October 2025 captured an economy firing on multiple cylinders even as some real-time indicators flashed amber. Festive-season consumption and the first full month of GST 2.0 delivered record Diwali trade and auto sales, while Q2 FY26 growth accelerated to 8.2%, firmly positioning India among the world’s fastest-growing large economies. At the same time, inflation fell to near-zero, GST collections remained buoyant, labour force participation continued to rise and non-fossil power consolidated a slim majority in installed capacity. The main pressure point came from the external sector, where record gold and silver imports widened the merchandise trade deficit, even as services exports and new policy initiatives on RDI, exports and rare earth magnets sought to future-proof the growth story.
I. Key Highlights:
Festive Consumption Surge & GST 2.0 Dividend: Diwali–Dhanteras retail trade is estimated at ~₹6.05 lakh crore vs ~₹4.25 lakh crore last year, showing a broad-based demand rebound. Auto retail hit ~40.2 lakh units (40.5% YoY), led by PVs and two-wheelers, indicating GST 2.0 cuts plus festive sentiment have clearly unlocked pent-up demand.
Strong Q2 Growth, Investment-Heavy Expansion: Real GDP grew 8.2% in Q2 FY26, with H1 at 8.0% vs 6.1% a year earlier, driven by strong services, manufacturing and construction. PFCE (7.9%) and GFCF (7.3%) growth point to a more investment and production-led cycle instead of a purely consumption-led one.
Steady Tax Buoyancy Amid Rate Rationalisation: Gross GST collections were ₹1.96 lakh crore in October 2025 (4.6% YoY; April–October up 9.0%). Modest domestic GST growth but strong GST on imports and ~₹1.69 lakh crore net GST with ~40% higher refunds signal a broadening base, faster refunds and comfortable fiscal space.
Industrial Output Pause, Investment Pockets Intact: IIP grew just 0.4% YoY and Eight Core Industries were flat in October, due to fewer working days and softer power demand. Yet Infrastructure/Construction Goods, Capital Goods, metals, cement and autos stayed in positive territory, showing the capex and construction cycle remains intact.
Ultra-Low Inflation, Food in Deep Deflation: CPI inflation dipped to 0.25% in October 2025, driven by ~5% food deflation; WPI was –1.21% with manufactured products at 1.54%. This boosts real incomes for consumers but compresses farm-gate prices and rural margins.
Labour Market Expansion with Rising Female Participation: LFPR rose to 55.4% and WPR to 52.5% in October, with unemployment stable at 5.2%. Female LFPR (~34.2%) and WPR (~32.4%), driven by rural women, underline a structural broadening of who is participating in growth.
External Sector Pressures, Precious Metals as Swing Factor: The merchandise trade deficit hit a record ~US$41.7 billion as exports fell and imports jumped, heavily influenced by a spike in gold and silver imports. Strong services exports (~US$38.5 billion) and a large services surplus partly cushioned the overall external position.
Big Push for RDI, Exports and Strategic Tech: The ₹1 lakh crore RDI scheme under ANRF provides patient capital for frontier tech, crowding in private investment in areas like AI, semiconductors and clean energy. The Export Promotion Mission and CGSE backstop export credit to support the USD 2 trillion export target by 2030, especially for MSMEs and first-time exporters.
Securing Critical Technologies: Rare Earth Magnets & Critical Minerals: The ₹7,280 crore REPM scheme targeting 6,000 MTPA capacity aims to cut dependence on Chinese magnets crucial for EVs, wind and defence. Along with the National Critical Mineral Mission, it links upstream mineral security with domestic manufacturing and energy-transition goals.
Coal Correction & Green Power Transition: Coal output fell 8.3% YoY and power-sector dispatches dropped sharply, reflecting lower demand and high stocks. Even as total generation dipped, renewables and hydro grew strongly, with non-fossil capacity now just over half of installed power capacity.
Investment-Led Manufacturing Backbone: Despite weak headline IIP, steel, cement, construction goods and autos continued to grow, showing infrastructure and housing demand is still strong. Combined with high growth, low inflation, higher labour participation and rapid green capacity addition, this supports the narrative of an economy in structural transition, with external and rural stresses as key risks.
The Economic Pulse
This section is dedicated to an overview of macro-fiscal performance. Each major topic is covered as a chapter, allowing for a deep dive into specific economic indicators.
I. Chapter I: Deepavali–Dhanteras 2025: First Festive Month Under GST 2.0
Snapshot -
Diwali trade at a new peak: Total Diwali retail trade is estimated at ₹6.05 lakh crore, up from about ₹4.25 lakh crore last year, signalling a strong broad-based consumption recovery.
Auto festive boom: Total auto retail of 40.2 lakh vehicles in October, growing 40.5% YoY, marks one of the strongest festive months on record for the automobile sector.
PV and 2W as the main drivers: Passenger vehicle retail of nearly 5.57 lakh units (11.4% YoY) and two-wheeler retail of nearly 31.5 lakh units (51.8% YoY) highlight the combined impact of GST 2.0 cuts and festive demand.
Commercial vehicles reflect underlying activity: Commercial vehicle sales of nearly 1.08 lakh units, growing by 17–18% YoY, point to healthy goods movement and infrastructure-linked activity.
Gold remains a festive anchor: Gold imports of nearly $14.7 billion in October, up sharply from $4.9 billion a year ago, show that high prices have not dented the cultural and savings-led demand for gold.
In Detail -
The jump in total Diwali retail trade from around ₹4.25 lakh crore last year to ₹6.05 lakh crore this year underlines the strength of domestic demand despite a challenging global environment. The increase is not confined to one category: consumer durables, electronics, apparel, jewellery, home improvement and everyday FMCG items all contributed to the higher turnover. This suggests that households are willing to spend across the income spectrum, with both middle-income and higher-income segments participating in the festive rebound.
Total auto retail touching 40.2 lakh units in October, with 40.5% YoY growth, shows how quickly demand responds when sentiment, policy and seasonality align. GST 2.0 rate rationalisation for smaller vehicles, combined with festive discounts and easier financing, reduced effective acquisition costs just as the peak buying season began. Passenger vehicles at nearly 5.57 lakh units and two-wheelers at nearly 31.5 lakh units tell a story of both urban aspiration and rural mobility improving at the same time.
