Economy

 

Indian Economy Current Affairs, important for Competitive Exams.

RBI Keeps Repo Rate Unchanged at 5.25%, Maintains Neutral Policy Stance

On 6 February 2026, Reserve Bank of India (RBI) Governor Sanjay Malhotra announced that the Monetary Policy Committee (MPC) unanimously decided to keep the policy repo rate unchanged at 5.25%, while maintaining a neutral policy stance.

Policy InstrumentCurrent RateDecisionNotes
Repo Rate5.25%UnchangedReflects cautious stance amid global uncertainties.
Standing Deposit Facility (SDF)5.00%UnchangedMaintains liquidity balance.
Marginal Standing Facility (MSF) & Bank Rate5.50%UnchangedNo change to borrowing costs for banks.
Monetary Policy StanceNeutralContinuedMPC remains flexible to respond to evolving conditions.

📊 Economic Outlook

  • Inflation: Currently low and under control, allowing RBI to avoid tightening.
  • Growth Projection: FY26 GDP growth estimated at 7.4%, supported by strong domestic demand.
  • Global Context: MPC highlighted uncertainties in global markets but noted India’s resilience.
  • Past Actions: Since Feb 2025, RBI has already cut repo rate by 125 basis points, creating room for growth.


India-US Trade Deal 2026: Tariffs Cut to 18%

On February 2, 2026, U.S. President Donald Trump and Indian Prime Minister Narendra Modi announced a landmark U.S.–India trade agreement, marking a major easing of trade tensions between the two countries.

Key Highlights

  • The United States has reduced reciprocal tariffs on Indian products to 18%, down from much higher effective rates earlier.
  • An additional 25% punitive duty linked to India’s purchase of Russian oil has been withdrawn, sharply lowering the overall tariff burden on Indian exports.
  • The U.S. President stated that India has agreed to stop buying Russian crude oil and shift energy imports towards the U.S. and other sources.
  • The U.S. administration also claimed that India will purchase over $500 billion worth of American energy, technology, and agricultural products, while moving towards reducing tariff and non-tariff barriers on U.S. goods.

Economic Impact

The announcement boosted market sentiment, as the U.S. is India’s largest trading partner. The lower tariff rate makes Indian exports more competitive compared to other Asian exporters.

Sectors expected to benefit include:

  • Textiles and Apparel, which were among the worst affected by earlier high duties
  • Gems and Jewellery, due to reduced export costs
  • IT Services, with major Indian tech companies witnessing positive market reactions
  • Energy and Technology, driven by increased imports from the U.S.

Union Budget 2026–27: Key Highlights for Competitive Exams

Union Budget 2026–27 is India’s 80th budget, presented by Finance Minister Nirmala Sitharaman on 1st February 2026. It emphasizes fiscal discipline, infrastructure push, reforms in taxation, and youth-centric growth.

📌 Union Budget 2026–27: Key Highlights

Fiscal & Economic Indicators

  • Total Expenditure: ₹53.47 lakh crore (↑7.7% from 2025–26)
  • Receipts (excluding borrowings): ₹36.51 lakh crore (↑7.2%)
  • Nominal GDP Growth Estimate: 10% (real growth + inflation)
  • Fiscal Deficit Target: 4.3% of GDP (vs. 4.4% in 2025–26)
  • Revenue Deficit Target: 1.5% of GDP (same as 2025–26)

Taxation & Customs

  • Simplification of customs tariff structure to boost exports.
  • Duty-free import limit for seafood export inputs raised to 3% of FOB turnover.
  • Exemptions extended for lithium-ion battery storage, solar glass, nuclear power projects (till 2035).
  • Phasing out exemptions for items with negligible imports to encourage domestic manufacturing.

Infrastructure & Growth

  • High-speed corridors announced for logistics efficiency.
  • Capital expenditure thrust continues to drive growth.
  • Focus on manufacturing in frontier sectors and rejuvenation of legacy industries.
  • Push for MSMEs as “champion sectors.”

