Newspaper Summary - 031225

 The sources provide a comprehensive overview of India’s Monetary and Financial Markets as of December 2025, highlighting areas of volatility, strategic regulatory reforms, and shifts in corporate finance, all set against the backdrop of global trade challenges and ongoing domestic economic development.

Here is a discussion of the key monetary, currency, and financial market developments and their regulatory context:

I. Monetary Policy and Currency Markets

Rupee Performance and RBI Stance

The Indian rupee (INR) has faced significant pressure, reaching a record intraday low of 90.00 against the US dollar and settling at an all-time closing low of 89.95 on Tuesday, December 2, 2025. So far this calendar year, the rupee has depreciated by 5.2% against the dollar, making it one of the most undervalued emerging market (EM) currencies.

Key factors driving the currency slide include a very strong US dollar, India-specific trade shocks, softer foreign inflows, FPI selling in the equity market, and sustained importer demand. The depreciation is also linked to the Reserve Bank of India (RBI) allowing more currency flexibility this year, intervening less aggressively than in earlier bouts of volatility.

• Valuation: The rupee’s real effective exchange rate (REER), calculated by the Bank of International Settlement against 64 currencies, hit 94.95 on October 30. A value below 100 indicates the rupee is undervalued. This undervaluation benefits exporters, such as the IT and pharmaceuticals sectors.
• RBI Intervention: With the rupee nearing the psychologically crucial 90-to-a-dollar mark, the focus shifts to how firmly the RBI manages this zone. The central bank must remain active below 90, as sustaining above this level could rapidly accelerate depreciation towards 91.00 or higher, potentially triggering unnecessary volatility.
• Interest Rate Outlook: Given the CPI inflation is at a record low of 0.25 per cent, coupled with strong GDP growth (8.2% in Q2 FY26), the RBI has been able to tolerate some depreciation. However, market attention is now fixed on the upcoming Monetary Policy Committee (MPC) decision, with some economists seeing scope for a further 25-50 basis points (bps) easing in the repo rate, while a Mint poll indicated that nine out of 13 economists expected the rates to be held steady.

II. Banking Sector and Credit Dynamics

Systemic Importance and Stability

The RBI reaffirmed that State Bank of India (SBI), HDFC Bank, and ICICI Bank continue to be identified as Domestic Systemically Important Banks (D-SIBs). These banks are perceived as "Too Big To Fail" (TBTF), which requires them to maintain an additional Common Equity Tier-1 (CET1) buffer, with SBI prescribed a requirement of 0.80 per cent of its risk weighted assets.

Public sector banks (PSBs) have seen a significant improvement in asset quality, with the Gross Non-Performing Assets (NPAs) ratio declining to 2.51 per cent in June 2025, down from 9.27 per cent in March 2016.

Deposit Rate Transmission Challenge

State-owned lenders have flagged concerns to the RBI regarding compressed interest margins resulting from the linking of floating-rate loans to an external benchmark (like the repo rate).

• Asymmetry: When the RBI cuts the repo rate, loan rates adjust immediately, but deposit rates are fixed and can only be reduced on fresh deposits or renewals. Banks reported passing on 100 bps of rate cuts on the asset side but only achieving a 30 bps reduction on deposit rates, leading to a 70-bps spread compression.
• Liquidity Management: Experts suggest that the RBI could assist transmission by injecting significant liquidity into the banking system, potentially requiring ₹2 trillion in liquidity to maintain core liquidity above a 1% threshold by March 2026.

Credit Information and Financial Inclusion

The use of credit information, crucial for India’s lending-led growth and financial deepening, is facing regulatory scrutiny regarding its scope beyond lending decisions.

• Exclusion Risks: Extending the use of credit scores to unrelated areas like employment or renting raises ethical concerns and risks trapping small borrowers, particularly students with defaulted education loans (8% NPA as of FY2025), in a cycle of exclusion.
• Asymmetry in Default Treatment: A moral asymmetry exists, where large corporate defaulters might "wash their sins" under frameworks like the Insolvency and Bankruptcy Code (IBC) and return to the market, while small borrowers face severe, life-altering consequences for defaults often beyond their control.

III. Capital Markets and Regulatory Developments

Market Performance and Indices

Stock markets saw declines on Tuesday, December 2, 2025, primarily due to profit-booking, especially in heavyweight financial stocks like HDFC Bank and ICICI Bank.

• Index Overhaul: The National Stock Exchange (NSE) finalized a major overhaul of the Nifty Bank Index methodology to align with SEBI's weight concentration norms. The index will expand to 14 constituents with fixed weight caps for the top three banks (19%, 14%, and 10%).
• Impact of Revisions: This re-shuffle is projected to result in cumulative inflows for Yes Bank ($140 million) and Union Bank of India ($109 million), but outflows for HDFC Bank ($322 million) and ICICI Bank ($348 million).

SEBI Regulatory Overhaul

The Securities and Exchange Board of India (SEBI) is preparing for a far-reaching revision of regulations affecting mutual funds, stockbrokers, and corporate disclosures.