The 51.8% YoY growth in two-wheeler sales is particularly important as a proxy for rural and small-town confidence, where two-wheelers are often the first big-ticket discretionary purchase. At the same time, 17–18% growth in commercial vehicle retail of nearly 1.08 lakh units reflects robust activity in freight, construction, logistics and mining. Together, these numbers suggest that the real economy beyond metros is participating meaningfully in the festive upturn.
The spike in gold imports to nearly $14.7 billion in October, from $4.9 billion a year earlier, shows that households have reallocated how they buy gold rather than abandoning it. Smaller pieces, coins, exchanges and wedding-related purchases continue to sustain demand despite high prices. While this supports domestic jewellery, retail and allied services, it also exerts pressure on the trade balance, making gold a key channel through which strong festive consumption interacts with the external sector.
Taken together, the Diwali trade numbers, auto retails and gold imports indicate that consumption is currently the strongest pillar of India’s growth pulse. The data also show that policy design matters: GST 2.0 has clearly amplified demand in price-sensitive segments like small cars and two-wheelers.
Chapter II: Macroeconomic Performance: The Underpinnings of Growth
Snapshot -
Growth Metrics: India’s real GDP grew by 8.2% in Q2 FY26, a sharp acceleration from 5.6% in Q2 of the previous year. For the first half of FY26 (H1), real GDP growth stands at 8.0%, up from 6.1% in H1 FY25, underscoring a strong and broad-based recovery.
Sectoral Performance: On the supply side, real GVA grew 8.1% in Q2, powered by the Secondary Sector (8.1%) and an even stronger Tertiary / Services Sector (9.2%). Within this, Manufacturing (9.1%) and Construction (7.2%) posted robust gains, while Agriculture & Allied activities grew 3.5%, indicating a broadly positive, if more moderate, rural contribution.
Indicators of Stable Momentum: The simultaneous strength of manufacturing, construction and services suggests that growth is not narrowly driven by one engine. Instead, secondary and tertiary sectors are moving together, pointing to a more durable momentum rooted in investment, infrastructure build-out and high-value services.
Demand Side Growth: On the expenditure side, Real Private Final Consumption Expenditure (PFCE) grew by 7.9% in Q2, higher than the 6.4% growth in the same quarter last year.
Shift In Growth Driver: With high growth in the Secondary and Tertiary sectors and a strong H1 GDP print of 8.0%, the economy increasingly reflects an investment and production-driven expansion, rather than a purely consumption-led upswing. This composition is more consistent with medium-term capacity creation and productivity gains.
In Detail -
A. GDP vs GVA: The Primary Growth Engines
The economy’s strong performance in Q2 and the first half of FY 2025-26 confirms that the strong start to the year has been sustained. Real GDP grew by 8.2% in Q2 FY26 (up from 5.6% in Q2 FY25) and is estimated at 8.0% for H1 FY26 (a clear improvement over 6.1% in H1 of the previous year). This growth is broad-based, as underscored by robust real GVA growth of 8.1% in Q2 and 7.9% in H1.
The growth is synchronised across sectors, with the Services Sector remaining the principal growth engine at 9.2% in Q2 (at constant prices). The Secondary Sector closely followed at 8.1%, driven by strong growth in Manufacturing (9.1%) and Construction (7.2%). The Agriculture and Allied Sector posted a more moderate but positive 3.5% growth, reflecting a rural contribution amidst changing monsoon and price conditions.
This confluence of strength in services, manufacturing and construction is crucial. A growth phase driven only by services can be vulnerable to external shocks, but when accompanied by solid gains in industry and infrastructure, it indicates that investment, production and employment are moving in tandem. The positive, if more modest, performance of agriculture adds an element of inclusiveness, supporting rural incomes and consumption and anchoring the overall growth narrative.
B. Demand-Side Drivers: Consumption, Investment, and Government Spending
Demand-side data for Q2 shows a healthy, rebalanced growth mix. Real Private Final Consumption Expenditure (PFCE), a key measure of household demand, grew resiliently at 7.9%, significantly higher than the 6.4% recorded last year. This strong performance is supported by rising real incomes and a benign inflation environment.
Private consumption remains a major GDP pillar, but investment and public spending are also playing a sustained role. The Q2 expansion of both Gross Fixed Capital Formation (GFCF) and Government Final Consumption Expenditure (GFCE) reflects the strong performance in manufacturing and construction and the continued execution of capital expenditure programmes.
The composition of growth is becoming more investment-led. This positive structural shift sees robust capital formation and steady government spending combining with modestly slower, but still strong, consumption. This suggests public capex is crowding in private investment, making the current upswing more resilient to shocks by moving toward a capex and productivity-driven trajectory.
Chapter III: Tax Collections
Snapshot -
Gross GST Revenue: Gross Goods and Services Tax (GST) collections in October 2025 stood at ₹1,95,936 crore, compared to ₹1,87,346 crore a year ago. This marks a solid 4.6% YoY increase, supported by the onset of GST 2.0 rate rationalisation and strong festive-season consumption, including Dhanteras and early Diwali demand.
Gross Revenue Growth (YoY): The overall growth in gross GST revenue reflects the resilience of domestic demand even as the tax system is being simplified. The yearly growth in gross domestic GST revenue was 7.8% for April–October 2025.
Driver of Growth (Imports):The headline improvement was led by GST on imports. Gross GST revenue from imports climbed to ₹50,884 crore in October 2025 from ₹45,096 crore a year earlier, a strong 12.9% YoY rise. In contrast, domestic GST revenue grew more modestly by 2.0%.
Net Revenue Growth (YoY): After accounting for refunds, Net GST revenue in October 2025 was ₹1,69,002 crore.
The Refund Story: Refunds continued to be a major moving part of the GST story. Total GST refunds (domestic + imports) rose 39.6% YoY in October 2025. Refunds on domestic supplies increased 26.5%, while refunds on imports surged 55.3%.
