India’s financial system continued to display resilience in July 2025, sustaining momentum at the same time as world commerce confronted uncertainties from tariff disputes and geopolitical tensions. In response to the Finance Ministry’s Month-to-month Financial Overview, robust home demand and sturdy macroeconomic fundamentals underpinned development, although warning was warranted amid protectionist tendencies overseas that had been starting to affect India’s commerce outlook.
The report highlighted that world commerce had already began to really feel the consequences of upper duties and coverage unpredictability, which dampened enterprise sentiment. The World Commerce Group (WTO) revised its world merchandise commerce development forecast for 2025 right down to 0.9% from an earlier 2.7%, noting that the total impression of tariff hikes would possible grow to be clearer within the latter half of 2025 and into 2026. According to this, the Commerce Coverage Uncertainty Index rose 17% in July, reflecting heightened issues amongst companies and buyers. With america being a key vacation spot for Indian exports, any extended tariff pressures there may progressively have an effect on shipments.
Regardless of these exterior headwinds, India’s exterior sector remained steady. Exports of products and companies rose 4.5% year-on-year in July to $68.3 billion. Merchandise exports expanded 7.3%, pushed by a sturdy 12.7% improve in non-petroleum, non-gems and jewelry exports, whereas companies exports grew modestly by 1.4%. Imports climbed 6.1% to $80 billion, led by a 6.9% rise in non-oil imports, reflecting robust home consumption. This pushed the commerce deficit greater to $11.7 billion, up from $10.1 billion a 12 months earlier.
To mitigate tariff-related challenges, the federal government pursued a calibrated commerce coverage. The India-UK Complete Financial and Commerce Settlement (CETA), efficient from July, is anticipated to double bilateral commerce by 2030 whereas safeguarding delicate sectors. Moreover, the just lately concluded India-EFTA settlement and ongoing negotiations with the EU, US, and different companions intention to diversify markets and strengthen provide chains, reflecting a broader strategic method.
On the home entrance, high-frequency indicators pointed to sustained financial exercise. E-way invoice technology reached document ranges, manufacturing PMI hit a 16-month excessive, and companies PMI continued to sign growth. Rural and concrete consumption remained robust, supported by rising FMCG gross sales, sturdy UPI transactions, and regular vehicle demand. A beneficial monsoon additional boosted rural spending energy. Inflation eased considerably, with headline CPI falling to 1.6% in July as a result of softening meals costs, remaining under the RBI’s decrease tolerance band. The ministry famous that this supplied further flexibility for fiscal and financial measures to help development.
Whereas the general outlook remained constructive, the evaluation flagged dangers from tariff developments. Though latest U.S. tariffs had a restricted speedy impact, their broader impression on provide chains and funding may emerge over time. However, India entered this era from a place of relative energy, aided by a sovereign score improve by S&P to BBB, continued capital expenditure, and upcoming reforms—together with GST changes and state-level deregulation—that are anticipated to draw funding, decrease borrowing prices, and improve competitiveness.
The ministry concluded that whereas world uncertainties and tariff pressures posed challenges, India’s resilient home demand, diversified commerce technique, and ongoing reforms supplied a strong basis to navigate these headwinds and maintain development.