• Mutual Fund Norms: SEBI proposed capping brokerage and transaction costs charged by funds beyond the Total Expense Ratio (TER) and scrapping the extra five bps charge over the exit load to enhance transparency in costs and charges. Asset management companies (AMCs) have criticized these suggestions, fearing reduced income and curtailed research work.
• Stock Broker Rules: SEBI plans to streamline outdated regulations, formalize definitions for algorithmic and proprietary trading, and lower compliance complexity for intermediaries.

Corporate Finance and IPO Activity

Corporate fundraising saw a significant revival in Q3 FY26 (July-September), increasing by 58.1% year-on-year to ₹7.5 trillion. Net profits emerged as the dominant source of funding (40% of funds raised), suggesting corporations are prioritizing robust, debt-light balance sheets.

• IPO Momentum: The Meesho IPO anchor book faced controversy due to the allotment of a large share tranche to SBI Funds Management. Meanwhile, Swiggy is planning to raise approximately $1.1 billion through a Qualified Institutional Placement (QIP).
• Fintech & Cross-Border Payments: Fintechs like Razorpay and Cashfree Payments have secured the RBI’s Payment Aggregator-Cross Border (PA-CB) license, enabling the compliant onboarding of global platforms for India-specific payment methods like UPI and RuPay.

IV. Broader Regulatory and Legal Context

Insolvency and Corporate Accountability

The overall recovery rate under the Insolvency and Bankruptcy Code (IBC), as of March 31, 2025, stood at 33% of admitted claims. Recommendations for improving IBC processes include setting up an advance ruling mechanism to reduce litigation and providing transparent "no dues" certificates immediately upon completion of a resolution plan.

The Supreme Court upheld a SEBI fine on Reliance Industries Ltd (RIL) for violating fair disclosure norms concerning the Jio-Facebook deal, emphasizing the higher onus on large entities to meticulously comply with disclosure principles. Conversely, a separate Supreme Court order relating to the Sandesara brothers case raised concerns by annulling criminal and regulatory proceedings upon payment of ₹5,100 crore, despite legislation intended to prevent the compromise of economic crimes through financial settlement.

Digital Economy Governance

The Finance Minister emphasized the need for global coordination and co-operation to manage new challenges arising from the digitalization of the economy, the emergence of new financial products, and evolving structures of beneficial ownership. She asserted that innovation must be balanced with accountability to maintain the strength and credibility of financial systems.

Furthermore, the new Digital Personal Data Protection Rules 2025 (DPR25) mandates that banks, as extensive data fiduciaries, must strengthen their data management systems to protect highly sensitive customer data (KYC, credit reports, etc.), under the threat of penalties up to ₹50 crore.

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Analogy: The current state of India's Monetary and Financial Markets is like a ship navigating choppy international waters (strong dollar, trade shocks) while undergoing a complete engine overhaul (regulatory reforms by SEBI and RBI). The ship is stable, driven by strong internal momentum (high corporate profits and growth), but the captains (RBI and PSBs) are keenly monitoring the fuel levels (deposit rates) and making difficult maneuvers (less aggressive currency intervention) to ensure the internal machinery runs efficiently (rate transmission) and fairly (SEBI transparency, credit fairness).

The sources reflect that corporate activities and funding in India, as of December 2025, are characterized by strong internal financing, dynamic capital market shifts, strategic sectoral investments, and intense regulatory scrutiny focusing heavily on corporate governance, accountability, and the ease of doing business.

Here is a comprehensive discussion drawing from the sources:

I. Corporate Funding Landscape and IPO Momentum

Revival in Fundraising and Internal Accruals

Corporate fundraising activity saw a significant revival in the quarter ending September 2025 (Q3 FY26), showing a 58.1% year-on-year growth, reaching an estimated ₹7.5 trillion. This represents the fastest growth rate since June 2023.

• Dominance of Profits: The primary source of funding for non-financial companies remains net profits, which accounted for nearly 40% (₹3 trillion) of all funds raised during the quarter. This high reliance on internal accruals reflects a strategic preference among corporations to remain relatively "debt-light" and prioritize robust balance sheets, a lesson learned from previous borrowing cycles.
• Bank Credit Rebound: While outstanding bank credit declined in the preceding quarter, it saw a resurgence in Q3 FY26, surging by a substantial ₹2.4 trillion, contributing about 31% of the total funds mobilized by non-financial enterprises.

IPOs, QIPs, and Venture Capital

The capital market saw significant activity, particularly among digital companies:

• Large Offerings: Food deliverer Swiggy is preparing to raise as much as ₹10,000 crore ($1.1 billion) from institutional investors through a Qualified Institutional Placement (QIP) as early as the following week.
• IPO Controversy (Meesho): The anchor book for the Meesho IPO, planned to raise ₹5,421 crore ($603 million), faced a setback after major investors reportedly pulled out due to a substantial share allocation to SBI Funds Management. The IPO, which will make Meesho the first large multi-category e-commerce marketplace to list, is perceived as being "priced fully" in the absence of a clear path to profitability.
• Fund Closures: Fireside Ventures closed its fourth consumer-focused fund at $253 million (₹2,265 crore). Notably, this fund saw a shift towards a more diverse investor base, with 50% of the capital coming from global limited partners (LPs), including US university endowments and sovereign wealth funds like ADIA and ICD.
• Debt/Equity Raising: Hindustan Construction Company (HCC) approved raising up to ₹1,000 crore via rights equity shares. IndiGrid acquired an inter-state transmission (ISTS) project for an enterprise value of ₹372 crore, funded through a mix of equity, internal accruals, and debt.

