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December 12, 2025 Indian Economy and Business: Key Developments from December 11-12, 2025

India witnessed significant economic and business activity over the past 24-48 hours, marked by a repo rate cut by the RBI, a rebound in stock markets, and crucial policy discussions on trade and financial markets. Microsoft CEO Satya Nadella highlighted India's growing momentum in Artificial Intelligence, while a new report shed light on income inequality.

Economy & Finance Highlights:

  • The Reserve Bank of India (RBI) has cut the repo rate by 25 basis points to 5.25%, a move described by the RBI Governor as leading to a "rare Goldilocks period" for the economy.

  • Indian equities experienced a rebound, ending a three-day losing streak. The Sensex rose by 427 points, and the Nifty climbed above 25,850, following a rate cut by the US Federal Reserve. Sectors such as auto and metal showed significant rallies.

  • NITI Aayog released a comprehensive report titled "Deepening the Corporate Bond Market in India" on December 11, 2025. This report provides a strategic roadmap aimed at mobilizing long-term capital and reducing the Indian economy's reliance on bank credit.

  • According to recent reports, "old economy sectors" are driving India's investment boom, which positions the country as a hedge against the global AI investment surge.

  • Gold imports contributed to India's Current Account Deficit (CAD) reaching 1.3% in the second quarter of FY26.

  • For Budget 2026, there are plans for states to receive a larger capital expenditure push through higher interest-free loans from the Centre.

  • India's stock market demonstrated remarkable wealth creation, generating a record Rs 148 lakh crore between 2020 and 2025. Airtel emerged as the top wealth creator over this five-year period.

  • Reliance Industries continues to lead as India's most valuable company by market capitalization, followed by HDFC Bank, Tata Consultancy Services (TCS), and Infosys.

  • The Mutual Fund (MF) industry's Assets Under Management (AUM) surpassed Rs 80 lakh crore in November, with equity mutual fund inflows seeing a 21% jump.

International Relations & Trade:

  • Union Commerce Minister Piyush Goyal stated on December 11, 2025, that the United States should sign the free trade agreement with India if it is satisfied with India's current offer, emphasizing that India will not negotiate under time pressure. Prime Minister Narendra Modi and US President Donald Trump also held discussions regarding ongoing tariff disputes.

  • Italy's Deputy Prime Minister expressed optimism for the conclusion of an India-EU Free Trade Agreement within the next six months, although the Indian minister refrained from providing a specific timeline.

  • India-Italy ties are set for a further boost with an EU FTA declaration expected soon, and PM Modi has been invited to visit Rome.

Technology & Innovation:

  • Microsoft Chairman and CEO Satya Nadella, during his AI Tour in India on December 11, 2025, highlighted the "great momentum" in India regarding the deployment of Artificial Intelligence and agentic AI applications, noting their role in accelerating decision-making and driving measurable impact.

  • Amazon Web Services (AWS) announced plans to invest $7 billion to expand its data center infrastructure in Telangana over the next 14 years.

Social Welfare & Governance:

  • The World Inequality Report 2026 revealed that the top 10% of earners in India capture 58% of the national income, while the bottom 50% receive only 15%.

  • The government announced plans to introduce new levies on tobacco and pan masala as the Goods and Services Tax (GST) compensation cess is set to lapse.

  • A new 'Bharat Taxi App' has been announced by the government, aimed at regulating and limiting surge pricing for ride-sharing services like Ola, Uber, and Rapido.

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