India's Big Leap Forward: Government Reports Significant Reforms in 2025
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In a year marked by international pressures, including unprecedented US tariffs and stricter visa rules, the Indian government has reported a substantial push towards policy reforms. Despite political disagreements and tumultuous Parliament sessions, the government has claimed that 2025 was a year of 'bold thinking and decisive action' under Prime Minister Narendra Modi's leadership. The government's assessment highlights a slew of reforms spanning labour laws, taxation, ease of doing business, trade, education, energy, and rural employment. Key changes include the introduction of four new labour codes, which replaced 29 older laws and focus on wages, industrial relations, social security, and workplace safety. The reforms aim to benefit nearly 10 million gig workers, 50-70 million contract workers, and 150-180 million low-paid workers. One of the notable reforms is the Goods and Services Tax (GST) simplification, which has moved to a two-slab structure of 5% and 18%. The government claims that this change has reduced the average GST burden by 5%, putting approximately ₹1 lakh crore back in people's pockets. The GST change is also expected to lead to annual savings of ₹50,000 crore through cheaper life and health insurance premiums. The year also saw significant changes in rural employment, with the introduction of the Viksit Bharat G-RAM-G Bill, 2025. This bill has increased guaranteed rural employment from 100 to 125 days, potentially adding ₹60,000 crore in wages each year. Other key reforms include easing rules for building manufacturing units, cutting delays by six to 18 months, and adding 32 industries to the 'White Category', reducing compliance for 3,000 to 5,000 units each year. The government has also expanded the definition of 'small companies' to include firms with turnover up to ₹100 crore, cutting compliance costs for about 10,000 companies. In the insurance sector, the government has allowed up to 100% foreign direct investment (FDI), which could bring 80-100 million more people under insurance coverage over the next five years. India has also signed trade agreements with the UK, Oman, and New Zealand, and finalised a free trade agreement (FTA) with the European Free Trade Association. The government's assessment notes that these reforms have come at a time of strong economic performance, with India recording 8% GDP growth in the first half of 2025-26. The country is working towards its long-term goal of Viksit Bharat by 2047.
