2025: When Indian Businesses Chose Survival Over Growth

The year 2025 is likely to be remembered as one of the most challenging periods for Indian businesses in recent times.

Trouble began early in the year when the US imposed punitive tariffs on Indian exports. Those initial shocks went on to shape corporate strategies for the rest of the year, forcing companies to focus less on growth and more on survival.

Despite the higher tariffs, India's exports managed to hold their ground, even as imports surged. According to How India Fared in 2025, a year-end report by Rubix Data Sciences, exports during January-November 2025 rose marginally by 0.6% year-on-year to $407.6 billion. Imports, however, climbed 4.6% to $690 billion.

While exports avoided a decline, exporters derived little comfort from the numbers. Most were compelled to absorb the additional costs imposed by tariffs rather than pass them on to buyers. For much of the year, the priority was retaining market access and staying afloat, not protecting margins.

The report highlights that whatever export growth India saw in 2025 was narrow and selective, driven by a handful of products and destinations. In a telling trend, exports to the US rose despite higher tariffs, as Indian firms accepted lower profitability to maintain volumes.

Electronics emerged as the biggest winner, particularly mobile phones, as global manufacturers expanded production in India. Beyond this, however, performance across sectors remained weak.

Gems and jewellery exports suffered as higher tariffs eroded competitiveness. Diamond exports to the US plunged 40.8%, while gold and precious metal jewellery exports fell 19.2%. The textiles sector faced similar pressures, unable to pass on rising input costs without losing demand. Bed linen exports to the US, for instance, slipped 1.9%.

Auto components and petroleum products also recorded declines. Exports of auto parts to the US dropped 7.4%, while refined petroleum product exports fell 15.4%. In many of these sectors, exporters chose to absorb higher costs rather than raise prices, preserving buyer relationships at the cost of profitability.

Exports to other major markets showed mixed trends. While shipments to the US jumped 15.4%, and exports to China and Germany rose 8.4% and 7.5% respectively, sharp declines were seen elsewhere. Exports to the Netherlands fell 24.6%, while shipments to Singapore plunged 36%.

On the import side, rising crude oil and gold bills widened the trade gap through much of the year. Gold imports surged in October, pushing the trade deficit to $41.7 billion for the month, driven by festive demand and a tripling of gold imports. The deficit narrowed to $24.6 billion in November as imports moderated.

Energy trade was further complicated by sanctions on cheaper Russian crude. Indian refiners were forced to turn to alternative suppliers such as the US and the UAE. As a result, crude imports from Russia fell 17.8% during January-October 2025, from $45.1 billion to $37.1 billion. Imports from the US jumped 83.3% to $7.8 billion, while those from the UAE rose 8.7% to $12.5 billion. While this shift helped maintain supply, it came at the cost of higher energy bills.

Amid the challenges, the government's GST rate cut in September stood out as a rare bright spot. The move rationalised five slabs into two principal rates - 5% for essentials and 18% for most goods and services - offering immediate relief to businesses and consumers alike.

The impact was visible almost instantly. Gross GST collections rose 4.6% year-on-year to 1.96 trillion rupees in October 2025. Digital payments surged dramatically, jumping from 1.18 trillion rupees on September 21 to 11.31 trillion rupees the very next day as consumers rushed to take advantage of lower rates.

The auto sector was among the biggest beneficiaries, with vehicle sales soaring 41.3% year-on-year in October. The tax cuts also helped lift overall economic momentum, with GDP growth touching 8.2% in Q2 FY26 - the highest in six quarters - prompting the RBI to raise its FY26 growth forecast to 7.3% from 6.8%.

However, 2026 does not begin with a clean slate. Most of the pressures that defined 2025 remain firmly in place. Tariffs persist, energy costs remain volatile, and pricing power continues to be limited.

As the report makes clear, companies enter the new year carrying forward the baggage of the past one. Those that recalibrated their strategies in 2025 will be better placed to cope, while others may find themselves adjusting on the fly.