India-New Zealand Free Trade Agreement (FTA)

♦ Prime Minister Narendra Modi on 22 December 2025 held a telephone conversation with New Zealand Prime Minister Christopher Luxon, during which the two leaders jointly announced the conclusion of a landmark India-New Zealand Free Trade Agreement (FTA). The agreement has been finalised in a record nine months since negotiations were initiated during PM Luxon’s visit to India in March 2025. 

♦ The FTA provides zero-duty market access on 100 per cent of New Zealand’s tariff lines, granting duty-free access for all Indian exports. India has offered tariff liberalisation on about 70 per cent of tariff lines, covering nearly 95 per cent of bilateral trade. To protect farmers and domestic industry, market access excludes sensitive sectors such as dairy, coffee, milk and milk products, sugar, spices, edible oils, rubber and onions.

India and Oman

♦ India and Oman signed a Comprehensive Economic Partnership Agreement (CEPA) on 18 December 2025, during Prime Minister Narendra Modi’s official visit to the Sultanate of Oman.  The pact was inked by Union Commerce and Industry Minister Piyush Goyal and Oman’s Minister of Commerce, Industry and Investment Promotion Qais bin Mohammed Al Yousef, reflecting the shared vision of both nations to deepen economic integration and unlock new growth opportunities.

♦ The agreement also marks a breakthrough in services trade. For the first time, Oman has made ambitious commitments across 127 services sub-sectors, including computer-related services, business and professional services, audio-visual services, research and development, education and health. These commitments are expected to unlock high-value opportunities for Indian service providers and drive skilled job creation.

♦ The agreement allows 100 per cent foreign direct investment by Indian companies in major services sectors in Oman, enabling Indian firms to establish and expand their commercial presence in the Gulf nation.

♦ The India-Oman CEPA is the second free trade agreement signed by India in the last six months, following the pact with the United Kingdom, and aligns with New Delhi’s broader strategy of forging trade agreements with complementary economies.

Asian Development Bank (ADB)

♦ India and the Asian Development Bank (ADB) on 15 December 2025 signed loan agreements worth over $2.2 billion to support five major development projects spanning skilling, renewable energy, healthcare, urban transport and sustainable livelihoods across multiple states. The agreements were finalised under the guidance of the Department of Economic Affairs, Ministry of Finance. 

♦ The loan documents were signed by Deputy Secretary Saurabh Singh on behalf of the Government of India and by Aarti Mehra, Officer-in-Charge and Deputy Country Director of the ADB India Resident Mission, on behalf of the multilateral lender.

♦ The financing package includes support for the Pradhan Mantri Skilling and Employability Transformation through Upgraded Industrial Training Institutes Programme ($846 million), Accelerating Affordable and Inclusive Rooftop Solar Systems Development Programme – Subprogramme 1 ($650 million), Assam State Tertiary Health Care Augmentation Project ($398.8 million), Chennai Metro Rail Investment Project – Tranche 2 ($240 million), and the Integrated Ecotourism and Sustainable Agri-based Livelihood Development in Meghalaya Project ($77 million).

♦ The skilling programme aims to create a future-ready workforce by modernising 650 Industrial Training Institutes across 12 states and upgrading five National Skill Training Institutes into centres of excellence. The initiative is expected to improve employability for at least 1.3 million youth by offering demand-driven courses in high-growth sectors such as renewable energy, electric mobility and advanced manufacturing.

FDI

♦ The Union Cabinet approved a proposal to raise the foreign direct investment (FDI) limit in insurance firms from 74% to 100% on 12 December 2025. The move is expected to draw substantial foreign capital, increase competition, and improve customer services across India’s insurance market.

♦ By lifting the cap, the government aims to attract long-term global investors and deepen the sector’s capital base.

♦ The reforms form part of a broader push to expand insurance penetration and align with the government’s long-term vision of achieving ‘Insurance for All by 2047’.

♦ To give effect to the changes, amendments to the Life Insurance Corporation Act, 1956, the Insurance Regulatory and Development Authority Act, 1999, and the Insurance Act, 1938 will be introduced as part of the comprehensive legislative exercise.