FY26 Performance So Far: For the fiscal year April–October 2025, total Gross GST revenue has reached ₹13,89,367 crore, compared to ₹12,74,442 crore in the same period of the previous year, an increase of 9.0%. Within this, gross domestic GST revenue has grown 7.8%, while import-related GST has risen by about 12.9%, underscoring both resilient domestic consumption and healthy trade-linked activity.
In Detail -
Gross GST collections of ₹1.96 lakh crore in October 2025 confirm that the tax base remains broad and growing, even as rate rationalisation under GST 2.0 is being rolled out. The timing, right in the middle of the festive season and around Dhanteras-Diwali suggests that formal-sector consumption demand has held up strongly, with higher-value purchases feeding into GST.
The composition of revenue tells an important story. Domestic GST (CGST + SGST + IGST + Cess on domestic supplies) of ₹1,45,052 crore grew modestly at 2.0%, while import-based GST of ₹50,884 crore grew at 12.9%. This divergence indicates that while domestic demand is steady, there has been a sharper pick-up in import-intensive segments, which is consistent with elevated capital goods, electronics and intermediate-goods imports seen in the trade data.
Net GST revenue of ₹1,69,002 crore in October provides a cleaner signal of what ultimately accrues to the exchequer after refunds. The official estimate of 7.1% YoY growth in net revenue, alongside only a 0.6% month-on-month increase, suggests a picture of steady but not overheating revenue growth, strong enough to support the fiscal position, yet consistent with broader disinflationary trends captured in the price data.
The sharp jump in refunds to nearly 40% YoY is a key feature of the October numbers. Faster refund processing, including for exporters and input tax credit claims, improves liquidity for businesses and supports production and exports. At the same time, it temporarily widens the gap between gross and net revenue.
From a fiscal-sustainability lens, the 9.0% growth in gross GST collections for April-October 2025 keeps the Centre and States on a comfortable trajectory relative to budgeted targets. Strong import-related growth, combined with steady domestic collections, indicates that the tax system is capturing the ongoing formalisation of the economy and the gradual broadening of the GST base.
Industrial and services powerhouses like Maharashtra, Karnataka, Gujarat, Tamil Nadu and Haryana together contributed over 40% of total GST revenue in October 2025, underlining their role as key production and consumption hubs. At the same time, several smaller states and UTs such as Nagaland, Arunachal Pradesh, Ladakh and Andaman & Nicobar Islands posted very high percentage growth in domestic GST collections, reflecting deepening formalisation and tax base expansion beyond the traditional metros.
Chapter IV: Growth and Output: IIP Soft Patch vs Buoyant PMI
Snapshot -
Industrial Output Nearly Stalls: Overall industrial activity slowed sharply, with the IIP rising just 0.4% year-on-year (YoY) in October 2025, compared to 4.0% in September.
Core Sector Flat: The Index of Eight Core Industries (ICI) was unchanged (0.0% YoY), as contractions in coal, crude oil, natural gas and electricity offset gains in fertilisers, steel, cement and refinery products.
Mixed Sectoral Picture: Within IIP, Manufacturing managed a modest 1.8% YoY expansion, but Mining contracted by 1.8% and Electricity by 6.9%, reflecting weather- and calendar-related softness in energy demand.
Investment-Led Pockets Intact: Use-based data show robust 7.1% growth in Infrastructure/Construction Goods and 2.4% growth in Capital Goods, consistent with an investment-driven capex cycle even as headline output slows.
Weak Consumption Signal: Consumer Durables output dipped 0.5% YoY, while Consumer Non-durables fell a sharper 4.4%, pointing to subdued mass-market demand despite an ongoing festive season.
PMI Stays Strong: In contrast to lagging hard data, the HSBC India Manufacturing PMI strengthened to 59.2 in October from 57.7 in September, signalling resilient underlying order books and future output momentum.
In Detail -
India’s industrial engine slowed sharply in October 2025, with the IIP growing by just 0.4% YoY (down from 4.0% in September). This steep moderation is mainly attributed to the shorter effective working month due to multiple major festivals, which disrupted factory schedules and compressed production days. Thus, the weak print reflects market behavior change more than a fundamental demand issue.
The cumulative IIP for April–October 2025-26 remains positive at around 2.7% YoY, despite being slower than the same period last year. This suggests that while momentum has cooled, industrial activity is still trending higher and does not signal a structural downturn.
The IIP pattern is uneven sectorally. Manufacturing (highest weight) grew 1.8% in October, but Mining contracted 1.8%, and Electricity fell 6.9%. The drop in electricity is largely due to the extended monsoon and milder temperatures. Crucially, both the Manufacturing and Electricity indices remain well above the base year, indicating a structural capacity step-up.
The Eight Core Industries (ICI), 40% of IIP, were flat (0.0% YoY) in October, a 14-month low due to an energy-heavy drag. This stagnation was caused by steep contractions in Coal (-8.5%), Natural Gas (-5.0%), and Electricity (-7.6%). However, construction-linked sectors like Steel (+6.7%) and Cement (+5.3%) grew strongly. Cumulatively, ICI growth remains positive at 2.5% for April-October 2025-26, though slower than last year.
The IIP’s use-based classification confirms investment-led strength with soft consumption. Infrastructure/Construction Goods led robust growth at 7.1%, suggesting the capex cycle remains intact. Conversely, Consumer Durables (-0.5%) and Consumer Non-durables (-4.4%) declined, indicating the persistence of the “two-speed” consumer story, particularly affecting rural and lower-income demand
Forward-looking survey data are more upbeat than the hard data. The HSBC India Manufacturing PMI climbed to 59.2 in October from 57.7 in September, marking one of the strongest readings in the current cycle and remaining comfortably above the 50 threshold that separates expansion from contraction. The improvement was driven by stronger domestic orders, operational improvements and continued hiring, even as export growth softened.
The divergence between a soft IIP/ICI print and a buoyant PMI suggests that October’s industrial slowdown is largely a function of fewer working days and weather-related energy demand, rather than a collapse in underlying demand. If calendar effects normalise and core energy supply recovers, current PMI readings point to a likely rebound in headline output over the coming months.
