The high global definitions are risks, but the Indian economy is fixed: the Ministry of Finance

The Indian economy continued to show flexibility in July 2025, as it maintained momentum even when global trade faced uncertainty from the conflict of customs tariffs and geopolitical tensions. According to the monthly economic review of the Ministry of Finance, strong local demand and strong total economic basics were supporting growth, although caution was justified amid the protection trends abroad that began to influence India’s expectations.

The report highlighted that global trade has already begun to feel the effects of high duties and the inability to predict politics, which led to the relief of work morale. The World Trade Organization (WTO) reviewed the global trade growth expectations for 2025 to 0.9 % of 2.7 % earlier, noting that the full impact of raising the customs tariff may become likely to become clearer in the last half of 2025 to 2026. Slams with this, the index of uncertainty for commercial policy is 17 % in July. Although the United States is a major destination for Indian exports, any long tariff pressure there can gradually affect shipments.

Despite these external opposite winds, the external sector in India remained stable. Commodity and services exports increased by 4.5 % year on year in July to $ 68.3 billion. Cargo exports expanded by 7.3 %, driven by a strong increase of 12.7 % in non -local, local and jewelry exports, while service exports grew modest by 1.4 %. Imports increased by 6.1 % to 80 billion dollars, led by a 6.9 % increase in non -oil imports, reflecting strong local consumption. This trade deficit has paid up to $ 11.7 billion, an increase of $ 10.1 billion in the previous year.

To alleviate the challenges related to tariffs, the government has pursued a calibration trade policy. It is expected that the comprehensive economic and commercial agreement in India (CETA), effective since July, will double bilateral trade by 2030 while protecting sensitive sectors. In addition, the recently concluded India Agreement, the ongoing negotiations with the European Union, the United States and other partners aim to diversify markets and enhance supply chains, which reflects a wider strategic approach.

On the local front, high frequency indicators indicated continuous economic activity. The generation of an invoice on the electronic road has reached record levels, the manufacture of the purchasing managers index reached a 16 -month height, and PMI services continued to expand the signal. Rural and urban consumption remained strong, supported by an increase of FMCG sales, powerful UPI transactions, and fixed demand for cars. The monsoon winds strengthened the power of rural spending. Inflation decreased significantly, as the main consumer price index decreased to 1.6 % in July due to the softening of food prices, and remains without a decrease in the range of tolerance in RBI. The ministry noted that this provides additional flexibility for financial and monetary measures to support growth.

While the total expectations remained positive, the review indicated the risks of the developments of customs tariffs. Although the recent American definitions had a limited immediate effect, its broader impact on supply and investment chains may appear over time. However, India entered this period from the relative power site, with the help of the sovereign classification by the S&P to BBB, the continuation of capital spending, upcoming reforms-including the amendments to the tax, services and pales tax at the state level-which are expected to attract investment, low borrowing costs, and enhance competitiveness.

The ministry concluded that although the universal uncertainty and customs tariffs constitute challenges, the flexible domestic demand in India, the various trade strategy, and continuous reforms, provided a strong basis for mobility in these opposite winds and maintaining growth.