ICRA Insight

December 2025

Foreword

We are pleased to present the December 2025 edition of ICRA Insights, reaffirming our commitment to delivering timely, research-backed perspectives on India’s evolving macro and sectoral landscape.

This month’s Monthly Macro Wrap highlights India’s Q2 FY2026 GDP growth accelerating to 8.2%, supported by festive restocking, GST rationalisation, and robust capital expenditure. While October’s IIP growth slowed to 0.4% and GST collections rose modestly, full-year GDP growth has been revised upwards to 7.4%, underscoring resilience amid headwinds such as adverse base effects and reduced Government spending.

In our Spotlight on CSR, we feature ‘Waves of Warmth Spread’, our Christmas initiative at Deepalaya School, Haryana, where the ICRA family donated 72 blankets to residential students, turning the winter’s chill into comfort and proving that kindness can create waves of change.

The Research Recap section covers reports on record-high merchandise imports, a widening trade deficit, and festive retail sales buoyed by GST cuts. Our Monthly Compendium also includes the RBI’s draft credit risk framework, ECL’s impact on bank capitalisation and other sectoral insights.

This edition also brings you rating updates, methodologies, media coverage, and our latest podcast on Banking Sector Outlook. We hope you find this edition insightful and wish you all a Happy New Year!

K. Ravichandran

Chief Ratings Officer, ICRA Limited.

Aditi Nayar

Chief Economist, ICRA Limited.

Monthly Macro Wrap

India’s Q2 FY2026 GDP surged to 8.2%, surpassing expectations and driven by festive restocking, GST rationalisation, and strong capital expenditure. October’s IIP growth slowed sharply to 0.4%, while GST collections showed only a modest rise. Despite looming headwinds like adverse base effects and reduced government spending, full-year GDP growth has been revised upward to a healthy 7.4%, signaling resilience.

Listen to the podcast

Spotlight
on CSR

Waves of Warmth Spread

The ICRA family spread warmth at Deepalaya School, Haryana, donating 72 blankets to residential students as part of our Christmas CSR drive, proving kindness creates waves of change. Click here to know more!

Research Recap

Economic Outlook and Macro Trends

India’s merchandise imports hit a record $76.1 billion in October 2025, up 16.6% YoY, while exports fell 12% to $34.4 billion. This pushed the trade deficit to an unprecedented $41.7 billion, with the CAD expected to widen to ~2.4-2.5% of the GDP.

Festive Retail Sales Soar on GST Rate Reductions

Two-wheeler retail sales jumped 22% to 41 lakh units during the festive season, while passenger vehicles rose 21% to 8.1 lakh units, aided by GST cuts, discounts, and financing options. Inventory levels eased to 45–50 days by October-end, signalling strong demand.

Monthly Research Compendium

The Research Compendium features ICRA’s key reports from October 2025, including the RBI’s draft credit risk framework, ECL’s impact on banks’ capitalisation, the climate series on NMM’s success, and Pune’s upcoming micro-market supply for FY2026—insights shaping India’s economic and sectoral outlook.

The Economic Times:
Individual NBP for life insurance growth estimated at 9% in FY2026: ICRA

Mint:
Core sector output flat in October, marking sharpest slowdown in 14 months

Business Standard:
Overcapacity in solar manufacturing to impact firms' profitability: ICRA

ICRA Podcast

Check out ICRA’s latest podcast by Mr. Sachin Sachdeva VP and Sector Head - Financial Sector Ratings at ICRA on Banking Sector Outlook FY2026 and Key Credit Trends.

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ICRA Insight

Foreword

Monthly Macro Wrap