Chapter V: Price Dynamics and Inflationary Environment
Snapshot -
Headline inflation at historic low: CPI inflation fell to 0.25% YoY in October 2025, with food deflation and GST-linked moderation in several consumption items bringing overall price growth close to zero.
Deflation at the wholesale level: WPI for all commodities turned negative at –1.21% in October, indicating broad softness in primary commodities, energy and some intermediate inputs.
Manufactured goods still have some pricing power: MPI inflation for manufactured products stayed mildly positive at 1.54%, showing that firms are not cutting output prices in line with cheaper inputs.
Food basket in deep deflation: CFPI at –5.02% YoY points to a broad-based decline in food prices, giving consumers a strong real-income boost but putting pressure on farm-gate realisations.
In Detail -
The October 2025 CPI print of 0.25% means that, on average, the consumer basket today costs almost the same as it did a year ago. This is a highly unusual configuration for an economy still growing close to 8% in real terms, and it is driven primarily by food prices turning decisively negative along with the full-year base effects of earlier price spikes dropping out of the index.
Non-food categories such as housing, health, education and personal care continue to see low but positive inflation, yet they are now too small in aggregate to offset the drag coming from food. For households, especially in the lower and middle income brackets where food dominates expenditure, this translates into a visible easing in the cost of living and a direct increase in real disposable income.
On the producer side, the WPI picture complements this story. With the all-commodities WPI at –1.21%, wholesale prices for primary goods, energy and several intermediate inputs are lower than a year ago, pointing to a clear easing of cost pressures in the production system. However, manufactured products within WPI still show inflation of 1.54%, meaning that producers have not cut output prices in line with the fall in input prices.
The deepest move is in the food basket. CFPI at –5.02% implies that food prices on average are about five per cent lower than a year earlier. The correction is broad-based across vegetables, edible oils and some cereals and pulses, helped by good domestic supply and earlier policy steps on imports and stocks.
For consumers, this is unambiguously positive: a cheaper food basket frees up income for other spending and helps anchor inflation expectations at lower levels. For producers in agriculture and allied sectors, the picture is more complicated. If farm-gate prices fall faster than input costs for diesel, fertiliser, transport and labour, farm margins compress and rural incomes can come under pressure despite low inflation. That poses a risk to rural consumption if such deep food deflation persists.
Chapter VI: Labour and Employment
Snapshot-
Sustained Labour Force Participation:The October 2025 PLFS data show that India’s labour force participation continues to edge up, with the overall LFPR rising to 55.4%, a six-month high and marginally above 55.3% in September.
Employment is also rising in tandem: The worker population ratio increased to 52.5% in October from 52.4% in September, confirming that more people entering the labour force are actually being absorbed into jobs.
Unemployment Rates Unchanged: The headline unemployment rate remained unchanged at 5.2% between September and October, masking a small decline in rural joblessness and a mild uptick in urban unemployment.
Female Factor Still Rising Theme: Female participation remains the strongest structural trend, with female LFPR climbing to around 34.2% in October and female WPR up to about 32.4%, both supported primarily by rising rural female workforce engagement.
In Detail-
The October 2025 labour market data point to a gradual expansion of India’s active workforce without any visible deterioration in headline unemployment. The overall labour force participation rate at 55.4% is now at its highest level in six months and continues the steady upward trend visible since June. This indicates that more individuals aged 15 and above are either working or actively seeking work, reflecting both better job opportunities and improved confidence in the labour market.
The worker population ratio at 52.5% in October reinforces this reading. A higher WPR means that a larger share of the total population in the 15+ age group is actually employed, not just looking for work. The rise from 52.4% in September may appear small in absolute terms, but at the scale of India’s labour force it represents a meaningful net addition to employment. The persistence of this upward movement since mid-2025 is important: it signals that the improvement is not a one-off seasonal effect but part of a broader strengthening in labour absorption.
The unchanged all-India unemployment rate at 5.2% between September and October hides some underlying movement. Rural unemployment eased slightly, while urban unemployment inched up, leaving the aggregate number flat. This pattern is consistent with seasonal factors and with stronger rural labour demand in the post-monsoon months, while urban job markets adjust more slowly. From a macro perspective, a stable unemployment rate alongside rising LFPR and WPR is a relatively healthy configuration.
The most important structural signal in the October bulletin is the continuing rise in female labour force participation. Female LFPR has moved up to roughly 34.2%, with female WPR around 32.4%, and both indicators have been improving steadily for several months. Much of this shift is driven by rural women, where female LFPR and WPR have risen on the back of agriculture, self-employment and other informal activities. For long-term growth, this is a critical development: higher and more sustained female participation can raise potential output, deepen the labour pool and improve household incomes, even if a significant portion of that work remains informal.
Chapter 7: Trade and External Sector
Snapshot-
Trade Deficit: October 2025 saw India’s merchandise trade deficit widen to a record US$ 41.68 billion, as exports fell and imports surged to an all-time high of US$ 76.06 billion, led by precious metals.
Imports and Exports: Merchandise exports slipped to US$ 34.38 billion (down 11.8% YoY), while strong domestic demand pushed up imports by 16.6% YoY.
Gold and Silver Shines: Gold and silver were the main swing factors on the import side: gold imports jumped to about US$ 14.72 billion up ~200% and silver imports to roughly US$ 2.7 billion up ~575%, together adding over US$ 12 billion to the monthly import bill compared to a year earlier.
Services Sector: Services trade continued to act as a stabiliser, with services exports at an estimated US$ 38.52 billion in October and a sizeable services surplus helping to keep combined exports (goods + services) for Apr–Oct 2025 growing at around 4.8% YoY despite the weak merchandise print.
In Detail-
The October 2025 trade data mark a clear turning point. On the goods side, the combination of weaker global demand and stronger domestic appetite for imports pushed the merchandise trade deficit to an unprecedented US$ 41.68 billion. Exports of goods fell to US$ 34.38 billion, an 11.8% year-on-year contraction, as shipments to key markets like the United States slowed under the impact of new tariffs and softer demand across several product categories.
