking its most aggressive easing cycle since 2019.

GST 2.0 kicks in: Simpler taxes, lower costs

One of the most consequential reforms of the year came in September with the launch of GST 2.0. The overhaul simplified India’s indirect tax architecture streamlined into two slabs — 5% and 18%, replacing the earlier four-rate system of 5%, 12%, 18% and 28%. Most essentials, household items and daily-use goods now attract 5% GST or are exempt.Luxury and sin goods, including pan masala, tobacco, aerated drinks, high-end cars, yachts and private aircraft will be taxed at 40%, ensuring progressivity while safeguarding revenues.Life insurance premiums were made GST-free. Household goods, packaged foods, medicines, consumer durables, automobiles and farm equipment all became cheaper.GST on farm machinery, irrigation equipment and bio-pesticides has been slashed to 5%, reducing input costs and encouraging productivity and sustainable farming practices.The reform eased compliance, reduced costs, boosted festive demand and reinforced domestic manufacturing, delivering relief at both the consumer and enterprise level.

Budget 2025: Big relief for middle class

The Union Budget added another boost, delivering sweeping income tax relief under the new tax regime. The headline announcement was zero income tax on annual income up to Rs 12 lakh. For salaried individuals, the nil-tax threshold effectively rises to Rs 12.75 lakh, after accounting for the standard deduction of Rs 75,000, offering additional relief to middle-income earners.Slab rates were reworked to ease the burden on middle-income earners, significantly improving disposable incomes. Together, tax cuts, GST rationalisation, record-low inflation, robust GDP growth and accommodative monetary policy have created a supportive economic environment.These factors are expected to lift consumer spending, improve corporate profitability and sustain investment momentum. While currency volatility remains a risk to watch, the broader macro trend points to positive market sentiment and scope for sustained economic expansion.As the RBI summed up, “Economic activity during the first half of the financial year benefited from income tax and goods and services tax (GST) rationalisation, softer crude oil prices, front-loading of government capital expenditure, and facilitative monetary and financial conditions supported by benign inflation.”

Stock market showed strong peaks and weak finish

India’s equity markets delivered a mixed performance in 2025, touching record highs and lows during the year, later ending on a softer note as foreign selling intensified amid global uncertainty, geopolitical tensions and shifting trade dynamics.Strong consumer demand, steady government spending and ongoing structural reforms helped markets remain resilient for much of the year.Early 2025: Markets began cautiously, weighed down by global growth concerns, elevated interest rates in advanced economies and trade tensions. Still, benchmarks opened the year on a positive footing. On January 2, the BSE Sensex stood at 78,507.41 while the Nifty 50 was at 23,742.90, supported by buying in frontline stocks.Mid-year: A recovery was following however, global volatility spiked in April after US President Donald Trump, in his second term, announced sweeping new tariffs on April 2, dubbed “Liberation Day” triggering a sell-off across global markets.Late 2025: Volatility remained in the final months due to foreign portfolio outflows, rupee pressure and uncertainty around global monetary policy and geopolitics. Nifty 50 touched an all-time high of 26,326 on December 1, ending the year with gains of about 10.2%, while BSE Sensex also hit its highest-ever closing level of 86,159.02, reflecting steady gains and improving market breadth through much of the year.However, momentum faded toward the close. In the final sessions, benchmarks declined dragged down by continued foreign investor selling and a lack of strong domestic triggers. The Nifty 50 closed at 26,042.30, down 0.38%, while the Sensex fell 367 points, or 0.43%, to 85,041.45, after touching an intraday low of 84,937.82.Overall, the Indian markets showed a neutral-to-negative note in 2025.

India’s trade push: FTAs take centre stage

Even as protectionism rose, India pressed ahead with trade diplomacy. India stepped up its trade diplomacy in 2025, concluding key free trade agreements and reviving stalled negotiations as it sought to diversify export markets amid rising global protectionism and tariff barriers.India–New Zealand FTA (2025): India concluded a Free Trade Agreement (FTA) with New Zealand on December 22, paving the way for duty-free entry of all Indian exports into the New Zealand market and a planned investment inflow of $20 billion over the next 15 years. PM Modi and New Zealand Prime Minister Christopher Luxon announced the deal via social media, with both sides aiming to double bilateral trade within five years.According to the Global Trade Research Initiative (GTRI), the pact strengthens India’s access to a high-income, rules-based Pacific market, while offering New Zealand deeper entry into one of the world’s fastest-growing major economies amid global trade uncertainty.India–Oman CEPA (2025): The India–Oman Comprehensive Economic Partnership Agreement (CEPA) delivers near-complete duty-free access for Indian exports and opens opportunities across labour-intensive manufacturing, services and skilled workforce mobility.The deal marks a major expansion of India’s economic footprint in the Gulf region. Gulzar Didwania, Partner at Deloitte India, described the Oman CEPA and New Zealand FTA as “watershed moments” for India’s export-led growth strategy.

“The India–Oman CEPA delivers zero-duty access on nearly 98% of tariff lines, covering textiles, engineering goods, medical devices, pharmaceuticals and automobiles. Similarly, the India–New Zealand FTA removes tariffs on 100% of India’s exports, opening the NZ market widely and potentially doubling trade over five years,” he told TOI.India–UK CETA (2025): The India–UK Comprehensive Economic and Trade Agreement (CETA) offers near-total duty-free access for Indian exports, with significant upside for labour-intensive sectors.India–Israel FTA: India and Israel have been negotiating an FTA since 2010, completing ten rounds covering 280 tariff lines. Talks stalled due to differences over services market access, particularly the temporary movement of Indian IT and skilled professionals. Negotiations gained fresh momentum in November 2025, when both sides signed the Terms of Reference, formally reviving discussions.India has already signed trade agreements with Sri Lanka, Bhutan, Thailand, Singapore, Malaysia, South Korea, Japan, Australia, the UAE and Mauritius. It is also part of:

The Downside: Rupee stress, tariffs and rising uncertainty

Despite strong domestic growth, 2025 exposed some of India’s economic vulnerabilities on the global front. The year was marked by rising trade tensions, currency pressure and heavy foreign capital outflows.

