India’s Economic Policy & Market Pulse: 06th October to 11th October’25
What happened in India Last Week | Weekly Report
Government of India & RBI Announcements
Thanks for reading Kirtiraj’s Substack! Subscribe for free to receive new posts and support my work.
RBI Monetary Policy Committee Decisions
The Reserve Bank of India concluded its pivotal September-October 2025 monetary policy meeting with unanimous decisions that signal a cautiously optimistic economic outlook. The MPC maintained the policy repo rate at 5.50% while adopting a neutral stance, reflecting confidence in India’s economic momentum despite global uncertainties.
Key Policy Revisions:
- GDP growth forecast upgraded from 6.5% to 6.8% for FY 2025-26
- Inflation projection sharply lowered to 2.6%, indicating price stabilityyoutube
- Real GDP growth reported at 7.8% in Q1 FY 2025-26 , the fastest pace in seven quarters
The central bank’s optimism stems from strong domestic consumption, robust investment activity, and supportive factors including favorable monsoon conditions and the transformative GST 2.0 reforms.
Major Policy Implementation
India-EFTA Free Trade Agreement Activation: The Trade and Economic Partnership Agreement (TEPA) with European Free Trade Association countries—Switzerland, Norway, Iceland, and Liechtenstein—became effective October 1, 2025. This landmark agreement includes:
- $100 billion investment commitment over 15 years from EFTA nations
- 1 million direct jobs expected to be generated
- 100% market access for India’s industrial and non-agricultural products
Digital Payment Infrastructure Overhaul: Starting October 1, several critical changes reshaped India’s financial ecosystem:
- Continuous cheque clearing replacing batch processing for faster settlements
- UPI biometric authentication launched October 8, allowing facial recognition and fingerprint-based payments
- Introduction of UPI Multi-Signatory for business transactions
Key Business & Economy News
Manufacturing Sector Momentum
India’s manufacturing sector demonstrates remarkable resilience and growth trajectory. The FICCI survey reveals that 87% of respondents reported higher or same production levels in Q2 2025, with average capacity utilization at approximately 75%. Key highlights include:
- Manufacturing FDI surged 18% to $19.04 billion in FY 2024-25
- Over 50% of manufacturers planning new investments or capacity expansions within six months
- Strong growth projections across automotive, electronics, machine tools, and metals sectors
Production-Linked Incentive (PLI) Success: By July 2025, India approved 806 applications under PLI schemes, attracting $20.3 billion in investments across 14 strategic sectors. The program generated over 1.2 million direct and indirect jobs while producing $190.9 billion in output.
Trade Relations and Global Positioning
US-China Trade War Impact: The escalating trade conflict presents both opportunities and challenges for India. With the US imposing 100% additional tariffs on Chinese goods starting November 1, 2025, Indian exporters see potential market share gains. However, India faces its own challenges with 50% US tariffs affecting key sectors including textiles, gems, jewelry, and chemicals.
Export Performance: Despite tariff pressures, India’s exports to the US showed mixed signals, with goods exports declining 22.2% between May-August 2025 from $8.8 billion to $6.9 billion. The decline reflects the cumulative impact of progressive tariff increases throughout 2025.
IPO Market Surge
October 2025 emerged as a record-breaking month for India’s IPO market, with expected proceeds exceeding $5 billion. Major listings include:
- Tata Capital Ltd. : $1.7 billion offering
- LG Electronics India Ltd. : Multi-billion dollar listing
The primary market has already crossed ₹1 lakh crore in 2025 with three months remaining, positioning this year as potentially record-breaking.
Emerging Trends in Business & Investments
Fintech and Digital Payment Revolution
India’s digital payments ecosystem is experiencing transformational growth. Key projections include:
- Digital payment volumes expected to grow from 206 billion transactions in FY25 to 617 billion in FY30
- UPI targeting 1 billion transactions per day by FY28
- Credit card volumes projected to grow at 21.7% CAGR
Recent innovations include biometric authentication for UPI payments and expanded use cases for platforms like Bharat Connect, with transaction values expected to grow at 30%+ CAGR.
Renewable Energy Investment Boom
India’s renewable energy sector achieved unprecedented growth momentum:
- 420% year-on-year surge in capacity addition in June 2025
- Q1 2025 investments reached $9.8 billion , a 7.7-fold increase
- India officially surpassed Japan to become the world’s third-largest solar energy producer
- 125 GW solar capacity achieved, reinforcing global leadership
The government’s ambitious target of 500 GW non-fossil fuel capacity by 2030 continues driving massive private and public sector investments.
Technology and AI Integration
Artificial Intelligence adoption is reshaping business operations across sectors. Key trends include:
- 14% CAGR growth projected for IT & AI sectors (2025-2030)
- Small businesses increasingly adopting AI-driven automation for efficiency
- Integration of AI in traditional sectors including agriculture, healthcare, and manufacturing
Fastest Growing Sectors by CAGR:
- Electric Vehicles: 25%
- FinTech: 20%
- E-commerce: 18%
- Renewable Energy: 17%
Strategic Takeaways
1. Policy Convergence Creates Investment Goldmine
The simultaneous implementation of EFTA agreement, GST 2.0 reforms, and digital payment infrastructure upgrades creates a unique window for foreign investment. The $100 billion EFTA commitment, combined with 100% FDI allowance in renewable energy, positions India as a premier destination for European and global capital seeking manufacturing and clean energy opportunities.
2. Digital Payment Infrastructure as Economic Multiplier
India’s transition to continuous cheque clearing, biometric UPI authentication, and expanded digital payment use cases isn’t just about convenience—it’s creating a $907 trillion payment ecosystem by 2030. Businesses that integrate these platforms early will capture disproportionate market share as India moves toward a cashless economy.
3. Manufacturing Renaissance Through Strategic Diversification
The 18% surge in manufacturing FDI, coupled with PLI scheme success, indicates India is successfully positioning itself as the “China+1” alternative. Companies should focus on sectors with high capacity utilization (75%+) and government support—particularly electronics, pharmaceuticals, and automotive components—where global supply chain diversification is accelerating.
4. Renewable Energy as Core Economic Engine
The 420% growth in renewable capacity additions signals that clean energy isn’t just environmental policy—it’s becoming India’s primary economic growth driver. The 7.7-fold investment increase to $9.8 billion in Q1 2025 alone suggests unprecedented opportunities in solar, wind, and energy storage technologies.
5. Trade Relationship Recalibration as Competitive Advantage
While US tariffs create short-term challenges, they’re accelerating India’s pivot toward diversified trade partnerships. The successful EFTA agreement and ongoing EU negotiations suggest businesses should prioritize European market access while maintaining US relationships. The 100% tariff on Chinese goods creates immediate export substitution opportunities worth billions in sectors like textiles, electronics, and industrial chemicals.
The convergence of these trends indicates India is transitioning from an emerging market to a global economic powerhouse with distinct competitive advantages in manufacturing, technology, and clean energy. Businesses that align with these structural shifts—particularly in digital infrastructure, renewable energy, and European trade partnerships—are positioned to capture outsized returns in the next 24-36 months.
Thanks for reading Kirtiraj’s Substack! Subscribe for free to receive new posts and support my work.