2025 will be remembered as the year India consciously chose to think bigger, move faster, and reform deeper. Under PM Modi, it became a defining moment when the country shed layers of outdated laws, simplified its tax and regulatory structures, opened new frontiers for industry, and aligned governance with the aspirations of a confident nation.
It was a year when India’s economic philosophy shifted toward clarity, scale, and global ambition. The impact was felt across rural India, industry, labour markets, and the emerging sectors that will shape the future. The clarion call given by PM Modi for regulatory reforms on 15th August and need to redraft laws for 21st century India was reflected in these reforms.
Surpassing every global estimate, the Indian economy showed a staggering 8.2% GDP growth in 2025. It was the result of breathing new life into the economy through landmark reforms, cutting across sectors from taxation to labour reforms, from port modernisation to nuclear energy, from FDI to FTAs along with significant deregulation.
Labour Reforms: Placing Workers at the Core of India’s Growth Story
2025 marked the first year when the Labour Codes reshaped India’s world of work in a visible and decisive way. By consolidating 29 fragmented laws into four modern codes, India created a labour framework that is clearer for businesses and more secure for workers.
With a stronger focus on fair wages, smoother industrial relations, wider social security and safer workplaces, the reforms position the labour market to support a growing workforce of 64.33 crore, encourage higher female participation and sustain lower unemployment levels as the economy expands.
Recent labour reforms have expanded social protection across India’s workforce. Nearly 10 million gig workers now receive annual social security support of Rs5,000-10,000. Between 50 and 70 million contract workers are being brought under Employees’ Provident Fund and Employees’ State Insurance coverage, translating into benefits of Rs15,000-25,000 per worker each year. A new national wage floor is set to raise incomes for 150-180 million low-wage workers.
The reforms are expected to expand the formal workforce by 15 percent, while bringing nearly 50 crore working-age women into the labour pool. For industry, the changes translate into a 60-70 percent reduction in compliance requirements per factory, alongside cost savings of roughly Rs5,000 crore from lower expenditure on manpower, consultants, and production shutdowns.
Next-Generation GST Reforms: A Simpler, Fairer, More Transparent System
India’s GST system saw its most meaningful simplification in 2025, moving to a clean two-slab structure of 5% and 18% that eased the burden on households, MSMEs, farmers and labour-intensive sectors. The reform aimed to reduce disputes, improve compliance and strengthen digital oversight while keeping sin goods outside the new structure to maintain fiscal balance. The impact was visible in consumer sentiment, with India recording record Diwali sales of Rs6.05 trillion and witnessing its strongest Navratri sales in over a decade.
The reforms led to Average GST burden reduction of 5% for consumers with upto 20% reduction in GST burden for some and an additional INR ~1 lakh crore in their pockets.Reduction in life and health insurance also ensured annual savings of 50,000 crores due to reduced premiums leading to better uptake of life and health insurance
SBI Research now projects that even with lower slabs and rationalisation, GST revenues in FY26 are expected to exceed budget estimates. This reinforces the view that a simpler tax regime can be both people-friendly and fiscally strong, positioning India on a path toward a clearer, more predictable and growth-oriented indirect tax framework. Simpler registration procedures have enabled 90% reduction in registration time from 30 to 3 days for small firms.
Income Tax Revolution: Relief for the Middle Class
2025 brought a transformative shift for India’s middle class with an income tax framework that finally reflected the realities of modern household budgets. For the first time, individuals earning up to Rs12 lakh a year faced no income tax at all, creating meaningful savings and giving families the financial space to plan, invest and spend with greater confidence.
Simultaneously, India replaced the old Income-tax Act of 1961, burdened with 4,000+ amendments and thousands of complexities, with the modern, simplified Income Tax Act, 2025. The new law rationalises exemptions, reduces litigation, improves clarity, and strengthens voluntary compliance. It represents a decisive break from colonial-era drafting and signals India’s entry into a new era of transparent, technology-driven tax administration.
Reforms in Building Permits and Environmental Clearance
Modi Government has enabled easier norms for constructing manufacturing units by reducing the previous uniform 33% mandate for green cover and introducing a differentiated system based on an industry’s pollution potential. This will unlock around 1.2 lakh hectares of industrial, reduce project cost upto 20% and spur Rs20-30 lakh crore in investments.
Similarly, individual industrial units located within an industrial park that has already obtained a comprehensive Environmental Clearance (EC) are generally not required to seek a separate EC. This will prevent investment and employment losses from EC delays, particularly in time-sensitive sectors by upto 6-18 months.
