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Informist, Monday, Oct. 27, 2025

 

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--Fin min: GST rationalisation may mitigate some impact of external risks 
--Fin min: Global uncertainties present downside risks to growth outlook 
--Fin min: Global uncertainties warrant caution, to affect external demand 
--Fin min: FY26 growth outlook strong supported by domestic demand, low CPI 
--Fin min: Expect price stability barring adverse weather, supply shocks 
--Fin min: Sept trade data show signs of export destinations diversification 
--Fin min: Demand conditions strengthened on GST reforms, festive season 
--Fin min: India econ gained momentum Q2 despite tariff levy by US in Aug 
--CONTEXT: Fin min releases Monthly Economic Review for September 
--Fin min: India econ gaining momentum amidst uncertain global outlook
 

 

NEW DELHI – The domestic economy continues to gain momentum on robust demand across rural and urban India, despite the US levying higher tariffs, the finance ministry said in its Monthly Economic Review for September on Monday. "The momentum gained in Jul-Sept of 2025-26 (Apr-Mar) is expected to continue in the upcoming months, driven by resilient domestic economic activity and stronger demand conditions supported by GST reforms," according to the finance ministry. The Ministry of Statistics and Programme Implementation will announce GDP for the Jul-Sept quarter on Nov. 30.

 

This assumes significance in the backdrop characterised by economic and trade policy uncertainty, the report said. "India's economy gained momentum in Q2 FY26. This is particularly significant, as the United States imposed higher tariffs on India in August," it said.

 

The US imposed 50% tariff on Indian goods in August and there is significant uncertainty about these tariffs as New Delhi and Washington engage in negotiations for a trade deal.

 

According to data released by the government earlier this month, US remains the largest export destination for India despite the high tariffs. India's exports to US rose to $45.82 billion in Apr-Sept from $40.42 billion a year ago. India's overall exports in Apr-Sept were $413.30 billion against $213.68 billion a year ago.

 

"India's trade performance remains robust, with strong services exports effectively offsetting the merchandise trade deficit. Even as trade deal negotiations with the US continue, merchandise trade data for September 2025 presented early evidence of diversification of export destinations. The increase in gross foreign direct investment inflows signals the country's appeal as an attractive investment destination," the finance ministry said in the report.

 

The finance ministry said the implementation of various growth-enhancing structural reforms including GST rate rationalisation are expected to mitigate some of the negative impacts of these external challenges. "Recent policy measures, including GST rate rationalisation, are expected to keep inflation moderate while supporting consumption demand. The overall prices are likely to remain soft in FY26," it said.

 

The GST Council on Sept. 3 decided to overhaul the indirect tax regime by consolidating the four-slab GST structure of 5%, 12%, 18%, and 28% into a two-slab structure of 5% and 18%. The council also introduced a new GST rate of 40%, to be imposed on sin and luxury goods. The changes were implemented from Sept. 22.

 

The finance ministry noted that inflation has remained well under control, supported by deflation in food categories. "The prices of non-food and non-fuel items remained stable, with core inflation coming in at 4.6% in September 2025. Barring shocks stemming from adverse weather events and supply chain disruptions, price stability is expected to prevail," it said.

 

India's headline CPI inflation fell to an over eight-year low of 1.54% in September because of the statistical effect of a high base and fall in food prices. "Nevertheless, global uncertainties warrant caution and will continue to affect external demand, presenting downside risks to the growth outlook," it said.  End

 

Reported by Sagar Sen

Edited by Ashish Shirke

 

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