In parallel, merchandise imports climbed to US$ 76.06 billion, a rise of about 16.6% YoY, driven not only by precious metals but also by robust non-oil, non-gold imports, which signal that domestic investment and consumption demand remain strong.
The most visible distortion in the October numbers comes from gold and silver. Gold imports alone reached around US$ 14.72 billion, nearly three times the US$ 4.92 billion recorded in October last year. Silver imports, at roughly US$ 2.7 billion, were more than five times their year-ago level. With Diwali and the main part of the wedding season falling squarely in October this year, festive and jewellery demand was exceptionally strong. Together, the jump in precious metal imports added well over US$ 10 billion to the monthly import bill compared to a normal October, mechanically widening the merchandise deficit even as the underlying structure of imports still reflects healthy domestic demand for capital goods, electronics and intermediate inputs.
While the October merchandise print looks unfavourable, the services side of the external account continues to provide an important cushion. Services exports for October are estimated at US$ 38.52 billion, compared to US$ 34.41 billion a year earlier, while services imports are estimated at US$ 18.64 billion versus US$ 17.23 billion. This implies a sizable monthly services surplus and a cumulative services surplus of over US$ 118 billion during April–October 2025. When goods and services are combined, total exports for October 2025 are only marginally lower year-on-year at US$ 72.89 billion (–0.68%), while total imports are higher at US$ 94.70 billion.
For the April–October period as a whole, combined exports (goods + services) have still grown by about 4.8%, and combined imports by about 5.7%, underscoring that the October shock is heavily concentrated in a few items rather than indicative of a broad collapse in external demand.
II. Sectoral Performance:
Chapter 8 - Agriculture & Allied Sector
Snapshot -
Kharif Area Up, Coverage at 1,121.46 Lakh Ha: Total kharif sown area has increased by 6.51 lakh hectares over last year, with wheat, paddy, maize, sugarcane and pulses all recording higher coverage.
Pulses Focus: Urad Acreage Rising: Area under urad (black gram) has gone up from 22.87 lakh ha to 24.37 lakh ha, strengthening pulse production and income prospects in pulse-growing belts.
TOP Crops on Track: Sowing of potato, onion and tomato is progressing smoothly and is aligned with targets, with acreage up across all three crops compared to last year.
Comfortable Stocks and Water Storage: Rice and wheat stocks are above buffer norms, while 161 major reservoirs hold 103.51% of last year’s storage and 115% of the 10-year average, supporting yields and rabi prospects.
Fertiliser and Flood Response Under Close Watch: The Centre is closely monitoring fertiliser availability and flood-affected crop areas, with directions issued for timely supply and state-level coordination to safeguard production.
In Detail-
Kharif Sowing Gains and Focus on Pulses: The total area under kharif crops has increased by 6.51 lakh hectares over the previous year. The total sown area now stands at 1,121.46 lakh hectares, compared to 1,114.95 lakh hectares in 2024–25. Within this, major crops such as wheat, paddy, maize, sugarcane and pulses have all recorded an improvement in coverage, indicating a broadly positive kharif season. A key highlight was the increase in acreage under urad (black gram), which has risen by 1.50 lakh hectares, from 22.87 lakh hectares in 2024–25 to 24.37 lakh hectares in 2025–26, strengthening the outlook for pulse availability and farmer incomes in pulse-growing regions.
Flood-Affected Areas and Monsoon Impact: The crop situation in districts impacted by floods and landslides were also reviewed. Excessive rainfall damaged crops in some pockets, but other regions mostly benefited from a good monsoon, resulting in healthy crop growth. Overall, the assessment was that the favourable monsoon pattern in large parts of the country is expected to support rabi sowing and lift overall agricultural production, even as localised losses in severely affected districts are addressed through targeted support.
Potato, Onion and Tomato Sowing on Track: Progress in horticulture crops especially potato, onion and tomato was another important focus area. Data shows that sowing of these crops is proceeding smoothly and in line with the targets. The area under onion has increased from 3.62 lakh hectares in 2024–25 to 3.91 lakh hectares currently. Potato coverage has expanded from 0.35 lakh hectares to 0.43 lakh hectares, while tomato sowing has risen from 1.86 lakh hectares last year to 2.37 lakh hectares this year.
Comfortable Foodgrain Stocks and Strong Reservoir Levels: The rice and wheat stock levels remain above the prescribed buffer norms, indicating a stable foodgrain supply position for the country. On the water front, reservoir storage levels across India are significantly better than both the same period last year and the average of the past decade. As of now, the 161 major reservoirs monitored hold 103.51% of last year’s storage and 115% of the ten-year average.
Fertiliser Availability and Coordination with States: A continuous coordination is being maintained with State governments to assess fertiliser requirements and ensure that adequate quantities reach farmers ahead of peak demand for the rabi season. This proactive stance on inputs, combined with healthy reservoir storage and improved kharif coverage, is expected to support a strong, stable and resilient agricultural performance in the months ahead.
Chapter 9 - Financing India’s Next Tech Leap: The ₹1 Lakh Crore RDI Scheme
Snapshot-
Dedicated RDI Corpus: The RDI scheme creates a ₹1 lakh crore corpus under ANRF as patient capital to fund high-risk, high-impact research and innovation that normal banking channels do not support.
Two-Tier Funding Structure: Financing flows through a Special Purpose Fund (RDIF) inside ANRF that holds the corpus, and second-level fund managers such as AIFs, DFIs, NBFCs and focused research organisations that deploy money into companies and projects.
Instruments and Deep-Tech FoF: Support is mainly through long-term low or nil-interest loans and equity/AIF contributions, with a dedicated deep-tech Fund of Funds to bring in private risk capital into high-TRL technologies.
Sunrise and Strategic Sectors: The scheme targets AI, quantum, semiconductors, clean energy, biotechnology, defence tech and space, focusing on bridging the “lab-to-market” gap rather than funding basic science alone.
Governance and Strategic Alignment: By routing public money through professional fund managers and investing only in entities controlled by resident Indian citizens, the design blends commercial discipline with strategic technology goals, complementing PLI and mission-mode programmes for scale-up and manufacturing.
