New Delhi: How was the year 2025 for the Indian economy? It faced some hiccups but still had several clear milestones to boast about.
Despite the US imposing
50% tariffs on Indian goods, the growth of our economy continued. The inflation has eased, and tax collections have brought down the fiscal deficit. Also, India has signed new trade agreements with the United Kingdom, the European Free Trade Association, New Zealand, and Oman.
India outpaces Japan in nominal GDP
India edged past Japan in nominal GDP in 2025, according to the International Monetary Fund’s estimates. As a result, India has become the fourth-largest economy in the world, and these, along with positive assessments from the World Bank and the IMF, defined the Indian economy this year.
Rise and rise of India
Notably, 2025 has also been the year when India became the world’s fourth-largest economy in nominal terms. IMF’s World Economic Outlook estimates that India’s GDP will reach $4.187 trillion, edging past Japan’s $4.186 trillion. It shows India’s sustained growth trajectory despite uncertainty in the global market.
US tariffs could not halt momentum
The tariffs imposed by US President Donald Trump could not halt India’s pace of economic growth in 2025. The IMF has stated that despite the tariffs on Indian exports, the economy of our country will grow at an average of 6.6 per cent in FY26 with inflation remaining stable, and several reforms protecting the economy against external shocks.
Also, inflation has eased with the softening of the Consumer Price Index. Inflation moved well below the Reserve Bank of India’s target band in 2025. Food inflation has become negative while core inflation, excluding food and fuel, has remained sticky.
India and trade diplomacy
Also, India’s fiscal position improved, and both direct and indirect tax collections increased in 2025. India also emerged as an important player in trade diplomacy, with a Comprehensive Economic and Trade Agreement with the United Kingdom, a Trade and Economic Partnership Agreement with the European Free Trade Association—comprising Switzerland, Norway, Iceland, and Liechtenstein, an FTA with New Zealand, and a Comprehensive Economic Partnership Agreement with Oman. However, it must be noted that the Indian rupee weakened steadily against the US dollar.
However, global forecasts for India have remained positive, with the World Bank’s Global Economic Prospects and IMF projections showing the country’s economic growth. One can only hope that in 2026, the Indian economy will touch newer heights.