Social & Welfare Initiatives

  • Yuva Shakti-driven Budget: Emphasis on youth employment and skill development.
  • Strengthening social welfare schemes for inclusive growth.
  • Focus on healthcare, education, and rural development.

Economic Survey 2025–26: India Projects 7.4% Growth with Historic Low Inflation

Finance Minister Nirmala Sitharaman tabled the Economic Survey 2025–26 in the Lok Sabha on 29 February 2026, prepared by the Department of Economic Affairs under the guidance of the Chief Economic Advisor.

The Survey presents a comprehensive assessment of India’s economy, projecting strong real GDP growth of 7.4%, historic low inflation of 1.7%, and sustained economic resilience despite global uncertainties. It highlights robust domestic demand, infrastructure-led growth, improving banking health, and fiscal consolidation, positioning India as the fastest-growing major economy.

Serving as the foundation for Union Budget 2026, the Survey emphasizes reforms, social sector priorities, and a forward-looking approach of “caution, not pessimism” as India advances toward long-term stability and global leadership.

India–EU Free Trade Agreement (FTA) 2026: Key Highlights & Strategic Impact

On 27 Jan 2026, India and the European Union (EU) officially concluded negotiations on a landmark Free Trade Agreement (FTA), described as the “mother of all deals.” The pact is expected to become operational by end of 2026, significantly reshaping global trade dynamics by eliminating tariffs, boosting exports, and strengthening strategic ties between two major economies.

The FTA covers markets representing ~2 billion people and ~25% of global GDP. It includes major tariff reductions, such as removal of duties on aircraft, and cuts on alcohol, food products, chemicals, and over 90% of EU goods. The deal ensures market access for 99% of India’s exports and includes €500 million in climate support funding.

Strategically, it promises an economic boost, with expectations of doubling EU exports to India by 2032, while enhancing India’s competitiveness in textiles, IT services, and pharmaceuticals. It also contributes to geopolitical balance amid uncertainties with the US and China, and expands cooperation in defence, security, and mobility.

However, challenges include a lengthy ratification process, domestic adjustments for Indian sectors like agriculture and small-scale manufacturing, and the need for regulatory alignment with EU standards on data protection, sustainability, and product quality.

In conclusion, the India–EU FTA marks a historic milestone, paving the way for economic growth, innovation, and stronger geopolitical alignment, despite implementation and adaptation challenges.

India’s Real GDP Estimated to Grow 7.4% in 2025–26

India’s real Gross Domestic Product (GDP) is projected to grow by 7.4% in 2025–26, compared to 6.5% in the previous fiscal year. According to the first advance estimates released on 7 January 2026 by the Ministry of Statistics and Programme Implementation, the real GDP for the current financial year is estimated to exceed ₹201 lakh crore, higher than the provisional estimate of over ₹187 lakh crore in 2024–25.

The Ministry stated that buoyant growth in the services sector is the major driver of this expansion. Sectors such as trade, hotels, transport, communication, and broadcasting-related services are estimated to grow by 7.5% this fiscal. In the secondary sector, manufacturing and construction are expected to register a 7% growth rate.

Reacting to the GDP figures, Prime Minister Narendra Modi noted that India’s “Reform Express” continues to gain momentum, powered by the NDA Government’s investment-led and demand-led policies. He highlighted ongoing efforts to build a prosperous India through infrastructure development, manufacturing incentives, digital public goods, and improved ease of doing business.

India’s Largest Integrated Inland Rainbow Trout Farm Inaugurated in Telangana

On 5 January 2026, Union Minister of Fisheries, Animal Husbandry and Dairying Rajiv Ranjan Singh, along with Union Coal Mines Minister G Kishan Reddy, inaugurated India’s largest integrated inland Rainbow Trout farm in Ranga Reddy district. The project has been developed by startup SmartGreen Aquaculture with an estimated investment of ₹50 crore.

This initiative is significant because Rainbow Trout is a cold-water fish species that has traditionally been farmed only in the high-altitude Himalayan regions of India. Through the use of advanced engineering, temperature-controlled systems, and modern aquaculture technology, the farm enables trout cultivation in the warm climate of the Deccan Plateau, marking a major technological breakthrough in Indian fisheries.

