Structural reforms took centre stage

The year 2025 saw India unleash structural reforms across sectors from labour and taxes to atomic energy and MSMEs powering GDP growth that settled at an average of 8.2 per cent, surpassing global projections. The shift was rooted in Prime Minister Narendra Modi's Independence Day address that pledged to stay the course of reforms to ease lives and businesses. Capping the year, the PM said India had boarded the "reform express" and emerged the centre of global attention.

"The primary engine of this reform express is India’s demography, our young generation and the indomitable spirit of our people. 2025 will be remembered as a year for India when it focused on reforms as a continuous national mission. We modernised institutions, simplified governance and strengthened the foundations for long-term, inclusive growth," the PM said as the year closed. A lowdown of major reforms through the year:

On November 21, India consolidated 29 fragmented labour laws into four modern codes that cater to the 64.33 crore strong labour market, provide social security to 10 million gig workers and set a new national wage floor to raise incomes for 150-180 million low-wage workers. With this move, the formal workforce is expected to expand by 15 per cent and 50 crore women are expected to enter the labour pool.

Tax reforms: Next-gen GST, personal IT

On October 24, the four-slab GST (5%, 12%, 18% and 28%) was replaced with two slabs of 5 per cent and 18 per cent to ease the burden on households and MSMEs. Official data show record Diwali sales of Rs 6.05 trillion and the strongest decadal Navratri sales. The move estimates average GST burden reduction of 5 per cent for consumers and Rs 1 lakh crore annual savings, with SBI Research suggesting that even with rationalisation, the GST revenue in FY26 would exceed budget estimates. In a first, those with annual income up to Rs 12 lakh were exempt from income tax. Simultaneously, the 1961 Income Tax Act (saddled with 4,000 plus amendments) was replaced with a simplified Income Tax Act, 2025, to rationalise exemptions, reduce litigation and aid voluntary compliance.

Ease of business

The government reviewed quality control orders (QCOs) removing mandatory compliance for 76 product categories and identifying over 200 for deregulation easing burdens on MSMEs and exporters. Estimates suggest the removal of these QCOs will double India’s share of apparel exports from over 3 per cent ($15 billion) to over 5 per cent ($30 billion) in five years, reduce production costs in footwear and auto industries by 10-15 per cent, result in 2-5 per cent lower prices for domestic consumers for electrical, electronics, bicycles and automotive products leading to consumption boost. The definition of small companies was expanded to include firms with turnovers up to Rs 100 crore. This will reduce compliance burden for about 10,000 companies. MSME definition overhaul raising enterprise investment and turnover thresholds was effective April 1.

Foreign direct investment

The government allowed 100 per cent FDI in Indian insurance companies to invite foreign capital, enhance competition and improve customer services. The move is expected to bring 10 crore newly insured individuals into insurance coverage over the five years along with $8-12 billion in fresh FDI inflows into the Indian insurance market. The government estimates a reduction of Rs 1.5-2 lakh crore in contingent fiscal burden over a decade.

FTAs

The India-UK CETA was signed in July and the India-Oman CEPA recently to expand duty-free access for Indian goods to Western and Gulf markets. The FTA with New Zealand was concluded and the first-ever FTA with European Free Trade Association (Switzerland, Norway, Iceland and Liechtenstein) operationalised. This agreement includes a binding $100 billion investment commitment over 15 years and major tariff cuts. FTA negotiations are at advanced stages with the European Union, Mexico, Israel, Canada and the Gulf Cooperation Council.

SHANTI Act

Parliament passed the SHANTI (Sustainable Harnessing and Advancement of Nuclear Energy for Transforming India) Bill to shift nuclear policy from a state monopoly model to a regulated model allowing private participation. The Act repeals Atomic Energy Act, 1962, and subsumes the Civil Liability for Nuclear Damage Act, 2010, into a unified legislation to unlock $100-150 billion new capital from private domestic and foreign investors through 2047, leading to 14 times increase in non-fossil fuel nuclear energy generation. The Bill will enable early deployment of 0.3–1 GW of Small Modular Reactors capacity by 2033.

Repeal of old laws

The Jan Vishwas Bill decriminalised over 200 minor offences and repealed 71 old laws. The move will save up to Rs 85,000 per MSME in compliance costs and reduce over 50 man hours on an average for select businesses.

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Courtesy: The Tribune -31-Dec-2025