India Economic and Regulatory Environment - Newspaper Summary

 The Indian Economic and Regulatory Environment in October 2025 is significantly shaped by a turbulent Global Economic and Regulatory Landscape, characterized primarily by geopolitical tensions, protectionist trade shifts, and the accelerating worldwide technological transformation fueled by Artificial Intelligence (AI).

Global Economic and Regulatory Context (Oct 2025)

The international landscape is defined by profound changes, particularly stemming from the conflict in Ukraine and the resulting U.S. policy shifts:

1. U.S. Sanctions on Russian Oil Giants: The U.S. administration imposed substantial, full blocking sanctions on Russia’s two largest crude oil suppliers, Rosneft and Lukoil, aiming to severely restrict Moscow's ability to fund the war. These sanctions are aimed at cutting the companies off from the international financial system and specifically risk imposing secondary sanctions on foreign financial institutions, including Indian refineries, if they continue to facilitate transactions with these entities. The European Union has also adopted a new sanctions package targeting Russian energy infrastructure, including a full transaction ban on Rosneft PJSC and Gazpromneft. This geopolitical move immediately caused Brent crude futures to surge.
2. Trade and Tariffs: Global trade is experiencing an "unravelling," with President Trump's return bringing tariffs that threaten to approach Depression levels. The U.S. administration has been pressuring India to halt Russian oil imports, previously slapping an additional 25% tariff on India for buying Russian energy, raising the total levy on Indian goods to 50%. Despite this pressure, the two nations are negotiating a bilateral trade deal that could potentially reduce the U.S. tariff rate faced by Indian exporters to 15-16%.
3. The AI Arms Race: The world is caught in an AI arms race between the U.S. and China, capturing billions in investment. This fierce competition drives top AI researchers to work exceptionally long hours, sometimes 80 to 100 hours a week, aiming for "superhuman intelligence". This global transformation is mirrored by high demand in India for AI-led consulting talent. However, the push for Agentic AI browsers is viewed with caution by some, noting that failure to address current AI weaknesses could lead to a loss of human trust, a regulatory backlash, or an "AI winter".

India Economic Environment

India's economy demonstrates resilience and growth momentum amidst the global volatility:

• GDP Growth Outlook: Consultancy firm Deloitte forecasts India's FY26 GDP growth to average 6.8%, projecting a range of 6.7–6.9%. This forecast was raised from an earlier 6.5% estimate, driven by buoyant domestic demand, steady policy reforms, and a revival in private investment. Consumption strengthened rapidly in September and October, fueled by festive purchasing and Goods and Services Tax (GST) cuts.
• Fiscal Discipline Concerns: The Reserve Bank of India (RBI) is actively stressing the importance of fiscal discipline, urging states like Bihar and Maharashtra to adhere to Fiscal Responsibility and Budget Management (FRBM) targets and cautioning against pre-election populist spending. This warning comes as rising market borrowings by states and global uncertainty widened the spread between 10-year government bonds and state development securities (SDLs) to 106-112 basis points in early September.
• Impact on Oil Import Bill: The U.S. sanctions on Rosneft and Lukoil present a significant economic challenge for India, which has historically relied on discounted Russian oil (accounting for about 35% of total imported crude since FY23). Analysts project that the necessity of replacing Russian crude with market-priced oil from the Middle East and other regions will increase India's crude oil import bill by 2%, equating to approximately $2.7 billion. Russian oil flow to major Indian refiners is expected to drop near zero following the sanctions.

India Regulatory and Policy Reforms

The regulatory environment is undergoing modernization and targeted strengthening in various sectors:

• Companies Act Amendments: The government is preparing amendments to the Companies Act for the winter session of Parliament, aiming to make the law more business- and digital-friendly. The proposed changes seek to accelerate certain mergers, simplify compliance, facilitate electronic document service, and enable administrative restoration of struck-off companies, ultimately to help Indian companies become globally competitive and enhance the country's ranking in global business indices.
• Banking Sector Modernization: The Banking Laws (Amendment) Act, 2025, includes key provisions set to take effect on November 1, which will allow customers to designate up to four nominees for bank accounts and lockers, either simultaneously or successively, to simplify and clarify claim settlements.
• Pharmaceutical and Healthcare Regulation: India plans to introduce strict governmental control over advanced medical treatments such as gene therapy, stem cell-derived products, and xenografts by amending the Drugs Rules, 1945. This regulatory push is motivated by the safety and quality assurance needed for India's rapidly growing cell and gene therapy market, which is projected to reach $2.51 billion by 2033.
• Labour and Social Security: The Employees' Provident Fund Organisation (EPFO) has revised withdrawal guidelines, aiming to simplify access for essential needs like illness, marriage, education, housing, or job loss. These changes include allowing multiple withdrawals and setting a uniform one-year service tenure, striking a balance between members' needs and retaining funds for retirement.

Key Sectoral Dynamics and Investments

Specific sectors reflect strategic shifts driven by global and domestic policy priorities:

• Trade Access/WTO: India demonstrates global leadership in trade policy toward developing nations by offering one of the most extensive market access schemes to Least Developed Countries (LDCs) under the WTO framework. India's Duty-Free Tariff Preference (DFTP) Scheme covers 94.1% of tariff lines, surpassing China and the European Union among developing economies, fostering integration into global value chains for key LDC export sectors like textiles and agricultural commodities.
• Clean Energy and Automobile Shift: India's top automakers have set an ambitious goal to achieve over half of their sales through electric vehicles (EVs), hybrids, and CNG-fueled cars by 2030. This transition is driven by stricter forthcoming fuel efficiency norms and growing demand for cleaner vehicles. EVs accounted for 3% of passenger vehicle sales in FY25, while CNG accounted for 19%. Supporting this transition, there is a push for a "Battery Aadhaar" or foundational data backbone to tag and track batteries across their life cycle, crucial for maximizing resource efficiency and meeting the unprecedented demand for battery energy storage systems (BESS) required by India's decarbonization goals.
• Technology and AI Investment: The global focus on AI is boosting investment in Indian firms, such as Uniphore, an AI platform for business that raised $260 million in Series F funding from global majors including Nvidia, AMD, Snowflake, and Databricks, bringing its total funding to $870 million. This funding will accelerate innovation for its Business AI Cloud. Furthermore, major consulting firms, led by Accenture, are heavily recruiting from India's top B-schools (like IIM-Bangalore), preparing to advise global clients on AI-driven business transformation.
• Disinvestment and Capital Receipts: The Central government is on track to exceed its Miscellaneous Capital Receipts (MCR) target for FY26 (pegged at ₹47,000 crore), expecting proceeds to top ₹50,000 crore due to planned offers for sale (OFS) and strategic stake sales in public sector units (PSUs), including the anticipated sale of IDBI Bank. This strategy involves valuing assets highly and timing transactions strategically rather than merely meeting headline targets.