Speaking at the event, Rajiv Ranjan Singh assured full government support for the export of Rainbow Trout, particularly through assistance from the National Fisheries Development Board (NFDB). The project is expected to boost inland aquaculture diversification, encourage startup-led innovation, create employment, and enhance India’s presence in high-value fish exports.

UPI Recognized as World’s Largest Real-Time Payment System by IMF

The Unified Payments Interface (UPI) has been recognized by the International Monetary Fund (IMF) as the world’s largest retail fast-payment (real-time) system by transaction volume, according to the IMF report “Growing Retail Digital Payments (The Value of Interoperability)” released in June 2025. Additionally, as per the ACI Worldwide report “Prime Time for Real-Time” 2024, UPI accounts for around 49% of global real-time payment transactions, underscoring India’s leadership in digital payments.

In terms of global comparison, India recorded 129.3 billion transactions, far ahead of other countries such as Brazil (14%), Thailand (8%), China (6%), and South Korea (3%), out of a total 266.2 billion global real-time transactions.

To accelerate adoption, especially among small and micro merchants, the Government of India, Reserve Bank of India (RBI), and National Payments Corporation of India (NPCI) have implemented targeted initiatives. These include incentives for low-value BHIM-UPI transactions and the Payments Infrastructure Development Fund (PIDF), which supports deployment of POS terminals and QR codes in tier-3 to tier-6 areas. As of 31 October 2025, about 5.45 crore digital touchpoints were deployed through PIDF, and 56.86 crore QR codes were issued to nearly 6.5 crore merchants by FY 2024–25.

UPI and RuPay are also being expanded across public services, transport, and e-commerce, further deepening digital transactions nationwide. This information was shared by Minister of State for Finance, Shri Pankaj Chaudhary, in a written reply in the Lok Sabha on 8 Dec 2025.

Government Approves CoalSETU Policy for Transparent Coal Linkage Auctions

On 12 December 2025, the Government of India approved the CoalSETU policy to ensure seamless, efficient, and transparent utilisation of coal resources. The decision was taken by the Cabinet Committee on Economic Affairs (CCEA) chaired by Prime Minister Narendra Modi.

Under this policy, a new auction window called ‘CoalSETU’ has been introduced within the Non-Regulated Sector (NRS) Coal Linkage Auction Policy, 2016. The policy enables long-term auction of coal linkages for any industrial use and exports, ensuring fair access to coal.

Any domestic buyer can participate in the auction irrespective of end use. Coal linkages obtained under CoalSETU can be used for own consumption, exports, or other purposes such as coal washing, but resale within the country is not permitted.

Additionally, linkage holders are allowed to export up to 50% of the allocated coal and can flexibly utilise coal among group companies, improving operational efficiency and optimal resource utilisation.

RBI Monetary Policy Committee cut the policy repo rate by 25 basis points to 5.25%

The Reserve Bank of India’s Monetary Policy Committee unanimously cut the policy repo rate by 25 basis points to 5.25% in its December 2025 meeting. This marks the fourth rate reduction in 2025, bringing the cumulative cut for the year to 125 basis points. The move comes amid a backdrop of strong economic growth and subdued inflation, described by RBI Governor Sanjay Malhotra as a “rare Goldilocks period”.

Key details and implications of the announcement:

  • Economic Forecasts: The RBI revised its FY26 GDP growth estimate upward to 7.3% (from 6.8%) and lowered its CPI inflation projection to 2% (from 2.6%).
  • Liquidity Measures: To ensure smoother monetary policy transmission and support liquidity, the central bank announced plans for Open Market Operations (OMO) purchases of government securities worth ₹1 lakh crore and a three-year dollar-rupee buy-sell swap of $5 billion.
  • Impact on Borrowers: The repo rate cut is expected to lead to lower interest rates on loans, benefiting borrowers through reduced Equated Monthly Instalments (EMIs) for home and auto loans.
  • Impact on Investors: Lower interest rates are likely to impact fixed deposit returns, while potentially boosting rate-sensitive sectors of the stock market, such as real estate, auto, and banking.
  • Policy Stance: The MPC has maintained a “neutral” policy stance, leaving room for future adjustments based on evolving economic conditions.