Rupee under pressure amid dollar strength

The Indian rupee remained volatile in December, slipping to a record low near Rs 91 per US dollar on December 16, weighed down by strong dollar demand and sustained foreign portfolio outflows. The rupee recovered some ground the following day, strengthening by 55 paise to close at Rs 90.38 on December 17. A further late-week rebound saw the currency rise from nearly Rs 91 to Rs 89.27 on December 19, though pressure soon returned.On December 26, the rupee closed at Rs 89.86 per dollar, dragged down by falling domestic equities, continued foreign fund outflows and higher crude oil prices.Despite intermittent recoveries, the rupee has emerged as one of the worst-performing emerging market currencies this year, hurt by US tariffs on Indian exports and weak portfolio inflows. The pace of depreciation has been a key concern.After breaching the Rs 90 per dollar level, the rupee slipped past Rs 91 within just 13 days. In less than a year, it has fallen from around Rs 85 to Rs 90, underscoring the speed of the decline.According to State Bank of India’s Ecowrap report, the rupee is expected to stabilise and recover next year, even as near-term volatility persists.

FII outflows hit record levels in 2025

Foreign institutional investors (FIIs) remained persistent sellers of Indian equities throughout 2025, extending a selling trend that began in October 2024. As a result, 2025 has turned into the worst year on record for foreign equity flows into India.FIIs are set to close the year with a record-breaking exodus from Indian stock markets, marking the steepest annual net outflows ever witnessed in India’s capital markets.As of December 27, FIIs had sold equities worth Rs 22,130 crore through stock exchanges. This took cumulative equity selling in calendar year 2025 to Rs 2,31,990 crore. Investments via the primary market stood at Rs 73,583 crore, bringing net FII outflows for the year to Rs 1,58,407 crore, the highest annual net selling by FIIs since they began investing in India.According to Morgan Stanley, FII positioning in Indian equities is now close to cyclical lows. However, the brokerage cautioned that a sustained return of foreign inflows would depend on stronger growth momentum, relatively weaker equity performance in other markets, or higher corporate issuance levels.While domestic fundamentals remain relatively strong, currency volatility and foreign outflows continue to pose near-term challenges for Indian markets.

Yet 2025 was also defined by global headwinds!

Trade deals amid tariff wars

US President Donald Trump has often spoken warmly of his personal relationship with Prime Minister Narendra Modi, repeatedly describing him as a “great friend.” However, Washington’s trade actions toward India in 2025 told a sharply different story.On August 1, the US imposed a 25% tariff on Indian goods, doubling it to 50% by August 27, alongside an additional “penalty” linked to India’s energy ties with Russia. The move marked one of the most aggressive trade actions taken against India in recent years.Trump accused India of maintaining some of the world’s highest tariffs and what he called “obnoxious” non-monetary trade barriers. He also criticised India’s continued purchases of Russian oil, saying this undermined global efforts to pressure Moscow over the war in Ukraine.His rhetoric escalated in July, when he said,”I don’t care what India does with Russia. They can take their dead economies down together, for all I care.” New Delhi responded firmly stressing that the country remained firmly on track to become the world’s third-largest economy.

India–US trade talks: Progress slow

The United States remains India’s largest export destination, but trade ties faced strain after the Trump administration imposed punitive tariffs of up to 50% on Indian goods.While discussions continue, a final agreement remains elusive. A recent visit by a US delegation to New Delhi failed to deliver a breakthrough, even as Prime Minister Modi and President Donald Trump have described bilateral engagement as positive.The US is pushing for greater exports of energy and agricultural products, while India has drawn a firm red line on opening its farm sector. Officials now believe a deal could be signed by March.The US administration has repeatedly cited its widening trade deficit with India as a key concern, arguing that India maintains relatively high tariffs on American goods and imposes market-access restrictions. “We have a massive trade deficit with India,” Trump said shortly before the initial 25% tariffs came into effect.According to analysts, 2026 could be the first full year in which countries begin grappling with the real-world consequences of a tariff-heavy global trade system, with implications for investment flows, economic growth, inflation, interest rates and currencies.

Immigration becomes a trade flashpoint

Trade negotiations have increasingly become entangled with US immigration policy, particularly around the H-1B visa programme, a critical channel for India’s services exports. The US raised the H-1B visa fee to $100,000, up from a previous range of $2,000–$5,000, sharply increasing hiring costs for employers.From December 15, the US State Department also introduced enhanced screening and vetting, including scrutiny of applicants’ social media profiles, for both H-1B and dependent H-4 visas.This shift could significantly disadvantage entry-level professionals and recent international graduates, many of whom are Indian, raising fresh concerns about India’s largest and fastest-growing services export channel to the US.