II. Strategic Corporate Activity and Sectoral Shifts

Focus on Manufacturing, Green Energy, and Defence

Corporate strategy is heavily focused on long-term national priorities like manufacturing and critical infrastructure:

• National Mandate: Anant Goenka, the new FICCI President, stated that the organization’s main priority is to raise the share of manufacturing in GDP from 15% to 25%. This growth is expected to be pushed by consumption growth resulting from recent GST rate cuts and income tax exemptions, which should stimulate private capital expenditure (capex).
• Green Transition: L&T Group is pursuing a two-fold strategy: strengthening its traditional hydrocarbon Engineering, Procurement, and Construction (EPC) business while expanding into low-carbon and green segments such as renewables, CCUS, and green hydrogen-ammonia. The company previously announced plans to invest $2.5 billion in green energy over 3-5 years. However, attracting global capital for green hydrogen requires the Central government to establish a systematic long-term framework.
• Critical Electronics and Defence: JSW Defence launched a $90 million project to establish a military drone manufacturing facility in Hyderabad in partnership with US-based Shield AI. Separately, Syrma SGS commenced construction of a printed circuit board (PCB) manufacturing plant in Andhra Pradesh.
• Global Expansion and Partnerships: PVR INOX Pictures is focusing sharply on distributing international content, having distributed 42 international titles out of 78 films released between April and November. PepsiCo has signed a global pact with the Mercedes F1 team.

Talent Retention Strategies

Firms are implementing aggressive measures to retain talent, especially those hired from elite institutions:

• Clawbacks and Bonuses: Companies are incorporating clawback provisions into campus hiring contracts, requiring employees to forfeit compensation (like a joining bonus) if they leave before a stipulated period (e.g., TVS Motor Ltd’s ₹300,000 joining bonus includes a three-year clawback).
• Equity and Deferred Pay: High-frequency trading (HFT) firms offer performance and joining bonuses. Other methods include Restricted Stock Units (RSUs) with vesting periods (Texas Instruments) and deferred bonuses (Publicis Sapient). Razorpay and OYO Rooms’ Esops are also becoming more attractive as their IPO timelines approach.

III. Regulatory Developments and Corporate Accountability

The larger context of economic and regulatory development centers on balancing growth with accountability and improving the business environment.

Judicial and Regulatory Accountability

The Supreme Court delivered significant rulings impacting corporate governance and financial integrity:

• Fair Disclosure (RIL Case): The Supreme Court upheld a SEBI penalty of ₹30 lakh on Reliance Industries Ltd (RIL) and two compliance officers for failing to make a prompt clarification to the stock exchange regarding the Jio-Facebook deal, which had been reported in the media. The Court stressed the "bigger onus" on large entities to meticulously comply with disclosure principles, even regarding market speculation.
• Compromise of Economic Crimes (Sandesara Case): A different Supreme Court order raised concerns by directing the quashing of all criminal and regulatory proceedings, including those under PMLA and the Black Money Act, upon the deposit of a consolidated sum of ₹5,100 crore. This set a worrying precedent as it allowed economic crimes, which are typically non-compoundable under recent legislation, to be compromised via financial settlement. The opaque nature of the settlement figure, derived through a sealed cover process, was highlighted as undermining public justice.
• Insolvency (IBC): The overall recovery rate under the Insolvency and Bankruptcy Code (IBC) stood at only 32.8% of admitted claims as of March 31, 2025. A parliamentary committee recommended improvements, including introducing an advance ruling mechanism to reduce unnecessary litigation, and issuing transparent "no dues" certificates immediately post-resolution to help revitalized debtors start with a clean slate.

Regulatory Overhaul and Ease of Business

The government is pushing deregulation to reduce the burden on enterprises:

• Regulatory Thicket: Efforts have begun to reduce the regulatory burden, with the government withdrawing several Quality Control Orders (QCOs) and moving towards trust-based governance.
• SEBI Reforms: SEBI is preparing the most sweeping revision of regulations in decades, covering mutual funds, stockbrokers, and disclosure norms. This includes simplifying outdated rules and formalizing modern trading activities like algorithmic and proprietary trading.
• Digital Data Protection: The implementation of the Digital Personal Data Protection Rules 2025 (DPR25) mandates that banks, as extensive data fiduciaries, must strengthen their data management systems to avoid penalties up to ₹50 crore for breaches.
• Global Coordination: Finance Minister Nirmala Sitharaman urged the need for global coordination to deal with economic governance challenges arising from the digitalization of the economy, the emergence of new financial products, and evolving beneficial ownership structures, emphasizing that innovation must be balanced with accountability.

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The current phase of corporate India is like a juggling act where companies are fueling massive growth using their own cash reserves (high profits) while simultaneously contending with ambitious, yet complex, strategic goals (green energy, defense manufacturing) and navigating a judicial and regulatory system that is tightening accountability (SEBI fines) while attempting to loosen bureaucratic burdens (QCO withdrawals, IBC reforms). The success of this corporate growth hinges on the ability of the regulatory system to finalize reforms that foster competition without sacrificing systemic fairness and transparency.