MGNREGA name changed:

♦ The Union Cabinet is likely to approve renaming the national employment scheme from MGNREGA to Pujya Bapu Gramin Rojgar Yojna. The government will bring the Pujya Bapu Gramin Rozgar Guarantee Bill for MGNREGA, which will guarantee 125 days of work to the rural poor in a year. The government will allocate Rs.1.51 lakh crore.

♦ The National Rural Employment Guarantee Act 2005 (NREGA), later renamed as the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), is a labour law and social security measure that aims to guarantee the “right to work”.

♦ It aims to enhance livelihood security in rural areas by providing at least 100 days of wage employment in a financial year to every household whose adult members volunteer to do unskilled manual work.

The Asian Development Bank (ADB)

♦ The Asian Development Bank (ADB) has raised India’s growth forecast for 2025-26 by 0.7 percentage points—from 6.5 percent to 7.2 percent. ADB said India’s upgraded projection reflects a more robust third-quarter expansion, aided by tax cuts that have supported consumption. The forecast for 2026 remains unchanged at 6.5 percent.

♦ The ADB also revised upward its growth outlook for developing Asia and the Pacific for both 2025 and 2026, citing stronger-than-expected exports and reduced trade uncertainty following recent trade agreements with the United States.

♦ Inflation in developing Asia and the Pacific is expected to ease slightly to 1.6 percent this year, compared with the earlier 1.7 percent projection—driven mainly by lower-than-anticipated food inflation in India. The region’s inflation forecast for 2026 remains unchanged at 2.1 percent.

The Reserve Bank of India (RBI)

♦ The Reserve Bank of India (RBI) has slashed its repo rate by 25 basis points from 5.5% to 5.25%, the central bank's governor, Sanjay Malhotra, announced this on 5 December 2025. The latest rate cut takes the total reduction in 2025 to 125 basis points. The decision was taken unanimously after a meeting of the RBI's Monetary Policy Committee (MPC).

♦ The MPC had earlier reduced the key lending rate in June from 6% to 5.5% in view of a softening inflation.

♦ The RBI has also sharply raised the Gross Domestic Product (GDP) forecast for the current financial year to 7.3% from its earlier estimate of 6.8%. The GDP forecast for the current quarter (Q3, October-December) is also higher at 6.7% than the earlier 6.4%.

Fitch Ratings on 4 December 2025

♦ Fitch Ratings on 4 December 2025 revised India’s GDP growth forecast for FY26 to 7.4%, up from its earlier estimate of 6.9%, citing strong domestic demand and the positive impact of recent tax reforms. It said private consumption remains the primary engine of growth this fiscal year, supported by “strong real income dynamics, improved consumer sentiment, and the benefits of goods and services tax reforms.” 

♦ For FY27, Fitch expects growth to moderate to 6.4%, with domestic demand continuing to drive the economy. Public investment is likely to soften, while private investment is expected to strengthen in the second half of FY27.

♦ Fitch also expects the Indian rupee to strengthen to around 87 per US dollar next year (2026).

State Bank of India (SBI)

♦ State Bank of India (SBI) and Bank of India (BoI), have signed a Memorandum of Understanding (MoU) to work together on a Centre of Excellence in Strategic Partnership. This collaboration aims to strengthen leadership and expertise in project financing across India while encouraging innovation and teamwork in the banking sector.

♦ The Centre of Excellence is basically a shared workspace and knowledge hub where experts from both banks collaborate. It operates on three main ideas.​

♦ First is co-financing. Bank of India and SBI will jointly fund big projects. Second is strengthening the brand. Third is training people. 

The Gross Goods and Services Tax (GST)

♦ The Gross Goods and Services Tax (GST) collections for the 2025 November came in at over Rs 1.70 lakh crore. Official provisional figures indicate total Gross GST revenue reached Rs.1,70,276 crore in November 2025, rising 0.7% from Rs. 1,69,016 crore in November 2024.

♦ For April-November 2025, cumulative gross collections increased to Rs.14,75,488 crore, demonstrating robust 8.9% yearly growth.

♦ November's Net GST revenue amounted to Rs.1,52,079 crore, showing 1.3% yearly growth. The year-to-date net revenue reached Rs.12,79,434 crore, growing 7.3% annually.

♦ The Gross Domestic Revenue stood at Rs.1,24,300 crore in November 2025, compared to Rs.1,27,281 crore previously.