India is on a path of rapid economic transformation, and 2025 brings a wave of reforms designed to accelerate growth, support businesses, and improve the lives of millions. 

Here are the key economic reforms to watch in India this year.

1. Major Tax Relief for the Middle Class

• Increased Tax Exemption:
• The Union Budget 2025-26 raises the nil tax slab to ₹12 lakh (INR 1.2 million) annually under the new tax regime, offering significant relief to salaried individuals and small business owners.
• Progressive Tax Structure:
• The highest tax rate of 30% now applies only to incomes above ₹24 lakh, making the system fairer and more supportive of the middle class.
• Higher TDS/TCS Thresholds:
• The thresholds for Tax Deducted at Source (TDS) and Tax Collected at Source (TCS) have been increased for senior citizens, renters, and mutual fund investors, easing compliance burdens.

2. Support for Startups and MSMEs

• Extended Tax Holiday:
• The deadline for startups to qualify for a three-year tax holiday within their first 10 years has been extended to 2030.
• Enhanced Credit Guarantees:
• The government is boosting credit guarantees and targeted loans for small businesses, with a special focus on women entrepreneurs.
• New Fund for Startups:
• A new ₹10,000 crore fund will support early-stage startups, encouraging innovation and job creation.

3. Sector-Specific Incentives

• Manufacturing and Exports:
• The budget introduces incentives for manufacturing in electronics, textiles, and sustainable energy, with duty exemptions to boost exports and domestic production.
• Agriculture and Rural Development:
• Programs for high-yielding crops and increased credit limits for farmers are set to strengthen rural incomes and food security.
• Tourism and Infrastructure:
• The government is developing top tourist destinations and increasing capital expenditure on infrastructure, aiming to generate employment and showcase India’s heritage.

4. Financial Sector and Regulatory Reforms

• Higher FDI Limits:
• The FDI limit in the insurance sector has been raised to 100%, attracting more foreign investment.
• Regulatory Simplification:
• The Jan Vishwas Bill 2.0 aims to decriminalize over 100 legal provisions, making it easier to do business.
• A New Direct Tax Law:
• The government is set to introduce a new income tax bill to simplify and modernize direct tax laws.

5. Social Security and Inclusivity

• Healthcare for Gig Workers:
• Gig workers will be formally registered and given access to healthcare coverage, recognizing the growing importance of the platform economy.
• Education and Skill Development:
• Initiatives to provide broadband connectivity for rural schools and focus on digital skills aim to prepare youth for future job markets.

6. Fiscal Consolidation and Infrastructure Investment

• Lower Fiscal Deficit:
• The fiscal deficit is projected to reduce from 4.8% in 2024-25 to 4.4% in 2025-26, signaling strong fiscal management.
• Capital Expenditure Boost:
• The government is increasing capital expenditure to ₹11.2 trillion, supporting infrastructure projects and job creation.

Conclusion

India’s economic reforms in 2025 are comprehensive and ambitious. By focusing on tax relief, startup support, manufacturing incentives, regulatory ease, and social inclusion, the government is laying the foundation for sustained and inclusive economic progress. These reforms are not just about numbers—they represent a vision for a modern, resilient, and globally competitive India.