Mexico: The 50% shock in the trade outlook

One of the most unexpected jolts to India’s trade outlook in 2025 came not from a global superpower, but from Mexico.In December, Mexico announced a blanket tariff hike of up to 50% on imports from non-free trade agreement (FTA) countries, a move aimed at blocking Chinese trans-shipments from entering the United States duty-free. The decision had immediate and significant implications for Indian exporters.Under the measure, import duties ranging from 5% to 50% will apply to around 1,463 product categories from countries that do not have an FTA with Mexico, including India. The revised tariffs will come into effect from January 1, 2026, though the detailed product list has yet to be officially published.According to estimates by the Global Trade Research Initiative (GTRI), the impact on Indian trade could be severe. “Nearly 75% of India’s $5.75 billion exports to Mexico will be affected as tariffs jump from 0-15% to around 35%,” the think-tank said.For Indian exporters, particularly in sectors such as automobiles, textiles, engineering goods and consumer products, the decision threatens to undo years of market-building efforts in Latin America.India and Mexico are currently preparing to begin discussions on a bilateral free trade agreement, with formal negotiation parameters expected to be finalised shortly. Analysts believe such an agreement could help insulate Indian exporters from the tariff shock.

Russia: A relationship grows, but unevenly

India and Russia share a long-standing relationship, with economic ties dating back to the Soviet era. In the decades since, bilateral trade and investment have steadily expanded, with cooperation spanning energy, defence, pharmaceuticals and information technology.In the post-Soviet era, India–Russia trade rose from $1.4 billion in 1995 to a record $68.7 billion in FY 2024–25. Indian firms have invested in Russia’s oil and gas, pharmaceutical and IT sectors, while Russian companies have put money into India’s energy, infrastructure and manufacturing industries.Yet behind the headline numbers lies a growing imbalance that threatens to complicate the partnership.

A trade corridor dominated by oil

The India–Russia energy corridor has emerged as a defining feature of bilateral trade—especially since the outbreak of the Ukraine war and the imposition of Western sanctions on Moscow.In FY 2024–25, India’s imports from Russia stood at roughly $63.8 billion, driven overwhelmingly by crude oil and petroleum products. In contrast, India’s exports to Russia were only about $4.9 billion, leaving a massive trade gap.India’s dependence on Russian crude has remained high despite Western sanctions. In November 2025, India imported 1.77 million barrels per day (bpd) of Russian oil, marking a 3.4% increase over October.Estimates suggest that imports in December 2025 could reach as much as 1.5 million bpd, supported by strong volumes exceeding 1.2 million bpd earlier in the month.The appeal is clear: discounted prices.Russian oil has remained attractive due to aggressive pricing by non-sanctioned producers. Indian refiners—both public and private—have continued to capitalise on these discounts.Imports from Russia surged from $5.94 billion in 2020 to $64.24 billion in 2024, with crude oil now forming the largest share of goods flowing from Russia to India.The bilateral trade agenda gained further momentum during President Putin’s December visit to India, which reinforced energy and strategic cooperation while reaffirming the ambitious $100 billion trade target by 2030.On December 6, India and Russia vowed to scale up bilateral trade to $100 billion by the end of the decade. PM Modi also said both countries were “actively working” towards the early conclusion of a Free Trade Agreement with the Eurasian Economic Union, which includes Russia, Armenia, Belarus, Kazakhstan and Kyrgyzstan.However, the very factors that propelled India–Russia trade growth are now introducing new complications. Western sanctions are steadily reshaping India’s oil trade, according to a report by Rubix Data Sciences, reducing dependence on discounted Russian crude and redirecting energy flows towards the United States and the United Arab Emirates.The effects have been particularly visible in exports. In hindsight, 2025 will be remembered neither as a flawless “Goldilocks year nor as one derailed by tariffs.” The economy did well even under pressure, but enters 2026 with unresolved global headwinds!

As the curtain begins to fall in 2025, India’s economic story resists easy labels. Was it the year the country was squeezed by global trade wars and tariffs? Or was it a rare “Goldilocks” moment, marked by strong growth, low inflation and ample policy room to support the economy?The answer lies somewhere in between.The year-end economic review of India reads as a story of resilience, reform and recalibration. From record stock market highs to a weakening rupee, from expanding trade ties to sudden tariff shocks, the year revealed how India’s economic fortunes are increasingly shaped by forces far beyond its borders.India ended 2025 as one of the world’s fastest-growing economy — but not without scars!

8.2% GDP growth: A standout year for expansion

India’s economic ascent continued to capture global attention in 2025. Already the world’s fourth-largest economy, the country is firmly on track to become the third-largest by 2030, with GDP projected at $6628.0 billion, according to the latest IMF World Economic Outlook report.The headline moment came with the release of second-quarter GDP data for FY 2025-26. Real Gross Domestic Product expanded by a stunning 8.2% during the July–September period — a sharp acceleration from the 5.6% growth recorded in the same quarter last year.The print exceeded market estimates and even surpassed the Reserve Bank of India’s projections, marking a six-quarter high.Combined with a strong 7.8% expansion in the April–June quarter, the economy grew by around 8% in the first half of the financial year, reinforcing India’s position as the fastest-growing major economy globally. Economists expect growth to remain resilient in the December quarter, supported by stronger consumption following GST rationalisation. “Now we can comfortably say full year growth will be 7% or north of 7%,” Chief Economic Adviser V Anantha Nageswaran said after the data release.The National Statistics Office data cemented India’s position as one of the fastest-growing major economy in the world, even as global growth slowed and tariffs on Indian exports to the US intensified.In its official statement, the government highlighted “Real GDP, adjusted for inflation, rose 8.2% in Q2 FY26, compared with 5.6% in Q2 FY25. Growth in Q1 FY26 stood at 7.8%, up from 6.5% a year earlier. Nominal GDP expanded by 8.7% in Q2, with all major sectors contributing to the expansion. The primary sector grew 3.1% year-on-year, while the secondary and tertiary sectors posted strong growth of 8.1% and 9.2%, respectively.“Prime Minister Narendra Modi described the numbers as validation of policy continuity and reform-led growth. “The 8.2% GDP growth in Q2 of 2025-26 is very encouraging. It reflects the impact of our pro-growth policies and reforms. It also reflects the hard work and enterprise of our people. Our govt will continue to advance reforms and strengthen the Ease of Living for every citizen,” he posted on X.