The sources indicate that India's Technology and Digital Regulation landscape, as of December 2025, is defined by an aggressive push towards enhanced security and digital sovereignty, significant regulatory attempts to govern online content, and mandatory data protection norms for financial entities, all while the IT and digital sectors undergo strategic development and face global competition.

Here is a discussion of the key aspects drawn from the sources:

I. Digital Security, Surveillance, and Content Regulation

Mandatory Cybersecurity App and Privacy Concerns

A major development is the controversy surrounding the government’s attempt to mandate the use of the ‘Sanchar Saathi’ app on mobile devices.

• DoT Directive and Intent: The Department of Telecommunications (DoT) directed smartphone manufacturers to pre-install the Sanchar Saathi app on all new devices and push it through remote updates on older ones, ensuring the app is "readily visible and accessible" and its functionalities are "not disabled or restricted". Telecom Minister Jyotiraditya Scindia clarified that the app's use is voluntary and users can delete it if they wish. Scindia maintained that the app is necessary for security, helping to disconnect 1.45 crore mobile connections and trace about 20 lakh stolen phones.
• Privacy Violations: Pro-privacy groups and activists have condemned the move. They contend that requiring the app to be permanently pre-installed and non-disabled is intrusive. They argue that the persistent link between a device's unique IMEI and the user’s identity could be exploited for continuous surveillance, unauthorized profiling, or hyper-targeted marketing if the data were shared with private players.
• Contradiction with Data Protection: Critics highlight a legal paradox, noting that the mandatory installation, which demands blanket permissions for sensitive data like call logs and SMS, exposes the "hollowness" of India's privacy framework, especially in light of the recently notified Digital Personal Data Protection (DPDP) Rules, 2025. The government is accused of potentially weaponizing Section 17 exemptions of the DPDP Act to bypass safeguards and institutionalize "surveillance-by-design".
• Market Response: Smartphone manufacturer Apple reportedly does not plan to comply with the DoT mandate to pre-install the app. Critics suggest the app’s adoption should be driven by its utility, like the voluntary use of the DigiYatra or Digi-Locker apps, rather than coercion.

Mandatory SIM-Binding for Messaging Apps

In a related security measure, the DoT issued directives requiring messaging apps to link services continuously to the SIM card installed on the user’s device (SIM-binding), along with forcing periodic six-hour logouts for web/desktop versions.

• Industry Response: Zoho-owned Arattai is working toward compliance, seeing it as a "security-first initiative". However, the Broadband India Forum (BIF) criticized the mandates, arguing they offer limited incremental benefit against sophisticated fraud but could severely inconvenience users and disrupt services.
• User Impact: BIF noted the negative impact on travelers and NRIs who rely on Wi-Fi, professionals needing uninterrupted web-client access, and users employing multi-SIM setups. BIF also raised technical feasibility questions concerning OS-level restrictions (especially on iOS), dual-SIM, and eSIM complexities. They recommended stronger SIM-KYC enforcement instead.

Judiciary and Social Media Filtering

The Supreme Court has triggered concern by suggesting the Centre consider pre-screening all social media posts, potentially through an independent agency, to create a preventive framework against online harm like hate speech, defamation, or misleading content before it spreads.

• Conflict with Precedent: This idea runs counter to the Supreme Court’s landmark 2015 ruling (Shreya Singhal v. Union of India), which emphasized that intermediaries must act only upon receiving a court or government order, thereby striking down vague restrictions on online speech.
• Risk of Censorship: Mandatory pre-screening risks sliding into sweeping censorship due to the potential for arbitrary enforcement and a resulting "chilling effect," especially when defining terms like "fake" or "anti-national".
• Global Model: The sources suggest India should look to models like the European Union’s Digital Services Act (DSA), which mandates rigor and rapid action against harmful content while avoiding the pre-censorship of user speech.

II. Digital Economy Governance and Accountability

Data Protection for Financial Institutions

Following the recent implementation of the Digital Personal Data Protection Rules 2025 (DPR25), banks are mandated to align their extensive data management systems to protect highly sensitive customer data.

• Scope and Risk: Banks are repositories for huge amounts of digital personal data (over 300 crore deposit accounts, 32 crore loan accounts), including KYC, AML checks, credit reports, and transaction histories. The sources warn that failure to implement reasonable security measures could lead to significant financial penalties, with a maximum penalty of up to ₹250 crore for security failures and up to ₹50 crore for other breaches of the Act.
• Compliance Needs: Compliance requires strengthening internal systemic controls, enforcing consent and transparency, establishing clear standard operating procedures (SOPs), and regular training for staff.

Fintech and Digital Payments

The fintech sector continues to drive innovation, particularly in cross-border payments:

• PA-CB Licenses: Fintech companies like Razorpay and Cashfree Payments have secured the RBI’s Payment Aggregator-Cross Border (PA-CB) license, allowing them to provide compliant payment infrastructure for international businesses operating in India.
• UPI/RuPay Expansion: This licensing enables global platforms to onboard and offer India-specific payment methods like UPI and RuPay without necessarily requiring a local entity. Cashfree’s partnership with JP Morgan will strengthen its import transaction processing and settlement infrastructure under RBI regulations.