32 more industries have been also added “White Category” of industries including sectors like solar power, bicycle assembly, handloom, scientific instruments, tea packing, bio-fertilizers, and wood furniture (without spray painting). This will reduce compliance burdens and reduce entry barriers for first-time and smaller entrepreneurs, lowering fixed compliance costs at the start-up stage and free up resources for Pollution Control Boards to focus on high risk sectorsfor ease of doing business. This will benefit 3,000 to 5,000 industries annually.
The Great EoDB Reset: India Unshackles Its Entrepreneurs Through QCO Reform
The Ease of Doing Business reforms defined 2025 as a year of breaking barriers. A sweeping review of Quality Control Orders removed mandatory compliance for 76 product categories and identified over 200 for deregulation, lifting a major burden off MSMEs and exporters.
Removal of these QCOs will result in doubling India’s share of apparel exports from ~3% ($15bn) to ~5% ($30bn) in 5 years, reduction in production costs in footwear and auto industries by 10%-15%, 2-5% lower prices for domestic consumers for electrical, electronics, bicycles and automotive products leading to consumption boost. Additionally, removal of these QCOs will also result in creation of 30-33 lakh direct jobs and an equal number of indirect jobs.
Letting Small Companies Think Big
Expanding the definition of “small companies” to include firms with turnovers up to Rs100 crore reshaped the landscape for thousands of Indian enterprises. The reform created an environment where growing businesses no longer felt constrained by administrative hurdles, but instead were encouraged to scale with confidence and compete on a larger stage.
This will reduce compliance burden for about 10,000 companies and help them save INR 2 lacs annual in compliance cost.
A New Definition for Bigger MSME Ambitions
The MSME definition overhaul (effective April 1, 2025) removed a structural bottleneck that had discouraged scaling. Enterprise investment and turnover thresholds were raised 2.5-fold and doubled respectively:
4Micro enterprises: Investment limit raised Rs1 cr ? Rs2.5 cr and turnover limit Rs5 cr ? Rs10 cr
4Small enterprises: Investment limit raised Rs10 cr ? Rs25 cr and turnover limit Rs50 cr ? Rs100 cr
4Medium enterprises: Investment limit raised Rs50 cr ? Rs125 cr and turnover limit Rs250 cr ? Rs500 cr
This will enable enterprises to expand without losing MSME benefits and incentives, creating a longer runway for growth and enabling medium-tier firms to remain competitive globally while retaining access to government support structures.
Significant Reforms in FDI
Modi Government also did significant reforms in FDI by allowing 100% FDI in Indian insurance companies and will attract substantial foreign capital, enhance competition, and improve customer services within India’s growing insurance market.
Allowing upto 100% FDI in insurance sector will help bring 8 – 10 crore newly insured individuals into insurance coverage over the next 5 years along with $8-12 billion in fresh FDI inflows over the next 3-5 years into the Indian insurance market. It will also help reduce Rs1.5-2 lakh crore in contingent fiscal burden on government over a decade.
Opening Global Markets for Indian Manufacturers and MSMEs
India strengthened its economic future through strategic trade agreements.
The India-UK CETA signed in July and India-Oman CEPA signed recently expanded duty-free access for Indian goods to Western and Gulf markets, reinforcing India’s role as a global trade hub.India also finalised an FTA with New Zealand, eliminating tariffs across all its tariff lines and granting duty-free access to Indian exports.
In October, India operationalised its FTA with the European Free Trade Association which includes Switzerland, Norway, Iceland, and Liechtenstein, the first FTA with developed European economies. The agreement includes a binding $100 billion investment commitment over 15 years, major tariff cuts, and new opportunities in services, technology, and green energy.Negotiations are at advanced stages with the European Union, Mexico, Israel, Canada, and the Gulf Cooperation Council.
This combined with the recently announced Rs25,000 crore export promotion scheme will strengthen India’s position in international trade, accelerate progress toward the USD 1 trillion export target, and further the vision of Aatmanirbhar Bharat.
Market Securities Reform
In a landmark move to unify India’s securities market laws into single code, Securities Market Code Bill has been introduced which will strengthen governance norms, expand consumer protection, reduce compliance burden and support technology driven securities market.
The reforms could deliver Rs500-1,000 crore annually in reduced compliance, legal, and administrative overheads across industry. They are also expected to unlock Rs1,200-3,000 crore each year through new venture capital inflows and revenue from fintech innovation. Faster resolution of high-value economic fraud cases could further add efficiency gains of Rs500-1,300 crore per year.