A rare ‘Goldilocks’ phase

If growth was the headline, inflation was the surprise.The Reserve Bank of India has described the current macroeconomic environment as a “rare goldilocks” phase, marked by strong growth alongside low inflation.India achieved a historic milestone in October 2025 when retail inflation fell to just 0.25%, the lowest year-on-year print in the current CPI series, according to government data. The print marked a sharp 119-basis-point fall from September, reflecting a dramatic easing in price pressures.Inflation edged up modestly to 0.71% in November, a 46-basis-point increase from October, but remained comfortably below the Reserve Bank of India’s 4% target, underscoring a prolonged period of price stability.The cooling was driven largely by deflation in food prices. CPI inflation stayed benign through 2025-26, prompting the RBI to project average inflation at around 2% for the fiscal year, the lower bound of its tolerance range.The combination of inflation and a growth-oriented monetary stance has created space for further policy support, with expectations building around a complementary demand boost in the Union Budget 2026-27.

RBI cut repo rate

With inflation firmly under control, the central bank moved decisively to support growth. The RBI cut the repo rate during FY 2025-26, lowering it from 6.25% to 5.25%.The Monetary Policy Committee cut the repo rate by a cumulative 125 basis points during the calendar year 2025, bringing it down to 5.25%, while revising its inflation forecast to around 2% and nudging up full-year growth projections to about 7.3%.Including earlier actions, the RBI has now lowered rates by a total of 125 basis points since February 2025, marking its most aggressive easing cycle since 2019.

GST 2.0 kicks in: Simpler taxes, lower costs

One of the most consequential reforms of the year came in September with the launch of GST 2.0. The overhaul simplified India’s indirect tax architecture streamlined into two slabs — 5% and 18%, replacing the earlier four-rate system of 5%, 12%, 18% and 28%. Most essentials, household items and daily-use goods now attract 5% GST or are exempt.Luxury and sin goods, including pan masala, tobacco, aerated drinks, high-end cars, yachts and private aircraft will be taxed at 40%, ensuring progressivity while safeguarding revenues.Life insurance premiums were made GST-free. Household goods, packaged foods, medicines, consumer durables, automobiles and farm equipment all became cheaper.GST on farm machinery, irrigation equipment and bio-pesticides has been slashed to 5%, reducing input costs and encouraging productivity and sustainable farming practices.The reform eased compliance, reduced costs, boosted festive demand and reinforced domestic manufacturing, delivering relief at both the consumer and enterprise level.

Budget 2025: Big relief for middle class

The Union Budget added another boost, delivering sweeping income tax relief under the new tax regime. The headline announcement was zero income tax on annual income up to Rs 12 lakh. For salaried individuals, the nil-tax threshold effectively rises to Rs 12.75 lakh, after accounting for the standard deduction of Rs 75,000, offering additional relief to middle-income earners.Slab rates were reworked to ease the burden on middle-income earners, significantly improving disposable incomes. Together, tax cuts, GST rationalisation, record-low inflation, robust GDP growth and accommodative monetary policy have created a supportive economic environment.These factors are expected to lift consumer spending, improve corporate profitability and sustain investment momentum. While currency volatility remains a risk to watch, the broader macro trend points to positive market sentiment and scope for sustained economic expansion.As the RBI summed up, “Economic activity during the first half of the financial year benefited from income tax and goods and services tax (GST) rationalisation, softer crude oil prices, front-loading of government capital expenditure, and facilitative monetary and financial conditions supported by benign inflation.”

Stock market showed strong peaks and weak finish

India’s equity markets delivered a mixed performance in 2025, touching record highs and lows during the year, later ending on a softer note as foreign selling intensified amid global uncertainty, geopolitical tensions and shifting trade dynamics.Strong consumer demand, steady government spending and ongoing structural reforms helped markets remain resilient for much of the year.Early 2025: Markets began cautiously, weighed down by global growth concerns, elevated interest rates in advanced economies and trade tensions. Still, benchmarks opened the year on a positive footing. On January 2, the BSE Sensex stood at 78,507.41 while the Nifty 50 was at 23,742.90, supported by buying in frontline stocks.Mid-year: A recovery was following however, global volatility spiked in April after US President Donald Trump, in his second term, announced sweeping new tariffs on April 2, dubbed “Liberation Day” triggering a sell-off across global markets.Late 2025: Volatility remained in the final months due to foreign portfolio outflows, rupee pressure and uncertainty around global monetary policy and geopolitics. Nifty 50 touched an all-time high of 26,326 on December 1, ending the year with gains of about 10.2%, while BSE Sensex also hit its highest-ever closing level of 86,159.02, reflecting steady gains and improving market breadth through much of the year.However, momentum faded toward the close. In the final sessions, benchmarks declined dragged down by continued foreign investor selling and a lack of strong domestic triggers. The Nifty 50 closed at 26,042.30, down 0.38%, while the Sensex fell 367 points, or 0.43%, to 85,041.45, after touching an intraday low of 84,937.82.Overall, the Indian markets showed a neutral-to-negative note in 2025.