India’s GDP Growth Surges to 8.2% in Q2 FY 2025–26

India’s Gross Domestic Product (GDP) grew by 8.2% in the second quarter of the financial year 2025-26, showing strong economic momentum. This growth is higher compared to 7.8% in the first quarter and 5.6% in the same period last year. The rise was mainly driven by robust performance in the manufacturing, secondary, and tertiary sectors.

The country’s nominal GDP increased by 8.7% during the quarter. Notably, the manufacturing sector, which contributes 14% to the total GDP, experienced significant improvement, growing by 9.1% compared to just 2.2% last year.

India’s Foodgrain Production Hits All-Time High of 357.73 Million Tonnes in 2024–25

India’s foodgrain production for 2024–25 has reached a record 357.73 million tonnes, the highest ever. Agriculture Minister Shivraj Singh Chouhan released the final crop estimates on 20 November 2025 and credited farmers for this achievement.

Foodgrain output has increased by 106 million tonnes since 2015–16.
Rice (1501.84 lakh tonnes) and wheat (1179.45 lakh tonnes) recorded their highest-ever production. Maize output is 434.09 lakh tonnes, while nutri/coarse cereals total 639.21 lakh tonnes, including millets (Shri Anna) at 185.92 lakh tonnes.

Pulses production reached 256.83 lakh tonnes, with chickpea at 111.14 lakh tonnes and moong at 42.44 lakh tonnes.

Oilseeds output touched an all-time high of 429.89 lakh tonnes, led by record soybean (152.68 lakh tonnes), groundnut (119.42 lakh tonnes), and strong mustard production.

Among commercial crops: sugarcane output is 4546.11 lakh tonnes, cotton 297.24 lakh bales, and jute & mesta 88.02 lakh bales.

6th Global Fintech Fest 2025 Begins in Mumbai with Focus on AI-Powered Finance

The 6th edition of the Global Fintech Fest (GFF) began in Mumbai on 7th October 2025. The event was inaugurated by Union Finance Minister Nirmala Sitharaman. The theme for this year’s festival is “Empowering Finance for a Better World Powered by AI.”

Prime Minister Narendra Modi and UK Prime Minister Keir Starmer are scheduled to deliver the keynote address on 9th October, where they will also interact with industry leaders, policymakers, and innovators.

A major highlight of GFF 2025 is the “Bharat AI Experience Zone” set up by NPCI and NVIDIA, showcasing India’s advancements in AI-driven fintech. The event features a large expo with over 400 exhibitors, along with workshops, hackathons, investment pitches, fintech awards, and various networking sessions.

The three-day event, held at Mumbai’s Jio World Centre, is expected to attract over one lakh visitors and 7,500 participating companies, making it one of the largest global gatherings in the fintech sector.

GST Bachat Utsav 2025 – Next-Gen GST Reforms

On 22 September 2025, India launched Next Generation GST reforms, simplifying the tax system with just two slabs (5% & 18%). GST was reduced on 370+ items, including essentials like food, medicines, toiletries, and stationery. Many life-saving drugs are now GST-free or taxed at 5%. FMCG brands like Amul and Mother Dairy announced price cuts.

The reforms aim to reduce household expenses, boost savings, support MSMEs, and spur investment. PM Modi called it a “double bonanza” with GST cuts and income tax relief (zero tax up to ₹12 lakh), projecting savings of up to ₹2.5 lakh crore for citizens.

The GST Bachat Utsav, launched on the first day of Navratri, is being celebrated nationwide as a festival of savings and economic empowerment.

India–U.S. Bilateral Trade Pact Talks Resume

On 16 September 2025, India and the U.S. held high-level talks in New Delhi to push forward a long-awaited bilateral trade agreement. The meeting, led by Brendan Lynch (U.S.) and Rajesh Agrawal (India), comes after strained ties over the 50% U.S. tariffs on Indian goods linked to Russian crude imports.