In Detail -
The RDI scheme is a ₹1 lakh crore, multi-year corpus under ANRF to finance high-risk private R&D and late-stage innovation. It is meant to fill the “missing middle” in India’s innovation pipeline where deep-tech projects need long, patient capital that banks will not lend and normal VC avoids in strategic sectors.
A Special Purpose Fund inside ANRF is the legal home of the corpus, but it does not fund companies directly. Instead, it allocates money to Second Level Fund Managers (AIFs, DFIs, NBFCs, focused research organisations) chosen on track record and sector expertise, and these managers then invest in Indian entities within sector and TRL guidelines set by ANRF and the government.
Support is structured mainly as long-term low or nil-interest loans, refinancing lines, equity or AIF commitments, plus a Deep-Tech Fund of Funds that helps de-risk private investors in frontier technologies. The design allows different instruments for different sectors, while keeping a clear rule that money must back R&D-heavy, high-TRL activities rather than routine working capital or generic capex.
The scheme focuses on AI, quantum, semiconductors, clean energy, biotech, space, defence tech, digital agriculture and advanced materials, exactly the sectors already targeted by PLI schemes and mission-mode programmes. RDI sits upstream of these, paying for expensive R&D, IP and prototyping so that Indian technologies are ready to be scaled later under PLI and large public procurement.
Public risk capital is routed through professional fund managers rather than directly from government departments. RDIF money must ultimately flow into entities controlled by resident Indian citizens, so that strategic technologies remain under Indian control while project selection, monitoring and exits are handled with market-linked discipline by specialised funds.
By placing ANRF at the centre and using multiple second-level funds, the scheme can support university spin-offs, focused research organisations, MSMEs in industrial clusters and deep-tech startups beyond the major metros. In principle, this allows more regions and institutions to plug into high-value innovation chains, not just act as production or service backends.
Chapter 10 - The 2 Trillion Dollar Export Ambition
Snapshot -
New Mission Launched: India’s new Export Promotion Mission (EPM) and the Credit Guarantee Scheme for Exporters (CGSE) are the main policy instruments backing the USD 2 trillion export ambition for 2030, with a combined envelope of ₹45,060 crore over the next few years.
Digital First Framework: EPM shifts India from fragmented export schemes to a single, flexible, digital-first framework that explicitly targets MSMEs, first-time exporters and labour-intensive sectors that are most exposed to tariff hikes and non-tariff barriers.
Significant Budget Outlay: CGSE plugs the chronic collateral and risk-weight constraints in export lending by offering a 100% sovereign-backed guarantee on up to ₹20,000 crore of additional export credit, aimed especially at smaller firms and new exporters.
Higher Value Export Growth: The twin design – EPM for “market access + capabilities” and CGSE for “credit + risk-sharing” is meant to translate MSMEs’ 45% share in exports and a rapidly expanding base of exporting MSMEs into broader, more diversified and higher-value export growth.
In Detail -
India’s macro backdrop is a stated goal of USD 2 trillion in total exports by 2030, broadly split as USD 1 trillion in goods and USD 1 trillion in services. This target flows from the Foreign Trade Policy 2023 and has been repeatedly reiterated by the Commerce Minister. Hitting it implies sustained double-digit export growth through the decade in a world where global trade is slowing and protectionism is rising.
MSMEs already account for about 45–46% of India’s total exports, underscoring how central they are to the export story. Yet only around 1.7 lakh MSMEs out of several crore are actually exporting, which means the export pipeline is narrow and vulnerable to shocks like new tariffs, standards or sudden demand swings. Expanding both the number of exporting MSMEs and the range of products/markets is therefore a core policy aim.
The Export Promotion Mission (EPM), approved in November 2025 with an outlay of ₹25,060 crore for FY 2025-26 to FY 2030-31, is the structural response to these constraints. It consolidates older schemes such as Interest Equalisation and Market Access Initiative into a single, outcome-oriented, digitally driven architecture. EPM explicitly prioritises MSMEs, first-time exporters and labour-intensive sectors like textiles, leather, gems & jewellery, engineering goods and marine products, which are directly exposed to new tariff barriers and tighter sustainability regimes in markets like the US and EU.
Within EPM, Niryat Protsahan leans on interest support and trade-finance facilitation to make working capital and pre-/post-shipment credit cheaper and more predictable for MSMEs operating on thin margins and volatile orders whereas Niryat Disha focuses on market development, helping exporters meet standards, obtain certifications, participate in overseas exhibitions and use digital platforms for outreach, including a push for exports from non-traditional districts and new product categories.
The Credit Guarantee Scheme for Exporters (CGSE) is the financing leg backing this strategy. The Cabinet has cleared a 100% guarantee cover by NCGTC on up to ₹20,000 crore of additional export credit, to be extended by member lending institutions till 31 March 2026. The scheme targets exporters particularly MSMEs, who are fundamentally creditworthy but blocked by collateral demands, sectoral risk caps or prudential norms, against the backdrop of an estimated MSME credit gap of about ₹30 lakh crore (roughly one-quarter of total credit demand).
Chapter 11 - India’s Rare Earth Permanent Magnet (REPM) Strategy
Snapshot-
Why Rare Earth Magnets Matter: Rare earth permanent magnets sit at the heart of India’s EVs, wind turbines, electronics, defence systems and aerospace platforms; without them, motors, generators and precision actuators simply do not work at the required efficiency.
China’s Grip on REPMs: Global supply is heavily concentrated in China, which controls the bulk of mining, refining and magnet manufacturing and has already tightened export controls, making REPMs a strategic chokepoint for energy transition and national security.
Building Domestic Magnet Muscle: India’s new ₹7,280 crore REPM scheme aims to build 6,000 MTPA of fully integrated magnet capacity at home – from oxides to final magnets – reducing near-total import dependence and aligning magnet security with Net Zero, EV and defence targets.
Locking In the Value Chain: The scheme is designed to sit alongside the National Critical Mineral Mission and sectoral missions in EVs, renewables, semiconductors and defence, so that upstream rare earth mining and refining, and downstream magnet manufacturing, move together rather than in isolation.
