The Year of Resilience

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Good Morning. The year 2025 started off with bad news for the Indian economy. But it has also been a rather busy year, with exports showing signs of recovery, domestic consumption receiving a GST push and much more. The year to come will test the true growth story.

Meanwhile, Indian government’s orders landed a much-needed windfall for small enterprises. In other news, the biogas industry is attracting big bucks due to policy support as well as demand.

India Passed 2025’s Resilience Test, Now Comes The Tough Part

The year 2025 has provided a masterclass in reality. 

When the United States administration unleashed a 25% ‘reciprocal’ tariff,  followed by an additional 25% penalty for India’s purchase of Russian crude, the consensus among the smart set was that the Indian export engine would stall.

Add this to the ongoing immigration crackdown including the latest salvo that is effectively locking out H1B holders, and it makes for a two-pronged attack on goods and services.

As the year draws to a close, the data does not tell a story of collapse, but that of a gritty, entrepreneurial adaptation. 

The Trade Surprise 

India is surprising both its critics and its champions. One example of this resilience is visible in the latest figures from the Global Trade Research Initiative (GTRI). 

Exports to the US between May and November 2025 followed a distinct V-shaped trajectory: a precipitous decline through September followed by a robust, if partial, recovery by November. 

This pattern held true for a staggering 85% of India’s export categories. 

Gems and jewellery, for instance, plunged from $500.2 million in May to $202.8 million in September, only to climb back to $406.2 million last month. While still 19% below the May baseline, the rebound suggests that the ‘death of the Indian exporter’ was possibly exaggerated, at least for now. 

The story is mirrored in pharmaceuticals, garments, and even low-margin commodities like seafood. 

While adaptation is the watchword, there has been a price to survival. 

Profitability and margins for US-bound goods are razor-thin or non-existent and the same competitive pressures are haunting exporters as they pivot to new markets.

For many exporters and manufacturers, keeping the machines running is equally important, as it appears. And hoping for a resolution to the trade tiff which by the looks of it, is clearly extending into early next year.

Necessity, the mother of pragmatism

The good news is that the tariff rhetoric from Washington has notably cooled in recent weeks. 

President Trump has largely shelved the tariff cudgel, though he grumbled quite recently about Indian rice ‘dumping’.  

There is an irony at work. As US consumer prices creep upward, the administration has begun cutting duties on agricultural imports to preserve affordability. 

Necessity, it seems, is the mother of trade pragmatism.

Domestically, Indian businesses have managed steady, if tepid growth, in recent quarters. 

Markets have been disappointed by the lack of ‘fireworks’, but given that there are other structural challenges within the Indian economy, this was not a bad year after all, ending with a fairly strong set of macro numbers, including low inflation and low interest rates.

Much of this is due to the nimble policy work by the Indian government. 

An across-the-board GST rationalisation, which brought down prices; and a managed depreciation of the rupee — now hovering near 91 to the dollar — acted as natural, if incomplete, buffers against the 50% tariff wall.

There have been other steps to make life easier for exporters and other ‘reform’ moves like a new labour code. All of this helps. Though the fact that the Government is seemingly working hard to resolve this is good enough news for many Indian businessmen.

FDI Roars Back 

Perhaps the most startling development of 2025 is the surge in Foreign Direct Investment (FDI). After a dismal 2024, FDI has roared back, anchored by a massive $67 billion commitment from the American tech triumvirate — Google, Amazon and Microsoft — predominantly in cloud and AI infrastructure. 

Meanwhile, Global Capability Centres (GCCs) continue to proliferate, moving up the value chain into knowledge-intensive sectors like pharmaceutical R&D and oil exploration.

India’s inherent strengths in services have only been bolstered in a post-Covid world where geography is increasingly irrelevant. However, the shadow of AI looms large, and the true test of service resilience lies in the year ahead.

From Resilience To Growth 

India remains on a delicate footing. 

Its geopolitical standing has been tested by a Washington administration that appears to have singled it out. 

While tech giants are doubling down, others remain cautious. China has sprinted ahead in AI and electric vehicles, attracting portfolio investors who continue to pull their capital out of Dalal Street.

For emerging market investors, India today stands as a defensive alternative — a hedge against the ‘red-hot’ but volatile AI stocks of East Asia. 

The gains of 2025 provide a comfortable base, but the path to becoming the global power New Delhi aspires to be'; remains a long and an arduous climb. 

Resilience is a fine start; now comes the hard part of true growth.

Indians Stranded Over Visas

Thousands of Indians stranded after US abruptly advanced scheduled H1-B visa interviews. This comes after rolling out stricter background checks and social media vetting.

Flashpoint: The most affected visa applicants are those who had interview dates from December 15 onwards, as many of these appointments were rescheduled by several months, as per a report by Moneycontrol. India’s US Embassy issued an advisory asking applicants not to visit consulates as per original schedules.

What’s Next: As per immigration attorneys, the delays have disrupted careers, separated families. Now many workers are exploring temporary remote arrangements with their employers.

Biogas Draws Big Money

India’s biogas sector is set to attract around Rs 5,000 crore in investments in FY27, driven by policy support and rising demand for compressed biogas (CBG), according to the Indian Biogas Association (IBA). Industry players expect fresh capital to flow into new CBG plants, waste-to-energy projects and supporting infrastructure over the next two years.

Catch Up Quick: India currently has over 100 operational CBG plants, with many more under construction. IBA says that the government’s push to blend CBG with natural gas, lower GST rates, and guaranteed offtake through oil marketing companies has improved project viability and investor confidence. 

Outcome: The sector also benefits from the availability of agricultural and organic waste, aligning with climate goals, rural income generation and reduced dependence on imported fossil fuels.

Big Bank, Bigger Mortgages

India’s largest lender SBI’s home loan book is expected to cross Rs 10 trillion in FY26, said SBI Chairperson Challa Sreenivasulu Setty to PTI, citing strong and sustained demand for housing loans.

Context: SBI’s loan book already crossed Rs 9 trillion in outstanding home loans and expects momentum to continue as borrowers return to the market. The bank reported around 14% year-on-year growth in its mortgage portfolio, driven largely by end-user demand rather than speculative buying. 

Implications: Stable interest rates, rising household incomes and improved housing supply have supported borrowing appetite.

✍️ Zinal Dedhia, Kudrat Wadhwa, Shubhangi Bhatia, Katya Naidu | ✂️ Rohini Chatterji | 🎧 Joshua Thomas

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