Both sides agreed to intensify efforts, with weekly virtual discussions paving the way for the sixth formal negotiation round. Leaders Donald Trump and Narendra Modi expressed optimism, aiming to finalize the first phase of the pact by Fall 2025, covering tariffs, market access, agriculture, dairy, and MSMEs.

Fitch Revises India’s Growth Forecast from 6.5% to 6.9%

India’s GDP forecast for FY2025 was raised from 6.5% to 6.9%, driven by strong domestic demand, higher consumer spending, and supportive financial conditions.

GST reforms are seen as credit positive, expected to boost consumption and reduce risks to growth, despite global headwinds like higher US tariffs.

Medium-term outlook: India’s growth projected at 6.3% in FY2027, with the economy operating slightly above potential.

Monetary policy: The RBI may cut rates by 25 basis points by year-end.

Global forecast: Fitch projects 2.3% growth in 2026, supported by China and Eurozone momentum.

GST Council Approves Major Rate Rationalisation; Insurance & Life-saving Drugs Made GST-Free

The 56th GST Council Meeting, chaired by Finance Minister Nirmala Sitharaman in New Delhi on 3 September 2025, approved sweeping rate rationalisation reforms to benefit the common man, farmers, labour-intensive industries, and the health sector.

🔑 Key Decisions:

  • Tax Slabs Reduced → Four GST slabs merged into two by scrapping 12% & 28%, retaining 5% & 18%.
  • Insurance → All individual life & health insurance policies exempted from GST, including family floaters & senior citizen policies.
  • Medicines →
    • 33 life-saving drugs: GST reduced from 12% → NIL.
    • 3 cancer & rare disease drugs: GST reduced from 5% → NIL.
    • Other medicines: 12% → 5%.
    • Medical devices & apparatus: 18% → 5%.
  • Daily-use items → Hair oil, soap, shampoos, toothpaste, bicycles, kitchenware, etc. → 5% GST only.
  • Food items → Namkeen, noodles, chocolates, sauces, pasta, ghee, butter, coffee, etc. → 12%/18% → 5%.
    • Milk (UHT), paneer, chena, Indian breads → 0% GST.
  • Consumer durables → ACs, TVs, dishwashers, small cars & motorcycles → 28% → 18%.
  • Agriculture → All farm equipment → 12% → 5%.

Financial Impact: Revenue loss of ₹48,000 crore, but deemed fiscally sustainable.

Meeting Participation: Attended by Union Ministers, State CMs, Deputy CMs, Governors & Finance Ministers from across India.

56th GST Council Meeting in New Delhi on 3 September 2025

The 56th GST Council Meeting began in New Delhi on 3 September 2025, chaired by Union Finance Minister Nirmala Sitharaman. The two-day meeting focuses on next-generation GST reforms, including rate rationalisation and compliance simplification.

Prime Minister Narendra Modi, in his Independence Day speech, emphasized the benefits of GST and announced that the new reforms would be unveiled on Diwali 2025, reducing taxes on essential goods and providing relief to farmers, the middle class, MSMEs, local vendors, and consumers.

India’s Economy Grows 7.8% in Q1 2025-26, Beating RBI Projections

GDP Growth: India’s economy grew 7.8% in April–June 2025, up from 6.5% in Q1 2024-25.

Key Drivers:

  • Agriculture: 3.7% (vs. 1.5% last year).
  • Manufacturing: 7.7%.
  • Construction: 7.6%.
  • Services: 9.3% (vs. 6.8% last year).

RBI Outlook:

Growth exceeded RBI’s projection of 6.5% for Q1. Full-year 2025-26 forecast remains 6.5%.

US Imposes 50% Tariffs on Indian Goods from Aug 27, 2025

The U.S. Customs and Border Protection (CBP) has issued a draft notice implementing 50% tariffs on Indian imports, effective 27 August 2025, in line with President Donald Trump’s Executive Order 14329.

