India’s Economic Overview in 2025

In the fiscal year 2022-2023, India’s economy grew by 7.2%, making it the second-highest growth rate among G20 countries and nearly double the average for emerging market economies. This growth was driven by strong domestic demand, significant public infrastructure investment, and a strengthening financial sector. The India’s Economic Overview In 2025 reflects healthy growth, driven by strong domestic demand, strategic government initiatives, and a dynamic export sector.

India remains one of the fastest-growing major economy

GDP Growth

• In the fourth quarter of 2024, India’s GDP grew by 6.2%, driven by increased government and consumer spending, as well as a strong rural economy.

• The International Monetary Fund (IMF) projects India’s growth to remain strong at 6.5% for both 2025 and 2026, reflecting stable economic fundamentals.

 

Inflation Trends

• Retail inflation in India has experienced fluctuations due to factors such as food price volatility and global geopolitical tensions. However, recent data indicates a moderation in inflation rates, with cost pressures easing, allowing businesses to pass on reduced costs to consumers.

 

Foreign-Exchange Reserves

• As of January 2025, India’s foreign exchange reserves stood at $640.3 billion, providing a buffer against global economic uncertainties.

Export Performance

• India’s export sector has achieved historic milestones, as total exports surged to $778.21 billion in the fiscal year 2023-2024, reflecting a remarkable 67% increase from $466.22 billion in 2013-2014.

• In January 2025 alone, exports surged to $74.97 billion, underscoring the country’s growing prominence in global trade.

Major Export Sectors

India’s top export sectors include:

• Petroleum Products:

Due to India’s advanced refining capabilities, it has become a significant petroleum product exporter, with exports valued at approximately $20 billion in 2024, reflecting a 10% increase from the previous year. As the second-largest refiner in Asia, India not only exports products like petrol, diesel, and jet fuel but also supplies them to countries such as the US, China, and the Netherlands.

 

• Gems and Jewelry:

Renowned globally for its craftsmanship, India’s gems and jewelry sector exported goods worth $32.02 billion in 2024, reinforcing its status as a leading jewelry exporter.

 

• Pharmaceuticals:

Ranking among the top globally, India’s pharmaceutical industry exports active ingredients, biopharmaceuticals, finished drugs, and vaccines to various countries.

 

• Textiles and Apparel:

India is a major cotton producer; moreover, it exports various textiles and apparel, including t-shirts, jeans, and jackets.

Government Initiatives to Boost Exports

The Indian government has implemented several initiatives to enhance export performance:

• Production-Linked Incentive (PLI) Schemes:

Launched in 2020, the PLI schemes aim to stimulate domestic manufacturing across various sectors by providing incentives based on incremental sales.

This initiative seeks to reduce import dependence and promote self-reliance in line with the ‘Atmanirbhar Bharat’ vision.

The scheme encompasses 14 sectors, including electronics, pharmaceuticals, automobiles, and textiles.

Notably, it has attracted over $17 billion in investments, leading to production worth approximately 11 trillion rupees ($131.6 billion) and the creation of nearly one million jobs.

These schemes have boosted domestic manufacturing in sectors such as pharmaceuticals, electronics, auto components, and textiles.

The PLI scheme boosted India’s electronics sector, making it a global hub, with iPhone exports exceeding $12 billion in 2023/24.

Additionally, the automotive industry has benefitted, with companies like Reliance Industries securing bids to produce up to 10 gigawatts of advanced chemistry cells for electric vehicle batteries under the PLI scheme.

• Exporter Support Programs:

Moreover, by extending the Interest Equalization Scheme until December 31, 2024, the government ensures sustained financial relief and competitiveness.

This extension aims to provide affordable credit to exporters, enhancing their competitiveness in the global market.

Initiatives like the Interest Equalization Scheme and the Trade Infrastructure for Export Scheme (TIES) provide crucial support to exporters.

• Tariff and Tax Incentives:

To address tariff anomalies and incentivize labor-intensive sectors, the government has implemented schemes like RoSCTL; moreover, it boosts exports.

Introduced on March 7, 2019, RoSCTL aims to promote exports by rebating all embedded taxes and levies on exported products, thereby enhancing the competitiveness of Indian goods in international markets.

Rebate of State and Central Levies and Taxes (RoSCTL) and the Remission of Duties and Taxes on Exported Products (RoDTEP) incentivize labor-intensive sectors and address tariff anomalies.

These initiatives boost manufacturing, exports, and economic growth, solidifying India’s position in global trade.

Challenges in the Import and Export Landscape

Despite significant progress, challenges persist in India’s trade landscape:

• Logistical Issues:

Exporters frequently encounter delays stemming from inefficient coordination of shipment schedules and inadequate documentation. Furthermore, these logistical bottlenecks disrupt the supply chain, increasing costs and straining relationships with international buyers. Exporters often face delays due to inefficient synchronisation of shipment plans and improper documentation.

• Complex Documentation:

The intricate and often manual paperwork required for exports poses a significant hurdle. Exporters must navigate a myriad of regulations and standards, making compliance a daunting task. This complexity can deter businesses, especially small and medium-sized enterprises (SMEs), from entering or expanding in the export market. The complexity of regulations and manual paperwork processes can hinder compliance with international standards.

• High Transaction Costs:

High transaction costs, including tariffs, fees, and logistical inefficiencies, remain a significant barrier for Indian exporters, particularly SMEs, as they not only erode profit margins but also reduce competitiveness, making it challenging to operate efficiently within limited budgets.

• Government Restrictions:

Securing governmental approvals is lengthy and complex; consequently, it delays shipments and harms India’s reputation as a reliable trader.

• Infrastructure Limitations

Despite improvements, India’s infrastructure still faces challenges that impede efficient trade. Poor port infrastructure, weak transport networks, and underused coastal areas raise costs and delays, hurting India’s export competitiveness.

Conclusion

Global protectionism, including higher tariffs, poses challenges for Indian exporters; therefore, strategic adjustments are essential to sustain demand and trade relationships.

India’s economic growth in 2025 remains strong; moreover, strategic policies ensure resilience amid global uncertainties.

In summary, despite India’s trade expansion, overcoming these persistent challenges remains crucial for sustained growth.

By streamlining documentation, reducing costs, improving infrastructure, and effectively navigating trade policies, India strengthens its global market position.