India’s trade push: FTAs take centre stage

Even as protectionism rose, India pressed ahead with trade diplomacy. India stepped up its trade diplomacy in 2025, concluding key free trade agreements and reviving stalled negotiations as it sought to diversify export markets amid rising global protectionism and tariff barriers.India–New Zealand FTA (2025): India concluded a Free Trade Agreement (FTA) with New Zealand on December 22, paving the way for duty-free entry of all Indian exports into the New Zealand market and a planned investment inflow of $20 billion over the next 15 years. PM Modi and New Zealand Prime Minister Christopher Luxon announced the deal via social media, with both sides aiming to double bilateral trade within five years.According to the Global Trade Research Initiative (GTRI), the pact strengthens India’s access to a high-income, rules-based Pacific market, while offering New Zealand deeper entry into one of the world’s fastest-growing major economies amid global trade uncertainty.India–Oman CEPA (2025): The India–Oman Comprehensive Economic Partnership Agreement (CEPA) delivers near-complete duty-free access for Indian exports and opens opportunities across labour-intensive manufacturing, services and skilled workforce mobility.The deal marks a major expansion of India’s economic footprint in the Gulf region. Gulzar Didwania, Partner at Deloitte India, described the Oman CEPA and New Zealand FTA as “watershed moments” for India’s export-led growth strategy.

“The India–Oman CEPA delivers zero-duty access on nearly 98% of tariff lines, covering textiles, engineering goods, medical devices, pharmaceuticals and automobiles. Similarly, the India–New Zealand FTA removes tariffs on 100% of India’s exports, opening the NZ market widely and potentially doubling trade over five years,” he told TOI.India–UK CETA (2025): The India–UK Comprehensive Economic and Trade Agreement (CETA) offers near-total duty-free access for Indian exports, with significant upside for labour-intensive sectors.India–Israel FTA: India and Israel have been negotiating an FTA since 2010, completing ten rounds covering 280 tariff lines. Talks stalled due to differences over services market access, particularly the temporary movement of Indian IT and skilled professionals. Negotiations gained fresh momentum in November 2025, when both sides signed the Terms of Reference, formally reviving discussions.India has already signed trade agreements with Sri Lanka, Bhutan, Thailand, Singapore, Malaysia, South Korea, Japan, Australia, the UAE and Mauritius. It is also part of:

The Downside: Rupee stress, tariffs and rising uncertainty

Despite strong domestic growth, 2025 exposed some of India’s economic vulnerabilities on the global front. The year was marked by rising trade tensions, currency pressure and heavy foreign capital outflows.

Rupee under pressure amid dollar strength

The Indian rupee remained volatile in December, slipping to a record low near Rs 91 per US dollar on December 16, weighed down by strong dollar demand and sustained foreign portfolio outflows. The rupee recovered some ground the following day, strengthening by 55 paise to close at Rs 90.38 on December 17. A further late-week rebound saw the currency rise from nearly Rs 91 to Rs 89.27 on December 19, though pressure soon returned.On December 26, the rupee closed at Rs 89.86 per dollar, dragged down by falling domestic equities, continued foreign fund outflows and higher crude oil prices.Despite intermittent recoveries, the rupee has emerged as one of the worst-performing emerging market currencies this year, hurt by US tariffs on Indian exports and weak portfolio inflows. The pace of depreciation has been a key concern.After breaching the Rs 90 per dollar level, the rupee slipped past Rs 91 within just 13 days. In less than a year, it has fallen from around Rs 85 to Rs 90, underscoring the speed of the decline.According to State Bank of India’s Ecowrap report, the rupee is expected to stabilise and recover next year, even as near-term volatility persists.

FII outflows hit record levels in 2025

Foreign institutional investors (FIIs) remained persistent sellers of Indian equities throughout 2025, extending a selling trend that began in October 2024. As a result, 2025 has turned into the worst year on record for foreign equity flows into India.FIIs are set to close the year with a record-breaking exodus from Indian stock markets, marking the steepest annual net outflows ever witnessed in India’s capital markets.As of December 27, FIIs had sold equities worth Rs 22,130 crore through stock exchanges. This took cumulative equity selling in calendar year 2025 to Rs 2,31,990 crore. Investments via the primary market stood at Rs 73,583 crore, bringing net FII outflows for the year to Rs 1,58,407 crore, the highest annual net selling by FIIs since they began investing in India.According to Morgan Stanley, FII positioning in Indian equities is now close to cyclical lows. However, the brokerage cautioned that a sustained return of foreign inflows would depend on stronger growth momentum, relatively weaker equity performance in other markets, or higher corporate issuance levels.While domestic fundamentals remain relatively strong, currency volatility and foreign outflows continue to pose near-term challenges for Indian markets.

Yet 2025 was also defined by global headwinds!

Trade deals amid tariff wars

US President Donald Trump has often spoken warmly of his personal relationship with Prime Minister Narendra Modi, repeatedly describing him as a “great friend.” However, Washington’s trade actions toward India in 2025 told a sharply different story.On August 1, the US imposed a 25% tariff on Indian goods, doubling it to 50% by August 27, alongside an additional “penalty” linked to India’s energy ties with Russia. The move marked one of the most aggressive trade actions taken against India in recent years.Trump accused India of maintaining some of the world’s highest tariffs and what he called “obnoxious” non-monetary trade barriers. He also criticised India’s continued purchases of Russian oil, saying this undermined global efforts to pressure Moscow over the war in Ukraine.His rhetoric escalated in July, when he said,”I don’t care what India does with Russia. They can take their dead economies down together, for all I care.” New Delhi responded firmly stressing that the country remained firmly on track to become the world’s third-largest economy.

