Welcome to yet another edition, chief!

In today’s edition — Indian companies spent much of 2025 dealing with a tougher global environment after the US imposed higher trade tariffs. They had to adjust business plans on the go and absorb most of the pressure themselves. The priority was to survive and hold on to overseas markets, even if that meant letting go of profit margins.

India’s Trade Story in a Tough Year

Vishwas Ved

The year 2025 is perhaps going to be remembered as one of the most challenging periods for Indian businesses.

The trouble started brewing early on when the US slapped punitive tariffs on Indian exports, and the developments in the first few months went on to shape how companies planned their operations for the rest of the year.

Despite higher tariffs, exports more or less remained the same, but imports went higher.

According to a year-end report, How India Fared in 2025, by Rubix Data Sciences, exports for January-November 2025 rose by a marginal 0.6% to touch $407.6 billion year-on-year. Imports, on the other hand, rose to $690 billion, up 4.6%.

Although exports did not see any declines, that did not help exporters because they were forced to absorb any increase in costs caused by higher tariffs.

For the whole year, their focus was staying afloat and retaining market access rather than improving profit margins.

Selective Export Growth

The report points out that our export growth this year came from a handful of products and trading partners.

Surprisingly, India exported more to the US despite higher tariffs, accepting lower profitability to maintain volumes.

The major gainer was electronics, especially mobiles, as global manufacturers started production in India.

Other export categories remained far behind.

Gems and jewellery exports, the report pointed out, declined as demand weakened because higher tariffs made them uncompetitive. Exports of diamonds to the US fell by 40.8%, while gold and precious metal jewellery exports declined by 19.2%.

The same happened to the textiles industry, which couldn't pass on higher input costs without raising prices. For instance, bed linen exports to the US slipped by 1.9%.

Similarly, auto components and petroleum products also saw lower export values during the year. Exports of auto parts to the US declined by 7.4%, while refined petroleum product exports fell by 15.4%.

In many of these sectors, exporters chose to absorb higher costs instead of increasing prices. Obviously, this helped them retain buyers but profit margins took a hit.

Exports to major destinations other than the US were mixed. 

While exports to the US rose 15.4% and shipments to China and Germany also improved by 8.4% and 7.5%, respectively, declines were noticeable elsewhere, with exports to the Netherlands down 24.6% and Singapore falling 36%.

Higher Import Bills

Imports grew faster than exports through most of the year, thanks to crude oil and gold. 

Gold imports were high especially in October, which pushed the trade deficit to $41.7 billion during the month, the report says, adding that the spike was driven by a tripling of gold imports, reflecting festive demand. In November, the deficit came down to $24.6 billion once the imports moderated.

Energy trade was further influenced by sanctions on cheaper Russian crude. Indian refiners were forced to buy crude from the United States and the UAE.

Crude imports from Russia fell by 17.8% during January-October 2025, from $45.1 billion to $37.1 billion. Imports from the US jumped 83.3% — from $4.25 billion to $7.8 billion — while imports from the UAE increased 8.7% to $12.5 billion.

This change in strategy definitely helped exporters, but it also raised our energy bills.

GST: A Bright Spot

The government’s decision to cut GST rates in September was probably the only big relief for companies. The cuts rationalised the earlier five GST slabs into two principal rates, namely 5% for essentials and 18% for most goods and services. 

The impact was evident when gross GST collections rose by 4.6% year-on-year to ₹1.96 trillion in October 2025. 

Digital payments skyrocketed overnight from ₹1.18 trillion on September 21 to ₹11.31 trillion on September 22 as people rushed to avail lower GST rates. 

The auto industry was one of the major beneficiaries of the GST cut, as vehicle sales reported a 41.3% year-on-year rise in October 2025. 

The tax cuts were the reason the Indian economy clocked a GDP growth of 8.2% in Q2 FY26 — the highest in six quarters — prompting the RBI to revise its FY26 growth forecast to 7.3% from 6.8%.

What 2026 Inherits 

The bad news is that the year 2026 won’t get to start with a clean slate. Most of what made trade difficult in 2025 is still around. Tariffs haven’t gone anywhere, and energy costs continue to be unpredictable. 

The report makes it clear that when companies step into the new year, they’re already carrying this baggage with them. Unfortunately, companies do not have much room to increase prices or take more risks. 

In that sense, 2026 starts exactly where 2025 ends. Businesses that calibrated their plans and strategies in 2025 will find it easier to manage things. Others will be forced to adjust on the go.

On that note, Masters India and I wish you a very happy New Year!

₹6,650 crore

Oyo parent Prism has received shareholders’ approval to raise up to ₹6,650 crore through a fresh issue of equity shares as part of its proposed IPO. Shareholders also approved a bonus issue of equity shares in the ratio of 1 fully paid-up equity share for every 19 existing equity shares held, with December 5, 2025 fixed as the record date for determining eligible shareholders. Moody’s recently reaffirmed PRISM’s corporate family rating with a stable outlook and expects the company’s EBITDA to more than double to around ₹2,496 crore in financial year 2026..

—US delays announcement of China chip tariffs until 2027. US President Donald Trump's administration on Tuesday said it will slap tariffs on Chinese semiconductor imports over Beijing's “unreasonable” pursuit of chip industry dominance, but would delay the action until June 2027. The tariff rate will be announced at least 30 days in advance, according to the filing, which follows a year-long "Section 301" unfair trade practices investigation into China's exports of “legacy” or older-technology chips to the US, launched by former President Joe Biden's administration.

—North Korean agents are trying to infiltrate Amazon. Amazon has blocked hundreds of job applications from suspected North Korean operatives, according to the tech giant's chief security officer, amid growing concerns over cyber scams connected to Pyongyang. “Their objective is: get hired, get paid, and funnel wages back to fund the regime’s weapons programs,” Stephen Schmidt wrote on LinkedIn, adding that applicants were using fake or stolen identities to pursue remote IT jobs in the US and worldwide. The fraud was detected by Amazon's AI-powered application screening system combined with manual verification by its staff. 

—US regulator approves pill form of Wegovy weight-loss drug. The US Food and Drug Administration (FDA) has approved a pill version of the weight-loss drug Wegovy, according to pharmaceutical giant Novo Nordisk. It is the first pill of its kind to receive approval from the regulator, marking a new era for weight-loss drugs. Wegovy's Danish makers Novo Nordisk said the once-daily pill was a "convenient option" to the injectable and would provide the same weight loss as the shot. It comes after Wegovy was approved by the FDA specifically for weight loss. Others like Ozempic, which has similar weight-loss effects, were primarily approved for the treatment of Type 2 diabetes.

—Kajaria Ceramics fires subsidiary CFO over ₹20-crore fraud. Kajaria Ceramics Limited has fired the chief financial officer of Kajaria Bathware Private Limited over a fraud at a unit of the wholly owned subsidiary. Kajaria Bathware CFO Dilip Kumar Maliwal embezzled ₹20 crore from subsidiary Kerovit Global Private Limited , according to an exchange filing on December 19. Kerovit Global is a wholly owned subsidiary of Kajaria Bathware, which in turn is a stepdown wholly-owned subsidiary of Kajaria Ceramics.

ICYMI | Tax & Lax Don’t Rhyme

Missed last week's update? A company from Andhra Pradesh learned the hard way that being relaxed about GST compliance comes at a price. The Supreme Court upheld a 100% penalty, saying non-filing of returns is a lapse even when the tax is fully paid.

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