Good news continues to flow for India’s economy, markets and ordinary citizens as the country enters a phase of sustained growth, tax relief and reform-driven optimism. Union Finance Minister Nirmala Sitharaman’s most recent Union Budget was widely seen as a major relief for India’s middle-class families. In one decisive move, the government exempted individuals earning up to ₹12.75 lakh per annum from any income tax liability. This significant concession applies exclusively to taxpayers opting for the new income tax regime. With nearly 80 per cent of current income tax payers already having shifted to the new system, expectations are steadily building that the forthcoming Union Budget may finally bring an end to the older, more complex tax regime.
All eyes are now firmly fixed on the February 1, 2026 Budget, where the Finance Minister is expected to make another major economic announcement. Interestingly, Sitharaman herself has hinted at what could be next. Following the substantial income tax relief extended earlier, the GST Council implemented what has popularly been described as ‘GST 2.0’, which came into effect on September 22. This reform proved to be a major boost for both consumers and markets, as the tax burden on a wide range of everyday consumer goods was significantly reduced. The Finance Minister has described the current phase as unprecedented in India’s economic history, noting that no previous year has witnessed such extensive relief across income tax and indirect taxation. She has also made it clear that the government’s next focus area will be customs duty, or import taxes. Sitharaman indicated that her goal is to make customs taxation more attractive, simpler and globally competitive. As a result, concrete announcements on customs duty reforms are widely expected in the next Union Budget.
Customs tax reform is being positioned as the next big chapter in India’s ongoing economic transformation. Just as income tax and GST have been simplified and digitised, import duties are also likely to be made more transparent and business-friendly. Over the past two years, customs duties on several items have already been rationalised. However, Sitharaman has underlined that this is only the beginning and that more substantial changes are in the pipeline. She has expressed confidence that India’s GDP growth will not fall below 7 per cent this year, reinforcing optimism about the country’s macroeconomic fundamentals.
While the Finance Minister has not specified which products will see changes in import duties, concerns remain among certain industries, particularly automobile manufacturers, about India’s relatively high taxes on vehicle imports. Domestic and international players alike are keenly watching whether the Centre will offer some form of relief, balancing the need to protect domestic manufacturing with the imperative of integrating more deeply into global supply chains.
At the global level, several strong and positive developments are supporting Indian equities and sustaining investor confidence.One major positive factor has been the strengthening of India-Russia ties. Traditionally anchored in defence cooperation and crude oil trade, the relationship has now been elevated to cover a much broader spectrum of economic engagement. Prime Minister Narendra Modi’s recent meeting with Russian President Vladimir Putin resulted in agreements aimed at expanding bilateral trade beyond its current value of $68.7 billion. The ambitious target set, $100 billion in trade, underscores India’s growing stature as a global economic partner. These decisions are expected to provide fresh momentum to Indian defence and manufacturing companies.
Domestic monetary policy has also provided a strong tailwind to the markets. The Reserve Bank of India’s unexpected quarter-percentage-point cut in the repo rate has buoyed sentiment across key sectors, including banking, FMCG and automobiles. This timely move has complemented improved growth projections from both the RBI and international rating agencies. India’s economy clocked an impressive growth rate of 8.2 per cent in the previous quarter, comfortably exceeding projections and reinforcing confidence in the country’s growth trajectory. Global cues have also been supportive. US markets have returned to positive territory, helped in part by data showing that private companies in the US laid off around 32,000 workers last month. While such job losses are unfortunate, financial markets interpreted the data as increasing the likelihood of an interest rate cut by the US Federal Reserve. Expectations of looser monetary policy sparked gains across Wall Street, lifting global market sentiment in the process.
The US Federal Reserve is scheduled to announce its monetary policy decision on December 10, and a quarter-percentage-point rate cut is widely anticipated. In the most recent trading session, major US indices including the Dow Jones, Nasdaq and S&P 500 rose by up to 0.31 per cent. Riding on both global optimism and the RBI’s rate cut, Indian markets posted strong gains, with the Sensex rising 447.05 points, or 0.52 per cent, to close at 85,712, and the Nifty advancing 152.70 points, or 0.59 per cent, to settle at 26,186.45.
Fitch raises India’s growth forecast
Further reinforcing the positive narrative, Fitch Ratings has revised its growth outlook for India upward. The agency now expects the Indian economy to grow by 7.4 per cent in the current fiscal year, an increase from its earlier estimate of 6.9 per cent. Fitch attributed this upward revision primarily to stronger domestic consumption, supported by income tax relief and GST rationalisation. Looking ahead, Fitch has projected GDP growth of 6.4 per cent for the next fiscal year, accompanied by an average inflation rate of just 1.5 per cent. These estimates follow the release of the robust 8.2 per cent growth figure for the second quarter, once again highlighting the resilience and momentum of India’s economy. Taken together, these developments underline India’s steady march towards sustained, inclusive and globally competitive growth.