India–US trade talks: Progress slow

The United States remains India’s largest export destination, but trade ties faced strain after the Trump administration imposed punitive tariffs of up to 50% on Indian goods.While discussions continue, a final agreement remains elusive. A recent visit by a US delegation to New Delhi failed to deliver a breakthrough, even as Prime Minister Modi and President Donald Trump have described bilateral engagement as positive.The US is pushing for greater exports of energy and agricultural products, while India has drawn a firm red line on opening its farm sector. Officials now believe a deal could be signed by March.The US administration has repeatedly cited its widening trade deficit with India as a key concern, arguing that India maintains relatively high tariffs on American goods and imposes market-access restrictions. “We have a massive trade deficit with India,” Trump said shortly before the initial 25% tariffs came into effect.According to analysts, 2026 could be the first full year in which countries begin grappling with the real-world consequences of a tariff-heavy global trade system, with implications for investment flows, economic growth, inflation, interest rates and currencies.

Immigration becomes a trade flashpoint

Trade negotiations have increasingly become entangled with US immigration policy, particularly around the H-1B visa programme, a critical channel for India’s services exports. The US raised the H-1B visa fee to $100,000, up from a previous range of $2,000–$5,000, sharply increasing hiring costs for employers.From December 15, the US State Department also introduced enhanced screening and vetting, including scrutiny of applicants’ social media profiles, for both H-1B and dependent H-4 visas.This shift could significantly disadvantage entry-level professionals and recent international graduates, many of whom are Indian, raising fresh concerns about India’s largest and fastest-growing services export channel to the US.

Mexico: The 50% shock in the trade outlook

One of the most unexpected jolts to India’s trade outlook in 2025 came not from a global superpower, but from Mexico.In December, Mexico announced a blanket tariff hike of up to 50% on imports from non-free trade agreement (FTA) countries, a move aimed at blocking Chinese trans-shipments from entering the United States duty-free. The decision had immediate and significant implications for Indian exporters.Under the measure, import duties ranging from 5% to 50% will apply to around 1,463 product categories from countries that do not have an FTA with Mexico, including India. The revised tariffs will come into effect from January 1, 2026, though the detailed product list has yet to be officially published.According to estimates by the Global Trade Research Initiative (GTRI), the impact on Indian trade could be severe. “Nearly 75% of India’s $5.75 billion exports to Mexico will be affected as tariffs jump from 0-15% to around 35%,” the think-tank said.For Indian exporters, particularly in sectors such as automobiles, textiles, engineering goods and consumer products, the decision threatens to undo years of market-building efforts in Latin America.India and Mexico are currently preparing to begin discussions on a bilateral free trade agreement, with formal negotiation parameters expected to be finalised shortly. Analysts believe such an agreement could help insulate Indian exporters from the tariff shock.

Russia: A relationship grows, but unevenly

India and Russia share a long-standing relationship, with economic ties dating back to the Soviet era. In the decades since, bilateral trade and investment have steadily expanded, with cooperation spanning energy, defence, pharmaceuticals and information technology.In the post-Soviet era, India–Russia trade rose from $1.4 billion in 1995 to a record $68.7 billion in FY 2024–25. Indian firms have invested in Russia’s oil and gas, pharmaceutical and IT sectors, while Russian companies have put money into India’s energy, infrastructure and manufacturing industries.Yet behind the headline numbers lies a growing imbalance that threatens to complicate the partnership.

A trade corridor dominated by oil

The India–Russia energy corridor has emerged as a defining feature of bilateral trade—especially since the outbreak of the Ukraine war and the imposition of Western sanctions on Moscow.In FY 2024–25, India’s imports from Russia stood at roughly $63.8 billion, driven overwhelmingly by crude oil and petroleum products. In contrast, India’s exports to Russia were only about $4.9 billion, leaving a massive trade gap.India’s dependence on Russian crude has remained high despite Western sanctions. In November 2025, India imported 1.77 million barrels per day (bpd) of Russian oil, marking a 3.4% increase over October.Estimates suggest that imports in December 2025 could reach as much as 1.5 million bpd, supported by strong volumes exceeding 1.2 million bpd earlier in the month.The appeal is clear: discounted prices.Russian oil has remained attractive due to aggressive pricing by non-sanctioned producers. Indian refiners—both public and private—have continued to capitalise on these discounts.Imports from Russia surged from $5.94 billion in 2020 to $64.24 billion in 2024, with crude oil now forming the largest share of goods flowing from Russia to India.The bilateral trade agenda gained further momentum during President Putin’s December visit to India, which reinforced energy and strategic cooperation while reaffirming the ambitious $100 billion trade target by 2030.On December 6, India and Russia vowed to scale up bilateral trade to $100 billion by the end of the decade. PM Modi also said both countries were “actively working” towards the early conclusion of a Free Trade Agreement with the Eurasian Economic Union, which includes Russia, Armenia, Belarus, Kazakhstan and Kyrgyzstan.However, the very factors that propelled India–Russia trade growth are now introducing new complications. Western sanctions are steadily reshaping India’s oil trade, according to a report by Rubix Data Sciences, reducing dependence on discounted Russian crude and redirecting energy flows towards the United States and the United Arab Emirates.The effects have been particularly visible in exports. In hindsight, 2025 will be remembered neither as a flawless “Goldilocks year nor as one derailed by tariffs.” The economy did well even under pressure, but enters 2026 with unresolved global headwinds!

