Modi offers the Indian financial system within the midst of Trump tariff voltages for a tax hone

Narendra Modi, India's Prime Minister, on Friday, August 15, 2025, during the ceremony of the Independence Day in Red Fort in Neu -Delhi, India, the country.

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The Indian markets achieved a gift to a domestic economy on Monday, when Prime Minister Narendra Modi recently unveiled tax cuts, which is still exposed to the teeth of the US tariffs.

The NIFTY 50 Index rose by 1%, whereby the BSE Senseex added 0.84%. In currencies, the US dollar gave 0.18% compared to the rupie.

In an extensive speech on Independence Day on Friday, Prime Minister Narendra Modi made a concerted advance on self -confidence and proposed a flood of financial reforms. Neu-Delhi is now planning a two-rate structure of 5% and 18% in the context of far-reaching changes to the regime of goods and service tax (GST) and plans to abolish the previous 12% and 28% taxes, which were imposed on some objects, Reuters quoted a government official on Friday. The news was also reported by local media.

“The reforms aim to simplify compliance, to lower the tax rates and to modernize the GST frame in order to make it more growth-oriented. The managers of industry expect measures such as rationalization of installments in two plates, the tax burden for micro, small and medium-sized companies (MSMES), the essential goods, and the use of technological, medium-sized yields (Fell-Refuns returns) and frequency-rounds and frequency heights and frequency wages that have been cut to Frequilling Refuns and Fell-Refunds returns.

India's car industry could also be one of the beneficiaries of the new tax policy after a slow route in recent months. The sales of Indian passenger vehicles, which include cars, added 4.2% in the calendar year 2024, the manufacturers of Indian automobile manufacturers in January – according to Reuters, the slowest growth pace in four years.

The auto sector's shares recorded 8.75%during the Monday meeting when Maruti Suzuki India increased, while Hyundai Motor India rose by 8.15%.

“I am definitely positive about the announcement and the car sector, which is a relative successor in the last quarters, and not surprisingly to see that the sector jumps back quite strongly,” said James Thom, Senior Investment Director of the Asian share team at Aberdeen, opposite CNBC “in India on Monday”.

The tax overhaul of Modi could support the Indian economy that the Reserve Bank of India grows by 6.5% in the 2025-2026 financial year at a time of deep geopolitical uncertainty, which was enthusiastic about Washington's so-called “mutual tariffs”. Especially in Neu -Delhi, the cross -country cross of the US President Donald Trump fell because of his ongoing purchases of Russian crude oil. Washington has imposed a further delivery of 25% for Indian imports – which increases the total tasks to 50% – since it is effective at the end of this month.

“India is a domestic consumption history. Exports are a relatively small contribution. [tax overhaul] could compensate for more than from the effects of tariffs, “said Thom von Aberdeen.

“From a fundamental point of view, the changes to the GST regime will be absolutely supportive for consumption in the course of the year. And consumption has been weak in India for some time. So this is a real type of thrust for the economy if you want the India's economy.”

The domestic recording is “one of the most convincing indicators that investors go closely with a” largest driver of economic growth in India “with a GDP contribution of 61.4% in the 2024-25 financial year, said Deloitte in a report in August.

“In particular, urban consumption and a shift in the expenditure of expenditure against luxury goods are created as important pillars of this dynamic,” it said.

India Ratings & Research In the meantime, the private final consumption rate of India forecasts by 6.9% in the financial year until the end of March 2026 and exceeds a wider GDP growth outlook of 6.3% on the back with low real wage increases, the savings and a boost drop to personal loans.

“A severe decline in inflation has improved the prospects of stable consumption growth in the GJ26,” she added. Indian retail inflation slowed down from 4.31% in January to 1.55% in July since 2017.