In Detail -
Strategic Role of REPMs: Rare earth permanent magnets (REPMs) based on neodymium, praseodymium, dysprosium and related rare earths are core inputs for EV traction motors, direct-drive wind turbines, drones, missiles, guidance systems, radar, precision machine tools, industrial robots, hard-disk drives and other electronics. Their high magnetic strength per unit volume makes motors lighter and more efficient, which is critical for net-zero goals, EV rollout, wind capacity addition and defence modernisation.
China’s Dominance and Export Controls: China controls about 87% of rare earth oxide separation, over 90% of rare earth metal and alloy production, and around 90%+ of NdFeB magnet manufacturing capacity, with most of the remainder in Japan, Europe and the US. In 2024–25, Beijing tightened export controls on magnet materials and finished magnets, disrupting supply chains and directly affecting Indian auto and electronics suppliers, turning REPMs into a strategic vulnerability for import-dependent countries like India.
India’s Demand Surge and Import Dependence: India’s permanent magnet imports rose from roughly 28,700 tonnes in FY24 to about 53,700–53,748 tonnes in FY25, with more than 90% sourced from China. Current domestic demand for high-grade REPMs is about 4,000–5,000 tonnes per year, projected to exceed 8,000 tonnes by 2030 as EVs, wind power and advanced manufacturing expand; EV and wind manufacturers already account for over half of domestic REPM consumption.
REPM Manufacturing Scheme: Core Design Parameters: The Scheme to Promote Manufacturing of Sintered REPMs has a total outlay of ₹7,280 crore and targets 6,000 MTPA of integrated domestic REPM capacity. Each beneficiary must cover the full chain, that is oxides to metals to alloys to sintered magnets, with up to five plants of 1,200 MTPA each chosen via global competitive bidding. Incentives comprise about ₹6,450 crore of sales-linked support over five years plus ₹750 crore of capital subsidy, over a 7-year scheme period, roughly 2 years setup + 5 years incentives.
Link to National Critical Mineral Mission (NCMM): The REPM scheme is paired with the National Critical Mineral Mission (NCMM), launched in 2025 with an outlay of about ₹16,300 crore, targeting exploration, mining, processing, recycling and stockpiles of critical minerals, including rare earths. NCMM aims for 1,200+ exploration projects and a measurable share of global processing capacity by 2030–31, with IREL expansions, new auctions and MMDR amendments expected to gradually de-risk upstream ore and oxide supply while REPM incentives anchor downstream magnet manufacturing in India.
Execution Constraints: Mining, Processing, Skills: India has light rare earth resources in monazite-bearing beach sands but limited production and separation capacity, constrained by environmental rules, atomic-mineral regulation and slow permitting. Scaling oxide separation, metals and alloys outside China is capital- and technology-intensive, with equipment and process know-how also concentrated abroad. Magnet manufacturing needs specialised skills in powder metallurgy, sintering, microstructure control and magnet design, plus application-specific engineering for EV motors, wind generators and defence systems, which NCMM-linked Centres of Excellence and firm-level R&D will need to build.
Capacity, Cost and Success Metrics: On paper, 6,000 MTPA of domestic REPM capacity is enough to cover India’s projected demand by 2030 and leave some room for exports. In practice, outcomes hinge on
upstream feedstock availability from NCMM, IREL, private mines and overseas tie-ups
Whether Indian plants can reach Chinese cost and quality levels quickly enough
How fast India can add a recycling layer for magnets from e-waste and end-of-life EVs/wind turbines.
The scheme’s success will be judged by reduction in Chinese dependence, share of domestic EV and wind demand met competitively by Indian magnets, and whether India becomes a meaningful exporter of REPMs rather than a small, subsidised niche producer.
Chapter 12 - Coal
Snapshot -
Sharp Output Correction: Total coal production in October 2025 stood at 77.43 MT, down about 8.3% YoY from the strong base of 84.45 MT a year ago.
Offtake Moderates: Total coal offtake eased to 80.44 MT, a modest 4.8% YoY decline, reflecting softer demand after an exceptionally strong summer and early-monsoon run.
Power Sector Drawdown: Dispatches to the power sector saw the sharpest adjustment, falling 24.6% YoY to 51.76 MT, as cooler weather, improved hydro/renewable generation and high stock levels reduced incremental coal draw.
Private & Captive Mines More Resilient: Output from captive and other mines was comparatively stable at 16.32 MT (just 1.8% lower YoY), with offtake from captive blocks edging up slightly on a yearly basis, signaling still-firm demand from non-regulated industrial users.
In Detail -
Overall coal production in October 2025 was 77.43 MT, down 8.3% YoY from 84.45 MT in October 2024. This comes after strong growth through FY24 and early FY25 and aligns with lower thermal demand after an unusually hot summer and early monsoon. On a sequential basis, October shows a rebound vs the previous month, not a continuing slide. For April–October FY26, cumulative output is about 527 MT, vs roughly 537–538 MT in the same period last year, a contraction of around 2%, indicating production still close to last year’s elevated base.
Total coal dispatch in October 2025 was 80.44 MT, down about 4.8% YoY. The power sector drives this adjustment: dispatch to power fell 24.6% YoY to 51.76 MT, reflecting softer electricity demand (cooler weather, more rain), higher hydro output and better renewables availability. Despite this drop, coal use in power remains consistent with a system that is more diversified in its fuel mix but still relies on coal for baseload.
Output from captive and other mines in October 2025 was 16.32 MT vs about 16.61 MT a year earlier, only a 1.8% YoY decline compared to a much sharper fall in total production. Dispatch from captive/other mines inched up to around 16.65 MT on a YoY basis, indicating steady lifting by steel, cement, captive power and other industrial users. This points to firm industrial coal demand and a gradual increase in the share of captive/commercial mines in total supply alongside Coal India and SCCL.
The October 2025 data indicate adequate domestic coal availability: lower offtake from the power sector plus stable captive/commercial output reduces the need for aggressive imports. The steeper adjustment in power-sector dispatch relative to industrial users aligns with a power mix where renewables and hydro are taking more of incremental generation while coal continues as the main baseload and industrial fuel.