Here are the top 5 stories of the day

Congress’s Digvijaya Singh praises RSS photo, highlights Modi’s rise from worker to PM

Congress leader Digvijaya Singh sparked controversy on Saturday by praising the organisational strength of the RSS, a group the Congress has long opposed. Sharing a black-and-white photograph showing Narendra Modi seated on the ground while BJP veteran L.K. Advani sat on a chair, Singh highlighted how the RSS shapes leadership, noting it enabled a grassroots worker to rise to Chief Minister and eventually Prime Minister.Posting the image on X, he called it “very impressive” and lauded the power of the organisation. Later, Singh clarified that while he praised the RSS’s organisational structure, he remains a staunch opponent of the RSS and PM Modi, emphasizing that acknowledging the effectiveness of an organisation does not alter his political stance.Read full story

Resident doctors’ strike paralyzes Himachal hospitals

Medical services, except for emergencies, were severely disrupted across several government hospitals in Himachal Pradesh on Saturday after resident doctors went on an indefinite strike protesting the termination of Dr. Raghav Narula, who was accused of assaulting a patient at Indira Gandhi Medical College (IGMC), Shimla.The Resident Doctors’ Association announced the strike after mass casual leave on Friday, suspending outpatient services, routine care, and elective surgeries while maintaining emergency services. The incident, captured on video and widely shared on social media, showed Narula punching the patient, Arjun Singh, who had objected to being addressed disrespectfully; both parties later blamed each other.Read full story

Israel recognises Somaliland, sparking diplomatic backlash

Israel’s formal recognition of Somaliland as an independent and sovereign state has sparked diplomatic backlash across Africa and the Middle East, reigniting debate over the status of the self-governing region in northern Somalia. While Israel became the first country to grant official recognition, the United States has rejected the move, and the African Union warned it could destabilise the continent.Somaliland, which declared independence in 1991 following the collapse of Somalia’s Siad Barre regime, has functioned for over three decades as a de facto state with its own government, currency, army, and elections, but remains unrecognised by Somalia, the UN, the African Union, and all major powers.Read full story

BJP alleges Congress collusion with ‘anti-India’ forces over Rahul Gandhi’ Germany visit

The BJP on Saturday accused the Congress of colluding with “anti-India” forces, highlighting Rahul Gandhi’s participation in the Global Progressive Alliance during his Germany visit.Citing remarks by Rahul’s long-time advisor Sam Pitroda, BJP MP Sudhanshu Trivedi claimed the alliance promotes “anti-India” narratives and suggested it exposed the Congress party’s true ideological leanings, drawing renewed connections between the party and George Soros.Read full story

Hindus in Bangladesh seek India’s help amid rising BNP influence

Fearing for their lives after the lynchings of Dipu Chandra Das and Amrit Mondal, persecuted Hindus in Bangladesh are appealing to India to open its borders as a refuge from Islamist mob attacks. Their fears have intensified amid rising support for hardliner BNP leader Tarique Rahman, with many worried that the party’s potential return to power could worsen minority persecution, leaving them feeling trapped and vulnerable.

AGRA: A computer teacher at Aligarh Muslim University (AMU) was shot dead on campus in a targeted attack on Wednesday evening, police said. Chilling CCTV footage shows the assailants firing at the teacher even after he had fallen to the ground.In the CCTV visuals, the accused shooter can be seen shooting teacher 6 times near head.

The victim, Rau Danish Ali, had been teaching computer science at ABK High School on the AMU campus for over a decade. He was walking near the Maulana Azad Library canteen with two colleagues around 9pm when the attackers intercepted the group.Police said the assailants, arriving on a scooter, threatened the group with pistols before opening fire. CCTV footage near Kennedy Hall shows panicked students and staff scattering as the gunmen fired multiple rounds. One of Ali’s friends, Imran, told police that one of the shooters issued a chilling warning before opening fire: “You don’t know me yet, now you will.”Investigators said six to seven rounds were fired at close range, with four bullets hitting Ali in the head and one in the arm. AMU security personnel arrived shortly after the incident, but the attackers had already fled. Ali was rushed to Jawaharlal Nehru Medical College, where he was pronounced dead.An FIR has been registered at Civil Lines police station by Ali’s brother, Dr Rau Faraz, under Sections 103(1) (murder) and 109(1) (attempt to murder) of the Bharatiya Nyaya Sanhita. Ali is survived by his wife, two children, and his parents, all of whom are associated with AMU. The family had been preparing to travel for Umrah in the coming days.Senior superintendent of police Neeraj Kumar Jadaun said multiple investigation teams are working on the case. “CDRs and other technical evidence have been collected. The motive is not clear yet, and all angles are being examined. Those responsible will be arrested soon,” he said.AMU proctor Mohd Wasim Ali said the university administration was coordinating with police, and campus security has been tightened following the killing.

Paarl Royals host Sunrisers Eastern Cape in the third match of SA20 2025-26 at Boland Park, Paarl, on December 27. This early-season clash pits the home side’s balanced squad against the defending champions’ strong batting and bowling depth.

Paarl Royals, led by David Miller, rely on Lhuan-dre Pretorius, Kyle Verreynne, Dan Lawrence, Sikandar Raza, and bowlers like Mujeeb Ur Rahman and Gudakesh Motie. Sunrisers Eastern Cape, captained by Tristan Stubbs with Quinton de Kock as wicketkeeper, feature Jonny Bairstow, Marco Jansen, Anrich Nortje, and Adam Milne in a potent lineup.

Sunrisers Eastern Cape dominate recent encounters, winning four of the last five against Paarl Royals. Their batting strength has consistently outmatched the Royals, though Paarl’s home advantage could shift dynamics.

PR vs SEC, SA20 2025-26: Match details

• Date and Time: December 27 (Saturday); 9:00 pm IST / 03:30 pm GMT / 5:30 pm Local
• Venue: Boland Park, Paarl

Head-to-Head Record in SA20 2025-26:

Matches played: 7 | Paarl Royals won: 2 | Sunrisers Eastern Cape won: 5 | No result/Tied: 0

Boland Park Ground Pitch Report

Boland Park offers a balanced pitch with an average first-innings score around 159 in recent SA20 games, favouring spinners due to lower pace and bounce compared to other South African venues. Chasing teams have won all three recent matches here, making the toss crucial as captains may opt to bowl first.