Need for Global Digital Coordination

Finance Minister Nirmala Sitharaman stressed the need for global coordination and co-operation to manage new economic governance challenges arising from the digitalization of the economy.

• She emphasized that confidentiality and cybersecurity are challenges that no single country can address alone, demanding coordination, trust, and timely information exchange between jurisdictions.
• Sitharaman added that technology and artificial intelligence offer opportunities to make sense of information efficiently, but innovation must always walk hand-in-hand with accountability to ensure systems maintain strength and credibility.

III. IT Sector Performance and Technology Adoption

IT Services and Talent Landscape

The Indian IT majors experienced sequential market share gains in Q2 FY26, led by Infosys, HCL Tech, and Cognizant, especially in the Americas and Europe, although their aggregate share remains lower year-on-year compared to global rivals.

• Challenge of AI: Industry commentary suggests that when Indian IT loses annual market share, it indicates that "big transformation budgets" related to Smart GenAI and cloud-migration deals are landing elsewhere. Maintaining market share relies on capability relevance in areas like cloud computing, AI, and cybersecurity.
• Acquisitions: Wipro completed its $375 million acquisition of Harman’s Digital Transformation Solutions (DTS) business unit, incorporating around 5,600 employees to strengthen its Engineering Global Business Line. Tata Communications acquired a 51% stake in Commotion Inc., an AI-native enterprise SaaS platform, to accelerate its own AI adoption and journey towards becoming an AI-first firm.
• Hiring Competition: Startups and fintechs (like Razorpay, Fractal Analytics) are aggressively competing with tech giants and High-Frequency Trading (HFT) firms for top engineering talent at IITs, offering high salaries, bonuses, and Esops.

AI Development and Global Competition

The race for Artificial Intelligence dominance is noted in the sources:

• Apple’s AI Strategy: Apple, having largely been "on the sidelines" of the AI boom, is depending on Indian-origin engineer Amar Subramanya to help navigate its AI future, following a management revamp.
• OpenAI's "Code Red": OpenAI CEO Sam Altman declared a "code red" effort to improve the quality of ChatGPT, indicating pressure from competitors and a need to improve speed, reliability, and personalization.
• Global Divide: A UN report warned that AI could widen the gap between developed and developing countries, leading to a possible "great divergence" in economic performance, skills, and governing systems, calling for policies to mitigate this impact.

Digital Infrastructure and Manufacturing

India is making strategic investments in critical electronics manufacturing and digital service delivery:

• PCB Manufacturing: Syrma SGS commenced construction of a Printed Circuit Board (PCB) manufacturing plant in Andhra Pradesh to produce a full spectrum of PCBs.
• Enterprise Tech: Workday, an enterprise AI platform for HR and finance, is significantly expanding its footprint in India, opening a new data center in the India region (running on AWS) for provisioning customers from December 2025.
• Census Digitization: The upcoming Census 2027 will be conducted through digital means, using mobile Apps and providing an online provision for self-enumeration.

The current phase is a complex balancing act: regulating the pervasive digital space to ensure security and fair usage (SIM-binding, Sanchar Saathi) while upholding constitutional rights (privacy debates), aggressively adopting AI for economic efficiency (Tata Comm acquisition), and strengthening digital infrastructure (DPR25 compliance for banks). This tension between state security, enterprise innovation, and user privacy forms the core of India’s digital regulatory environment in late 2025.

The sources paint a detailed picture of India’s International Relations and Trade environment in December 2025, which is characterized by rising global protectionism, significant currency depreciation driven by international factors, strategic diplomatic engagement with key partners (Russia and the US), and a domestic regulatory drive aimed at boosting self-reliance and global competitiveness.

Here is a discussion of the major themes in International Relations and Trade:

I. Global Trade Environment and Protectionism

Massive Surge in Global Trade Barriers

The sources highlight an alarming increase in global protectionism, which directly impacts India’s trade position. According to the World Trade Organization (WTO) Director-General’s latest annual overview:

• Trade Affected: Global goods imports affected by new tariffs and other trade measures increased more than four times between mid-October 2024 and mid-October 2025. Imports worldwide worth $2,640 billion (or 11.1% of total imports) were affected by tariffs and other trade measures introduced during this period.
• Total Affected Trade: Including similar measures on exports, the total trade affected was worth $2,966 billion, which is more than three times the value recorded in the preceding period.
• Need for WTO Reform: WTO Director General Ngozi Okonjo-Iweala stressed that WTO members should use these trade disruptions as an opportunity to advance long-overdue reforms of the WTO to safeguard trade.

Impact of US Tariffs on India

The US administration, under President Trump, imposed reciprocal tariffs ranging from 10% to 41% on most of its trade partners earlier this year.

• Direct Hit: The US imposed a 25% reciprocal tariff on India, along with an additional 25% penalty for India buying Russian oil.
• Export Decline: These tariffs affected India’s shipments of over 50% of items to the US. As a result, India's goods exports to the US fell 11.9% year-on-year to $5.5 billion in September 2025, the first full month of tariff imposition, and declined by 8.6% to $6.3 billion in October 2025.
• Affected Sectors: US imports from India, including labor-intensive sectors like textiles, gems & jewelry, shrimps, and engineering goods, declined due to these new tariffs. However, diversification of markets has helped certain exports like gems and jewelry and marine products to grow recently.
• Trade Deal Uncertainty: Lingering uncertainty over a potential Indo-US trade deal is contributing to fragile investor sentiment. FICCI President Anant Goenka believes that challenges on the trade front will be resolved in a "very" short period of time.