Jan Vishwas: Ending the Era of Criminalisation
The Jan Vishwas reforms reshaped how government and business interact. Over 200 minor offences were decriminalised, hundreds of outdated laws were scrapped, and with the Repealing and Amendment Bill, 2025, this transformation has entered a new, deeper phase.
This law has repealed 71 acts which were obsolete or redundant, improving clarity and coherence in the legal framework and reduces interpretational confusion and avoidable litigation issues. This willsaveRs65,000-85,000 per MSME in compliance and legal costs and reduces 50+ man hours on average for select businesses, alongside reduced litigation and advisory costs.
This shift is not just legal but cultural; it signals to entrepreneurs that the system is now built to support, not intimidate. And when seven NDA-governed states together decriminalised more than 1,000 provisions, the reform evolved into a truly national movement.
States across the country have also done 23 reforms across land use, construction approvals and environment enabling 30-50% reduction in pre-construction time with Change of Land Use approval time falling from 6-12 months to just 15-45 days, accelerating project start. These reforms will also enable 30-90 days’ reduction in time to start operations for MSMEs and expand labour pool by 10%-15% for manufacturing and services.
Maritime and Blue Economy Reforms
The Monsoon Session of Parliament witnessed the passage of five landmark maritime legislations: the Bills of Lading 2025, Carriage of Goods by Sea Bill 2025, Coastal Shipping Bill 2025, Merchant Shipping Bill 2025, and the Indian Ports Bill 2025.
These laws modernise India’s maritime governance, replacing Acts from 1908, 1925, and 1958. The reforms ease documentation, reduce disputes, encourage coastal shipping, lower logistics costs, strengthen port governance, and position India to grow its blue economy. With faster wreck removal, better maritime safety, and empowered state maritime boards, India now has a 21st-century maritime framework aligned with global standards.
Educational Reform
The Viksit Bharat Shiksha Adhishthan Act establishes a single, unified higher education regulator by replacing multiple overlapping bodies (UGC, AICTE, NCTE) with the Viksit Bharat Shiksha Adhishthan. It enhances institutional autonomy to promote innovation and academic excellence, separates funding from regulation to ensure sharper focus on quality and standards, and aligns fully with the National Education Policy (NEP) 2020 vision of a modern, globally aligned regulatory framework.
This law will enable the number of higher education institutions to grow by 20% by 2034-35, with expansion into Tier-2, Tier-3 cities and rural districts. By reducing entry barriers and compliance burdens, it is expected to improve quality, lower education costs by 5-10%, cut median approval timelines by 20-30%, and save nearly 54 lakh human hours across 60-70 thousand institutions. It is also projected to boost FDI inflows into higher education by 10-20% over 3-5 years and expand accreditation coverage by 15-25%, strengthening institutional performance.
The New Era for India’s Nuclear Journey
The Parliament passed the SHANTI (Sustainable Harnessing and Advancement of Nuclear Energy for Transforming India) Bill. It is historic because it marks the first time India is structurally shifting its nuclear policy from a closed, state-monopoly model to a carefully regulated, safety-first but investment-friendly framework, repealing the old Atomic Energy Act, 1962 and subsuming the Civil Liability for Nuclear Damage Act, 2010 into a unified, modern law. By explicitly allowing private and foreign participation in designated civilian nuclear projects, while keeping the strategic fuel cycle, enrichment, reprocessing and weapons domain firmly under government control, it opens the door to capital, technology and next?generation reactors at a scale the public sector alone could not achieve.
This will unlock $100 – 150 billion of new capital from private domestic and foreign investors into nuclear power projects through to 2047 leading to 12-14 times increase in nuclear energy generation and reduce carbon emissions associated with fossil fuel generation.
Provisions of SHANTI Bill will also enable early deployment of 0.3-1 GW of Small Modular Reactors capacity by 2033, supporting modular, scalable clean power beyond large reactors.
A Landmark in Rural Employment Reform
2025 marked a shift in rural development with the new Viksit Bharat- G RAM G Bill, 2025 Rozgar Guarantee framework, which raises guaranteed work from 100 to 125 days and directs it toward strengthening village infrastructure and livelihoods.
By linking employment with local development plans and using digital systems for transparency, the reform aims to turn rural work into a driver of higher incomes, better assets and more resilient communities, moving it beyond relief toward long-term growth.
VB-G RAM G will increase annual wage entitlement by roughly Rs6,675 per household. Across 8.6 crore active jobs, this translates into up to Rs60,000 crore in additional wage entitlement each year, while also generating more than 200 crore additional person-days of employment.
2025 marked a decisive year of structural reform with simpler laws, stronger systems, softer inflation, and rising global credibility laying the groundwork for India’s path to Viksit Bharat 2047.
