Economy

The Reserve Bank of India (RBI) has proposed new guidelines in a draft circular to speed up the crediting of cross-border inward remittances, mandating same-day credits for payments received during foreign exchange market hours. This initiative addresses delays in fund transfers that currently affect millions of recipients, including Non-Resident Indians (NRIs) and businesses, and aligns with broader efforts to modernize India's payment systems amid record-high remittances of $135.46 billion in FY25.

On October 29, 2025, the US Federal Reserve, in a closely divided vote, reduced its benchmark interest rate by 25 basis points to a range of 3.75-4.00 percent, marking a cautious easing to support economic growth amid uncertainties from a potential government shutdown and delayed jobs data. The central bank also announced purchases of Treasury securities to ease liquidity strains in money markets, a move aimed at preventing shortages that could ripple through global finance. This decision, dissenting from two policymakers who favored a deeper cut, comes as inflation shows signs of moderation but remains above targets, signaling the Fed's balancing act between growth and price stability—key for emerging economies like India facing capital flow volatility.

Commerce and Industry Minister Piyush Goyal announced substantial headway in India-EU Free Trade Agreement (FTA) talks following his three-day visit to Brussels from October 26-28, 2025, stating that 10 out of 20 chapters have been finalized and 4-5 more broadly agreed upon. This comes amid a 12% dip in India's September 2025 exports to the US due to steep tariffs imposed by President Donald Trump, underscoring the urgency to secure stable markets like the EU, where India's merchandise exports reached $82 billion in FY25—nearly matching the $86.5 billion to the US. Both sides reaffirmed a commitment to conclude the deal by year-end 2025, aligning with directives from PM Narendra Modi and EU Commission President Ursula von der Leyen.

Recent blockbuster deals, including Blackstone's $705 million stake in Federal Bank and Emirates NBD's $3 billion takeover of 60% in RBL Bank, have spotlighted India's banking sector as a hotbed for foreign investment. These moves, part of a $15 billion surge in 2025 mergers and acquisitions—a 127% rise from 2024—highlight surging global trust in India's economic stability and digital banking boom, even as regulators fine-tune ownership rules to balance openness with control.

The University Grants Commission (UGC) has approved 17 foreign universities to establish campuses in India, including nine from the UK announced during PM Modi's visit to the UK in October 2025. These include institutions like the University of Southampton in Gurugram and the University of York, focusing on cities like Mumbai, NCR, Chennai, and Bengaluru. This surge aligns with the National Education Policy (NEP) 2020's push for internationalization, aiming to reduce outbound student mobility costs (currently $13.6 lakh per student for UG in the UK) and attract global talent amid rising global competition in higher education.

The International Monetary Fund's (IMF) latest Fiscal Monitor report, released in October 2025, has flagged a sharp rise in global public debt, forecasting it to exceed 100% of GDP by 2029—the highest level since 1948. This comes amid growing pressures from higher interest rates and increased spending needs, raising alarms about fiscal stability worldwide. For India, with its public debt at around 81.4% of GDP, the report underscores relative resilience but warns of potential vulnerabilities if deficits persist, as echoed in analyses from The Economic Times and The Hindu.

The Reserve Bank of India released its October 2025 bulletin on October 20, highlighting positive signs in domestic demand for September based on high-frequency data like vehicle sales and GST e-way bills. It also downplayed the impact of high US tariffs on India's growth, emphasizing the role of recent GST rate cuts in boosting consumption and offsetting external pressures, amid ongoing global trade tensions.

After back-to-back good monsoons in 2024 and 2025, India is facing a surplus in key crops like rice, wheat, and soyabean, leading to wholesale prices dropping well below the minimum support prices (MSP). This has reversed the earlier focus on curbing high food inflation that hurt consumers, now putting pressure on farmers with low returns, prompting potential policy changes to support the farm sector.

India and Brazil have agreed to expand the existing Preferential Trade Agreement between India and the MERCOSUR trading bloc, which includes Brazil, Argentina, Uruguay, and Paraguay. This decision came during a meeting in New Delhi between Commerce Minister Piyush Goyal and Brazilian Vice President Geraldo Alckmin, aiming to increase trade volumes and reduce barriers amid growing economic partnerships.

RBI Governor Sanjay Malhotra spoke at the annual meeting of the IMF and World Bank in Washington DC, where he called on other central banks to focus on Central Bank Digital Currencies (CBDCs) instead of stablecoins for handling payments across borders. This comes as more countries are accepting stablecoins, and it shows India's push for safer digital money options that protect national control over currency, especially when private cryptos could affect economic policies.

China has expanded its export controls on rare earth elements and technologies, adding five more elements to its restricted list effective October 9, 2025, amid escalating US-China trade tensions. This move has prompted US Treasury Secretary Scott Bessent to call for support from allies like India against China's actions, potentially accelerating stalled India-US trade negotiations as Indian officials visit Washington this week to address the 50% tariffs imposed on Indian exports due to Russian oil imports, highlighting shared concerns over critical minerals supply chains.

The Trump administration's 50% tariffs imposed in August 2025 led to a 12% sharp decline in India's merchandise exports to the US in September, but overall exports grew 6.74% to $36.38 billion, mainly driven by growth to China and UAE, while a surge in gold, silver, and fertilizer imports pushed the trade deficit to a one-year high of $31.15 billion, highlighting global trade challenges and India's diversification strategy.