The move follows Trump’s earlier announcement of an additional 25% tariff, citing India’s high trade barriers and close energy and defense ties with Russia.

Women’s Employment Rate in India Nearly Doubles Since 2017-18

According to Ministry of Labour and Employment, Periodic Labour Force Survey (PLFS) 2023-24, Women workforce participation rate (WPR) nearly doubling from 22% (2017-18) to 40.3% (2023-24), and unemployment falling from 5.6% to 3.2%.

  • Rural female employment grew by 96%, while urban female employment rose 43%.
  • Women’s employability: 47.53% (2024) vs 42% (2013).
  • Postgraduates & higher: employment rate rose from 34.5% to 40% (2017-18 to 2023-24).
  • India Skills Report 2025: 55% graduates globally employable (vs 51.2% last year).
  • EPFO payroll: 1.56 crore women joined formal workforce in 7 years.
  • e-Shram portal: 16.69 crore women workers registered.
  • Female self-employment share: 51.9% → 67.4% (2017-18 to 2023-24).
  • Gender budgeting: ₹0.85 lakh cr (2013-14) → ₹4.49 lakh cr (2025-26).
  • PM Mudra Yojana: 68% loans to women (35.38 cr loans worth ₹14.72 lakh cr).
  • PM SVANidhi: 44% women beneficiaries.
  • Women-led MSMEs doubled to 1.92 cr, creating 89 lakh new jobs (FY21–FY23).

S&P Upgrades India’s Sovereign Credit Rating to ‘BBB’

On 14 August 2025, S&P Global Ratings upgraded India’s long-term sovereign credit rating to ‘BBB’ from ‘BBB-’, the first upgrade in 18 years, citing strong economic growth, better monetary policy credibility, and sustained fiscal consolidation.

  • India’s last upgrade by S&P was in 2007.
  • India’s real GDP growth averaged 8.8% (FY 2022–24), the highest in Asia-Pacific, and is projected at 6.8% annually over the next three years.
  • India’s debt-to-GDP ratio expected to decline from 83% (FY 2025) to 78% (FY 2029).
  • Other agencies’ ratings: Fitch: BBB- (since 2006), Moody’s: Baa3 (since 2020).
  • The upgrade came despite U.S. tariffs on Indian exports (50%), citing oil imports from Russia.

India Achieves 100 GW Solar PV Module Manufacturing Capacity

India has reached 100 Gigawatt (GW) of solar PV module manufacturing capacity under the Approved List of Models and Manufacturers (ALMM), up from 2.3 GW in 2014.

Prime Minister Narendra Modi hailed it as a step towards self-reliance and clean energy adoption. Union Minister Pralhad Joshi credited the success to initiatives like the Production Linked Incentive (PLI) Scheme and the 2019 ALMM Order.

Capacity surged from 8.2 GW in 2019 to 100 GW in 2025, with 100 manufacturers operating 123 units (up from 21 in 2021). This achievement supports the 500 GW non-fossil fuel target by 2030 and boosts India’s role in global decarbonization efforts.

India Bans Jute Imports from Bangladesh via Land Routes, Allows Only Through Nhava Sheva Port

On 12 Aug 2025, India banned imports of certain jute products from Bangladesh via land routes, restricting them to Nhava Sheva Seaport in Maharashtra. The ban covers bleached/unbleached woven jute fabrics, jute twine/ropes, and jute sacks/bags.

This follows earlier 2025 trade curbs and the April 9 revocation of Bangladesh’s transhipment facility (except for Nepal and Bhutan), amid diplomatic tensions after remarks by Bangladesh’s interim leader Muhammad Yunus in China.

The move aims to protect India’s jute industry, apply diplomatic pressure, and regulate import routes, impacting bilateral trade worth USD 12.9 billion in 2023–24.

RBI Keeps Repo Rate Unchanged at 5.5% – MPC Meet, August 2025

📅 RBI MPC Meeting – 4th, 5th, and 6th August 2025

The Monetary Policy Committee (MPC) of the Reserve Bank of India kept the repo rate unchanged at 5.5%, maintaining a neutral stance.