II. Geopolitical Strategy and Bilateral Relationships

Strategic Autonomy and Foreign Policy

FICCI President Anant Goenka asserted that India follows a policy of strategic autonomy, forging partnerships that serve its national interest rather than being dictated by third parties.

Relations with Russia (Focus on Trade Insulation)

During Russian President Vladimir Putin’s visit to India, Moscow sought discussions on an "architecture" to insulate their bilateral trade from outside interference.

• Bilateral Trade Security: Russia emphasized that India and Russia must secure their trade relationship to ensure mutual benefit, especially concerning interference from third countries.
• Trade Imbalance: Kremlin spokesperson Dmitry Peskov acknowledged New Delhi’s concerns over its large trade deficit with Russia, which widened to about $59 billion in FY25, and stated that Moscow is jointly looking at possibilities of increasing imports from India to fix the imbalance.
• Sanctions and Oil Trade: India’s purchases of Russian crude oil are expected to decline for a “brief period” due to Western sanctions. Moscow plans to boost supplies and use sophisticated technology to avert the impact of Western sanctions on its oil production sector, assuring that the decline will be temporary. Indian refiners have reportedly stopped buying Russian oil from sanctioned entities, while others are in negotiation to buy from non-sanctioned entities.
• Currency Architecture: Local currency trade between India and Russia is viewed as very important as it protects trade and the sovereignty of both countries.
• Crude Import Diversification: Despite Russian crude accounting for a significant portion of India's imports (around 36.30% in November 2025), sanctions are expected to drag Russian cargoes down by roughly one-third in December 2025. India has actively sought diversification, with imports from the US and Africa rising to record levels in November 2025.
• Russian Investment Interest: Russia's largest bank, Sberbank, expressed interest in partnership and participation in large-scale infrastructure projects in India.

Cooperation with the US and Western Partners

India is seeking to strengthen its ties with Western partners across several strategic sectors:

• Bilateral Cooperation: India’s ambassador to the US, Vinay Kwatra, held “fruitful conversations” with US lawmakers on strengthening bilateral cooperation in energy, defence, and trade.
• Defence and Technology: JSW Defence launched a $90 million project to establish a military drone manufacturing facility in Hyderabad in partnership with US-based Shield AI, transferring technology for the manufacture of VBAT Unmanned Aerial Systems. India is also procuring additional satellite-linked Heron MK II drones under emergency provisions from an Israeli defence industry source.
• Agriculture Technology: US agritech major Corteva Agriscience is investing in developing hybrid wheat varieties specifically tailored for Indian conditions, calling India a "top priority" market.
• Global Financial Governance: Finance Minister Nirmala Sitharaman urged the need for global coordination and co-operation to manage challenges arising from the digitalization of the economy, new financial products, and evolving beneficial ownership structures, emphasizing that cybersecurity and confidentiality demand coordination and timely information exchange between jurisdictions.

III. Currency and Foreign Investment Dynamics

Rupee Valuation and Global Trade Shocks

The rupee's depreciation is heavily linked to international pressures:

• Undervalued Currency: The Indian rupee (INR) is described as one of the most undervalued emerging market (EM) currencies, having depreciated by 5.2% so far this year. The Real Effective Exchange Rate (REER) against 64 currencies hit 94.95 on October 30, with a value below 100 indicating undervaluation.
• Drivers: The depreciation is primarily driven by a very strong US dollar, coupled with India-specific trade shocks and softer foreign inflows. The rupee began sliding below the 100 REER level with the onset of the trade war.
• Capital Flows: Fragile investor sentiment due to Foreign Portfolio Investor (FPI) selling in the equity market is a continuous pressure point. FIIs offloaded equities worth ₹3,642.30 crore on Tuesday.
• Benefit to Exporters: The depreciating currency benefits exporters, particularly the IT and pharmaceuticals sectors.

Global Capital and Green Energy Demand

India's ability to attract global capital is critical, particularly for new strategic sectors:

• Green Hydrogen Framework: To rapidly scale up the production of green hydrogen and ammonia and attract global capital in this segment, the Central government needs a systematic long-term framework.
• VC Investment: Fireside Ventures closed its fourth fund with 50% of capital commitments coming from global limited partners (LPs), including sovereign wealth funds like the Abu Dhabi Investment Authority (ADIA) and the Investment Corporation of Dubai (ICD), indicating sustained international interest in Indian brands.
• Foreign Holding in PSBs: Foreign shareholding in five out of 12 public sector banks (PSBs) decreased at the end of FY25, though the government has no plan to raise the threshold on foreign holding.

