India’s economic reforms undertaken in 2025 mark a decisive shift towards outcome-based governance, aimed at reducing friction for citizens and businesses while improving transparency, efficiency, and long-term economic resilience.
A major highlight of the reform agenda is the significant tax relief extended to the middle class through the Union Budget 2025–26. Under the new tax regime, annual incomes up to ₹12 lakh are exempt from income tax, with the effective exemption rising to ₹12.75 lakh for salaried individuals. This move has enhanced disposable incomes, supporting higher consumption, savings, and investment across the economy.
The introduction of the New Income Tax Act, 2025 represents a landmark overhaul of India’s taxation framework. By simplifying language, removing obsolete provisions, and strengthening digital-first enforcement, the new law promotes faceless administration, streamlined compliance, and more efficient dispute resolution.
Labour reforms have further strengthened the reform ecosystem, with 29 existing labour laws consolidated into four Labour Codes. The new framework expands wage security, social protection, and workplace safety, including for women, migrant workers, and gig and platform workers. Nearly 10 million gig workers are now covered under annual social security support.
Rural employment reforms have replaced the earlier framework with a modern statutory model that extends guaranteed employment to 125 days per household annually, while integrating livelihood generation with community development and infrastructure creation.
Support for MSMEs has been enhanced through phased and flexible implementation of Quality Control Orders, reduced compliance costs, and easier access to certification and testing facilities. Next-generation GST reforms, including a simplified two-slab structure and rate cuts on essential goods and services, have reduced compliance burdens and helped ease inflationary pressures.
In addition, the Export Promotion Mission introduces a unified, outcome-driven framework to strengthen India’s trade competitiveness. By supporting MSMEs, first-time exporters, and labour-intensive sectors, the mission aims to expand India’s global market presence and build resilient export ecosystems.
Taken together, India’s 2025 economic reforms lay a strong foundation for inclusive, sustainable, and globally competitive growth, reinforcing confidence among citizens, investors, and international partners alike.