  • SDF rate: 5.25%
  • MSF & Bank Rate: 5.75%
  • Follows a 100 bps cut since February
  • Decision comes ahead of the festive season

📊 Projections:

  • FY26 GDP growth retained at 6.5%
  • FY26 inflation projected at 3.1% (down from 3.7% in June)
  • FY27 CPI expected to rise to 4.9%

India Becomes World’s 5th Largest Aviation Market in 2024

India handled 211 million air passengers in 2024, becoming the 5th largest aviation market globally, as per IATA’s World Air Transport Statistics (WATS) report.

This marks an 11.1% increase from 2023, overtaking Japan (205 million passengers).

The top aviation markets in 2024 were:

  1. USA – 876 million
  2. China – 741 million
  3. UK – 261 million
  4. Spain – 241 million
  5. India – 211 million

The Mumbai–Delhi route was ranked the 7th busiest airport pair in the world, with 5.9 million passengers. The busiest route globally was Jeju–Seoul (South Korea) with 13.2 million passengers.

MEA Defends India’s Oil Imports from Russia Amid Western Criticism

On 4 August 2025, the Ministry of External Affairs (MEA) defended India’s continued oil imports from Russia, calling U.S. and EU criticism unjustified and unreasonable.

India clarified that it began importing more oil from Russia only after traditional supplies were diverted to Europe due to the Ukraine conflict. The MEA emphasized that such imports are necessary for national interest and affordable energy for Indian consumers.

The MEA highlighted Western hypocrisy, noting that:

  • The U.S. still imports uranium, palladium, fertilizers, and other goods from Russia.
  • The EU had trade worth €67.5 billion in goods and €17.2 billion in services with Russia in 2024.
  • European LNG imports from Russia hit a record 16.5 million tonnes in 2024, surpassing previous years.

India asserted that its trade is a strategic compulsion, while others trade despite sanctions, undermining their own criticism.

U.S. Imposes 25% Tariff on Indian Imports from August 1, 2025

On 30 July 2025, U.S. President Donald Trump announced a 25% tariff on goods imported from India starting August 1, along with an unspecified penalty for India’s continued purchase of Russian oil and arms.

  • The move targets India more harshly than other countries, risking a major setback in U.S.-India trade talks.
  • Trump cited India’s high tariffs and non-monetary trade barriers, and its strong defense and energy ties with Russia.
  • India responded that it is reviewing the impact and remains committed to a fair bilateral trade deal.
  • The tariff is expected to hurt Indian exports, especially in textiles, footwear, furniture, and pharmaceuticals.
  • The U.S. has a $45.7 billion trade deficit with India; Indian exports to the U.S. were $87 billion in 2024.
  • The announcement could strain relations, already tense due to Trump’s ties with Pakistan and stalled trade negotiations.

India–UK Free Trade Agreement (FTA) 2025

India and the UK signed a landmark Free Trade Agreement (FTA) on 24 July 2025 during Prime Minister Narendra Modi’s visit to the UK, alongside UK PM Keir Starmer. The deal aims to double bilateral trade to $120 billion by 2030, creating new opportunities for exports, employment, and investment.

🔹 Key Benefits for India:

  • Zero tariffs on 99% of Indian exports to the UK
  • Boost to textiles, gems, leather, IT, auto parts, chemicals
  • Easier mobility for Indian professionals
  • Social security exemption for up to 3 years
  • Major gains for MSMEs and labour-intensive sectors

🔹 Key Benefits for the UK:

  • Gradual tariff cuts on Scotch whisky (from 150% to 40% in 10 years)
  • Reduced duties on cars, cosmetics, aerospace & medical devices
  • Access to Indian government tenders worth ₹4 lakh crore
  • Equal access to India’s financial services sector

The agreement also covers innovation, intellectual property, services, and labour rights, without compromising on India’s drug, food, or NHS standards. It will take full effect after UK Parliament ratification.

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