IV. Trade Policies and Corporate Competitiveness

Deregulation and Export Focus

India is actively working to reduce regulatory burdens and boost competitiveness:

• Quality Control Order Rollbacks: India has begun one of its most sweeping standards overhauls, withdrawing 22 Quality Control Orders (QCOs) in the past month (15 in mid-November and 7 recently). The withdrawal of QCOs was undertaken in the public interest to remove potential bottlenecks for downstream manufacturers and ease compliance.
• Trade Agreements (FTAs): Utilization levels of India’s new Free Trade Agreements (FTAs) with Australia and the UAE have been better than past trade agreements. FICCI aims to improve trade and supply chain, and leverage FTAs better, including eliminating non-tariff barriers.
• Exporter Mentality: Anant Goenka urged the Indian industry to stop looking for protection and sops, and instead focus on thinking globally and investing to enter global markets. He lamented the lack of a single Indian product brand that has gone global.
• Export Promotion: FICCI recommended increasing the outlay for the RoDTEP (Remission of Duties and Taxes on Exported Products) scheme, which currently stands at ₹18,000 crore, to provide benefits to affected sectors and MSMEs.

Sectoral Trade Dynamics

• Rare Earths and EVs: India is reworking its electric mobility strategy due to supply chain shocks, including the rare-earth magnet crunch. Chinese rare-earth magnet companies are seeking workarounds to China's export restrictions to maintain sales to Western buyers, though foreign buyers are developing alternative sources outside China.
• Import Vulnerabilities (Arecanut): Despite being self-sufficient in arecanut production, India saw significant imports (42,236.02 tonnes in 2024-25) led by countries like Bangladesh and Sri Lanka. Imports from Least Developed Countries (LDCs) enjoy zero customs duty under the DFQF (duty-free quota-free) preferential trade scheme, which domestic farmers argue nullifies protection and causes price crashes.
• Agrochemicals and Exports: The agrochemical industry's revenue growth this fiscal is set to rely on a rebound in exports, with over 65% of export revenue accruing from Latin America, supported by stable global supply chains and improving demand. The US market remains steady, with 80-85% of Indian shipments exempt from tariffs.
• Diamond Trade: A Belgian government decision to permit foreign diamond sorters and polishers is unlikely to have a major impact on the Indian cut and polish trade due to India's established supply chain, unmatched cost efficiency, and large skill availability.

The sources provide a detailed perspective on Socio-Economic & Sectoral News in India as of December 2025, highlighting profound developments in manufacturing ambitions, digital governance's impact on employment, critical issues in rural economics and food supply, and strategic shifts in major industries like healthcare, entertainment, and consumer goods.

Here is a discussion of the key socio-economic and sectoral developments:

I. Socio-Economic Issues and Justice

Exclusionary Impact of Credit Information

A critical socio-economic issue raised is the widening use of credit information beyond its original purpose of assessing financial contracts. The expansion of credit scores to unrelated domains such as employment decisions, renting, and matrimony raises ethical and economic concerns.

• Vulnerability of Small Borrowers: This overreach disproportionately affects small borrowers, notably students with defaulted education loans (where approximately 8% of outstanding loans are classified as Non-Performing Assets as of FY2025). If these young, often first-generation graduates, are blacklisted by employers due to poor credit scores, they are trapped in a cycle of exclusion.
• Moral Asymmetry: The sources highlight a moral asymmetry where large corporate defaulters can "wash their sins" and return to the market via frameworks like the IBC, while small borrowers face severe, life-altering consequences for defaults. The misuse of credit scores undermines the fairness and transparency intended by India’s financial inclusion agenda.

Rural Economic Distress and Price Deflation

Despite optimistic GDP figures, the rural economy faces significant headwinds due to widespread price deflation in the agriculture sector.

• Nominal Income Stagnation: While real GDP growth in the farm sector was 3.5% in Q2 FY26 (July-September), the nominal growth (at current prices) plummeted to just 1.8%, a sharp decline from 7.6% a year prior. This indicates that the agriculture sector, which contributes about 14% to GDP and employs nearly 46% of India’s workforce, is experiencing stagnant incomes.
• Price Crash: Prices of most consumed perishable crops, such as onions and potatoes, were lower year-on-year by 73% and 43%, respectively, as of the end of November. Prices of crops where Minimum Support Price (MSP) is announced, such as cotton and soybean, are also trading significantly lower than the MSP in wholesale markets.
• Impact on Consumption: Stagnant nominal farm incomes could directly impact household spending in rural areas, threatening the recent trend where rural FMCG volume growth had outpaced urban growth for seven consecutive quarters until September 2025.

Digital Surveillance and Privacy Rights

The government’s directive to mandate the installation of the 'Sanchar Saathi' app on mobile devices has sparked widespread concerns about digital surveillance and privacy. Pro-privacy groups argue that requiring permanent pre-installation of an app that demands blanket permissions for sensitive data like call logs and SMS exposes the "hollowness" of India's privacy framework and risks weaponizing state power for surveillance-by-design, contradicting the spirit of the new Digital Personal Data Protection Rules 2025 (DPR25).

II. Sectoral Developments and Growth Priorities

Manufacturing Ambition

A core focus of India’s economic development remains the massive scaling of the manufacturing sector. FICCI President Anant Goenka stated that a main priority is to raise the share of manufacturing in GDP from 15-17 per cent to 20-25 per cent over time.