Chapter 13 - Energy and Power
Snapshot-
Demand cool-off: Overall electricity generation in October 2025 fell about 6% YoY to ~142.5 BkWh, reflecting milder weather, festive timing and weaker cooling demand compared to October 2024.
Coal correction: Coal-based generation dropped sharply by 13.2% YoY to ~98.4 BkWh, pulling coal’s monthly share down to roughly 69% of total output, even though coal remains the dominant source.
RE surge in a soft month: Renewable generation (RES) jumped ~30% YoY to ~19.8 BkWh, lifting RES share to nearly 14% and pushing the non-fossil share of monthly generation to around 30% despite an overall dip in demand.
Capacity build-out continues: MNRE data show ~3.1 GW of new renewable capacity added in October alone (about 2.6 GW solar and 0.5 GW wind), plus 240 MW of large hydro, taking total RE capacity to ~250.6 GW.
Non-fossil majority consolidates: With non-fossil capacity now around 259.4 GW (RE + large hydro + nuclear) against a total system size just above 500 GW, clean sources clearly hold a slim majority in installed capacity, strengthening India’s early achievement of its COP26 capacity target.
In Detail -
India’s power generation fell 6% YoY in October 2025 (to 142.5 billion units), primarily due to milder temperatures, unseasonal rains, and a shorter billing month. Crucially, despite this dip in demand, the structural trend towards cleaner power continues, with non-fossil sources growing faster than fossil generation.
Coal generation saw the sharpest adjustment, falling 13.2% YoY (to 98.38BkWh), and its share of electricity dropped to 69% (below the typical 73%-75% range). In contrast, renewable energy (RES) surged 30.2% YoY, reaching nearly 14% of total output. The remaining 17% came from other sources (hydro, nuclear, gas), which grew 5.6% and helped stabilize the system.
On the capacity front, October 2025 was another strong month for renewables, even as actual generation softened. MNRE’s “Physical Progress” data indicate that about 3.09 GW of RE capacity (excluding large hydro) was added in October, led by 2.59 GW of solar and 0.48 GW of wind, alongside smaller additions in small hydro and biomass / waste-to-energy. Including large hydro, total RE additions in October were ~3.33 GW, taking cumulative RE capacity (including large hydro) to roughly 250.64 GW by 31 October 2025.
Installed non-fossil capacity as of 31 October 2025 (MNRE)
By the end of September 2025, the Power Ministry had already announced that India’s total installed capacity had crossed 500.89 GW, with non-fossil sources at 256.09 GW (just over 51% of the total). With MNRE now reporting 259.42 GW of non-fossil capacity as of 31 October, clean sources have consolidated that narrow majority and are edging closer to 52% of installed capacity, even before accounting for any fossil additions in October.
Chapter 14 - Manufacturing and Industrial Output
Snapshot -
The steel sector remains a core driver: Within manufacturing, “Manufacture of basic metals” grew by 6.6% YoY in October 2025, even as overall IIP growth slowed sharply to 0.4% and manufacturing to 1.8%. Steel is again one of the top positive contributors to industrial output.
Value-chain strength in steel products: The growth in basic metals reflects broad-based strength across the value chain, with official data highlighting strong contributions from “HR coils and sheets of mild steel,” “MS slabs,” and “Flat products of Alloy Steel”, mirroring the pattern seen earlier in the year.
Construction demand is still robust: The Infrastructure / Construction Goods index grew by 7.1% YoY in October, indicating that investment and construction activity remained solid despite fewer working days. Complementing this, cement output in the core industries rose by 5.3% YoY, confirming sustained demand from large infrastructure and construction projects.
Investment link confirmed: Use-based IIP data show Capital Goods output up 2.4% YoY in October, alongside the 7.1% growth in Infrastructure / Construction Goods. This combination signals that higher steel and cement production is being absorbed by ongoing investment and capex, not just inventory build-up.
Auto and allied sectors as additional supports: Beyond steel and construction, “Manufacture of motor vehicles, trailers and semi-trailers” grew by 5.8% YoY, and “Manufacture of coke and refined petroleum products” by 6.2%, pointing to healthy momentum in autos and refinery-linked industrial activity, even in a festive month with fewer production days.
In Detail -
STEEL SECTOR: INDICATORS OF RESILIENT INVESTMENT DEMAND
The steel sector remained a key pillar of manufacturing growth in October 2025, even as headline industrial growth slowed. Output in the “Manufacture of basic metals” group expanded by 6.6% YoY, making it one of the top three positive contributors to IIP within manufacturing.
Official releases note that growth in basic metals continues to be driven by core construction and engineering inputs such as hot-rolled coils and sheets of mild steel, MS slabs, and flat alloy-steel products. These are exactly the categories used in infrastructure, construction, machinery, and capital goods, which are less sensitive to one-off festival timing and more closely tied to the medium-term investment pipeline.
The link from steel to actual project activity is visible in the use-based IIP numbers. In October, Infrastructure, Construction Goods grew by 7.1% YoY, comfortably outpacing overall industrial growth. Together with the 2.4% YoY rise in Capital Goods, this suggests that higher steel output is being pulled through by real demand from highways, railways, metro projects, ports and industrial construction, rather than merely swelling inventories at mills or stockyards.
CEMENT SECTOR: SUSTAINED CONSTRUCTION MOMENTUM
Cement performance in October 2025 is consistent with the steel story and reinforces the picture of steady construction momentum. Core industries data show that cement production increased by 5.3% YoY, while the cumulative index for April–October 2025–26 is up 7.3% over the same period of the previous year. This comes on top of already elevated levels and aligns with the 7.1% growth in the Infrastructure, Construction Goods index, underscoring that both housing and large public infrastructure projects continue to absorb high volumes of building materials.
Taken together, the October data on steel, cement, infrastructure, construction goods and capital goods indicate that, even in a month when total IIP growth slowed to 0.4% because of fewer working days and weaker electricity generation, the investment-heavy parts of manufacturing remain on a steady upward track. This combination points to an industrial cycle where short-term volatility in headline IIP is being driven by calendar and weather effects, while the core of India’s investment-led manufacturing expansion continues to move forward.