India Inc’s 2025 reset: From China risks to long-term bets

From an uncertain geopolitical environment that created an atmosphere of fear and fragility to the constantly evolving belligerent posture of the world’s two largest economies—the US and China—Indian businesses had to navigate a complex global landscape not only to stay resilient but also to find avenues for growth amid mounting challenges.

India Inc had moments of caution, but it also made the most of the situation by recalibrating strategy and approach, choosing to invest time and energy in long-term growth rather than short-term gains. Many of these moves may not appear significant at the moment, as they are unlikely to yield immediate results, but over the longer run, they are expected to prove effective and bear fruit.

Dancing with the Dragon with urgency as boardrooms recalibrate strategy
One of the foremost challenges for India in 2025 was managing its approach towards China. In April, when China halted the supply of critical rare earth metals, essential for chips, weapons, electric vehicles and several other applications — India Inc, particularly automobile giants, knocked on the government’s door to secure supplies. Without intervention, the disruption threatened to derail India’s ambitious electric vehicle adoption plans.


As industry flagged concerns, the government swiftly doubled down on diplomatic channels while simultaneously fast-tracking domestic measures. This included accelerated execution of the National Critical Mineral Mission, aimed at reducing regulatory bottlenecks and opening doors for private firms to scale up exploration and processing of rare earths. India also partnered with countries such as Australia, Japan and the US to explore alternative supply-chain routes.

Although China partially eased the curbs later, the episode delivered a sharp jolt. It pushed India to prepare for future shocks, and crucial groundwork was laid to strengthen long-term resilience.

India a beacon of growth amid a slowing world
Despite geopolitical headwinds and global uncertainty, India emerged as the world’s fourth-largest economy in 2025 in terms of GDP. India’s resilience stemmed largely from strong domestic consumption. As a consumption-driven economy, India was less vulnerable to the damage caused by Trump’s tariff war, which hit export-dependent economies like China harder. Manufacturing expansion — particularly in defence exports and a robust digital services sector also boosted investor confidence.

GDP growth remained mostly in the 6–7% range, supported by public capital expenditure, services exports and sustained government spending on roads, transport and renewable energy. While corporate capex stayed relatively muted, India Inc’s balance sheets remained healthy.

New tax and GST frameworks offer fresh hope
The 2025 Budget marked a decisive shift in India’s tax architecture, with a clear focus on simplifying compliance and boosting consumption. The government recalibrated income-tax slabs under the new regime to broaden the base, simplify compliance and put more disposable income in consumers’ hands.

At the same time, the GST framework was streamlined, reducing multiple slabs to just two key rates — 5% and 18%. This not only eased the compliance burden for businesses but also strengthened digitisation and helped sustain business momentum across sectors.

Dalal Street sees a strong IPO wave
Investor confidence in India’s growth story was clearly reflected in a steady pipeline of IPOs on Dalal Street in 2025. From ICICI Prudential AMC — the country’s largest asset management company — to JSW Cement, manufacturing-linked firms such as Saatvik Green Energy and Manas Polymers, and niche industrial SME listings like Bai Kakaji Polymers and Admach, the market saw wide participation.

Several marquee IPOs were oversubscribed multiple times, while many delivered healthy listing gains, reinforcing confidence in India’s long-term growth narrative.

Manufacturing takes centre stage
India witnessed a flurry of announcements and policy action aimed at building a manufacturing ecosystem focused on value addition and supply-chain resilience. Semiconductors gained priority, and incentives expanded under the PLI framework. Auto and EV companies scrambled to secure rare earth supplies from alternative sources, while defence manufacturing received a major boost as export order books swelled.

India also sharpened its positioning from ‘Make in India’ to ‘Make in India, for the World’, projecting itself as a credible manufacturing hub capable of challenging China’s dominance. Manufacturing currently contributes about 17% to India’s GDP, but the government has set an ambitious target of raising this share to 25% by 2047. Decisions taken in 2025 — through initiatives such as PLI schemes, Make in India and support for sunrise sectors — are expected to be critical stepping stones.

Trade diplomacy
In 2025, trade policy emerged as a core economic tool. India concluded multiple trade agreements to diversify markets and counter tariff pressures. A landmark Free Trade Agreement with the UK was signed mid-year, followed by the finalisation of an FTA with New Zealand in December. India also concluded negotiations on a Comprehensive Economic Partnership Agreement (CEPA) with Oman in August, improving access to Gulf markets.

Simultaneously, talks continued with the US, the EU and key Indo-Pacific partners, while ensuring protection for sensitive domestic sectors.

As India heads into 2026, the questions are no longer about growth potential but about execution — whether the country can build deep manufacturing ecosystems, secure critical minerals, and strengthen technological capabilities for the long haul.