Squads:

Sunrisers Eastern Cape: Jonny Bairstow, Quinton de Kock (wk), Tristan Stubbs (c), Lewis Gregory, Matthew Breetzke, Marco Jansen, Patrick Kruger, Senuran Muthusamy, Adam Milne, Anrich Nortje, Chris Wood, Allah Ghazanfar, JP King, Christopher King, Jordan Hermann, Mitchell Van Buuren, Tharindu Rathnayake, James Coles, Beyers Swanepoel, Lutho Sipamla

Paarl Royals: Lhuan-dre Pretorius, Dan Lawrence, Kyle Verreynne (wk), David Miller (c), Rubin Hermann, Sikandar Raza, Gudakesh Motie, Ottneil Baartman, Bjorn Fortuin, Mujeeb Ur Rahman, Hardus Viljoen, Okuhle Cele, Delano Potgieter, Nqabayomzi Peter, Asa Tribe, Eshan Malinga, Vishen Halambage, Nqobani Mokoena, Keagan Lion Cachet, Thomas Rew

Also READ: SA20 2026: Complete squads of all six teams after the players’ auction

PR vs SEC, SA20 2025-26: Today’s Match Prediction

Case 1:

• Paarl Royals wins the toss and bowls first
• Sunrisers Eastern Cape’ powerplay score: 50-60 (6 overs)
• Sunrisers Eastern Cape’ total score: 165-175

Case 2:

• Sunrisers Eastern Cape wins the toss and bowls first
• Paarl Royals’ powerplay score: 40-50 (6 overs)
• Paarl Royals’ total score: 150-160

Match result: Team bowling first to win the contest

Also READ: SA20 unveils elite match officials panel for the 2025-26 season

Australian captain Steve Smith said excess grass on the Melbourne Cricket Ground (MCG) pitch made batting difficult during the fourth Ashes Test, which ended inside two days as England won by four wickets on Saturday.A total of 36 wickets fell across six sessions, with 20 wickets on the opening day and 16 on the second. England’s win ended their long wait for a Test victory in Australia.

Smith said the 10mm grass left on the surface played a key role in how the pitch behaved.“It probably started quite slow and it’s hard to explain. Not tennis bally normally, that’s from like the moisture of the wicket,” Smith said during the post-match press conference.He added that the thickness of the grass affected how the ball behaved after pitching.“I think because of the thickness of the grass. The ball was just sitting in the grass, if that makes sense to you. Like I felt in the first innings, a couple almost like chipped one to mid on playing a defensive shot that just sort of sat in the grass and it was tricky to drive the ball because of how much it was. The seam was just catching the grass and it was stopping,” he said.Smith said the surface offered too much seam movement, making it hard for batters to settle.“It was tricky. No one could really get in. I think when you see 36 wickets across two days, that’s probably too much,” he said.He suggested that a slightly shorter grass covering might have helped.“It probably did a little bit more than they wanted it to. Maybe if we dropped it down to eight millimetres, it would be about right,” Smith said.England captain Ben Stokes also said a Test match finishing inside two days was “not what you want”, though he added that teams had to deal with the conditions presented.“When you go out there and you’re faced with those conditions, you’ve got to crack on and deal with it,” Stokes said. “But being brutally honest, that’s not really what you want.”

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A day after a 44-year-old Indian-origin man died after waiting for hours in a hospital’s emergency room in Canada, his wife accused the Edmonton hospital of “killing her husband” by not providing timely medical help.In a viral video, Prashant Sreekumar’s wife said that the Grey Nuns Community Hospital neglected her husband’s condition even after he complained of severe chest pain.“He was brought to Grey Nuns Community Hospital around 12.15 pm. He was sitting in the triage from 12.20 pm onward till about, I would say, 8.50 pm in the night,” his wife said.“He was sitting in the triage complaining of constant chest pain. His BP constantly kept on rising, with the last recorded blood pressure of 210. He… he was taken inside. He was only prescribed Tylenol during the entire waiting time that he was outside, and he was not given help. They said that chest pain is not considered an acute problem. They do not suspect a cardiac arrest,” she added.Further, she said that her husband collapsed, while nurses at the hospital were heard saying that they couldn’t feel his pulse.“When we came inside, he was asked to sit down. He got up for a fraction of seconds and he collapsed. He fainted. And the nurse was heard saying that I do not feel a pulse. So basically the hospital administration, the employees of Grey Nuns Hospital, have killed my husband, Prashant Sreekumar, by not providing him timely medical help,” she said.Also read: ‘Your mother will die today’: Hyderabad man sets wife ablaze in front of children“And the security was so rude that instead of addressing the cause, they said, ‘Ma’am, you are being very rude.’ So basically it is okay for them to kill a human being and to tell the wife that you are being rude,” she added.According to Canadian news channel Global News, Prashant began experiencing intense chest pain while at work. A client drove him to Grey Nuns Hospital in southeast Edmonton, where he was registered at triage and asked to wait in the emergency room.His father, Kumar Sreekumar, arrived at the hospital shortly afterwards. “My son told me, ‘Papa, I cannot bear the pain,’” Kumar recalled, as reported by Global News.According to the family, Prashant described his pain as “15 out of 10” and informed hospital staff about the severity of his condition.An electrocardiogram (ECG) was conducted to assess his heart, but the family said he was told that nothing serious was detected and that he would need to continue waiting. He was also offered Tylenol to manage the pain.As the hours passed, Kumar said nurses periodically checked his son’s blood pressure, which kept rising. “It went up, up, and up. To me, it was through the roof,” he said.Prashant is survived by his wife and three children, aged 3, 10 and 14. Family members said he was deeply devoted to his children and known for his cheerful, playful nature. The family often travelled together and shared a close bond.