• Strategy: This ambition is supported by expected consumption growth stemming from GST rate cuts and income tax exemptions, which is anticipated to push private capital expenditure (capex) and raise capacity utilization levels. Goenka urged industry to focus on thinking globally and investing in R&D rather than relying on government protection or sops.
• Defence and Electronics: JSW Defence launched a $90-million military drone manufacturing facility in Hyderabad in partnership with US-based Shield AI. Syrma SGS commenced construction of a new Printed Circuit Board (PCB) manufacturing plant in Andhra Pradesh.

Infrastructure and Energy Transition

Strategic infrastructure and energy projects continue to draw focus and investment:

• Green Energy: L&T Group is expanding into low-carbon and green segments (renewables, green hydrogen-ammonia, CCUS) and sees Saudi Arabia becoming one of its largest and most consequential markets by 2030. However, attracting global capital for green hydrogen requires the Central government to establish a systematic long-term framework. IndiGrid acquired an Inter-State Transmission (ISTS) project in Karnataka for ₹372 crore, aimed at evacuating solar power from the Gadag Solar Energy Zone.
• Logistics and Urban Mobility: Intercity smart mobility platform zingbus aims to expand its electric bus fleet to 1,000 vehicles amid rising demand, though it highlights the need for a supportive ecosystem for bus operators to transition to EVs. The government plans to launch a ride-hailing mobility app called ‘Bharat Taxi’, operated by a co-operative society, to free commercial vehicle drivers from dependency on private companies. Separately, Ola Consumer launched a non-AC ride category pan-India to offer value-driven fares and reach a larger base of riders.

Healthcare and Pharmaceuticals

The healthcare sector is seeing significant capacity building and consolidation:

• Hospital Expansion: Rainbow Children’s Medicare, which runs the Rainbow Children’s Hospitals chain, is steadily expanding, especially in tier-2 locations, and plans to infuse ₹1,000 crore over three years. The company noted a lot of activity in the healthcare sector, including major multi-specialty chains lining up big expansion plans and heightened private equity activity leading to consolidation.
• Pharmaceuticals: Biocon Biologics reached a settlement agreement with Amgen Inc., allowing it to commercialize two biosimilars, Vevzuo and Evfraxy, in Europe and the rest of the world starting December 2, 2025.

Media, Entertainment, and Consumer Trends

Consumer-facing sectors are adapting to market shifts:

• Entertainment Distribution: PVR INOX Pictures is focusing sharply on distributing international content to Indian screens, having distributed 42 international titles out of 78 films released between April and November.
• Consumer Goods Premiumization: French spirits major Pernod Ricard India is shifting its focus to premium alcohol, having sold its mass-market Imperial Blue whisky brand. The move frees resources for higher-margin categories and aligns with a strategic shift toward premiumization, following India’s growth as a world fastest-growing alcohol market.
• Fashion Trends: Go Colors, a listed bottom-wear focused company, has struggled as leggings, once half of its business, now account for only about 35% of sales due to evolving tastes and widening garment silhouettes. This illustrates the peril of building a business on a single, long-lasting trend.
• Advertising Industry: The global merger of Omnicom and Interpublic Group is set to lead to job cuts of over 4,000 people globally, with the impact in India expected mainly in finance, HR, and IT roles.

IV. Social Data, Demographics, and Labor

Census Digitization

The government announced that the Census 2027 will be conducted in two phases between April and September 2026 and then again in February 2027. The census will be conducted digitally, using mobile apps, and include an online provision for self-enumeration.

Job Growth and Labour Reform

FICCI expects job growth to happen as utilization levels go up and private capex comes in, despite headwinds from AI affecting the IT sector and productivity improvements in factories. The new FICCI President vehemently defended the new labour codes, calling them "absolutely necessary" and a big benefit to the working population.

Talent Retention

To combat the tight hiring environment, firms are using clawback provisions in campus hiring, requiring forfeiture of compensation (like joining bonuses) if employees leave early. Startups and fintechs, including Razorpay and Fractal Analytics, are competing intensely with tech giants and High-Frequency Trading (HFT) firms for top IIT talent, offering higher salaries, bigger bonuses, and more Esops.

V. Regional Economic Disparities

Jammu & Kashmir Fiscal Stress

Official data shows that GST revenues in Jammu & Kashmir registered a steep decline for the second consecutive month in November 2025, contracting 14% year-on-year. This signifies deepening stress in consumption and business activity across key sectors like trade, transport, hospitality, and construction. The decline is attributed to region-specific shocks, including damage to horticulture, and a steep drop in tourism following a terror attack.

Cyclone Damage in Andhra Pradesh

The government of Andhra Pradesh pegged the total loss from Cyclone Montha at ₹6,356 crore. The most severely affected sectors included agriculture and allied sectors (₹271 crore) and roads and infrastructure (₹4,324 crore).

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In sum, the socio-economic and sectoral picture of India in late 2025 is one of stark contrast: a powerful drive for industrial and digital transformation (manufacturing boost, AI adoption, Green Hydrogen framework) is running alongside deep-seated socio-economic challenges (rural deflation, credit exclusion, and privacy concerns related to state technology mandates). The success of India’s economic reforms hinges not just on achieving the 25% manufacturing goal, but also on implementing regulation that manages digital disruption and addresses the widening fairness gap for small citizens and rural populations.