ICRA Insight

August 2025

Foreword

We’re pleased to present the August 2025 edition of ICRA Insight, continuing our commitment to delivering timely, research-backed perspectives on India’s evolving macro and sectoral landscape.

This month’s Monthly macro wrap highlights two key developments: the imposition of US tariffs on India and the state of India’s fiscal health. The tariffs have prompted a downward revision in our FY2026 GDP growth forecast to 6.0%, while strong Government capex and RBI dividends offer resilience. Our Chief Economist, Aditi Nayar, shares her insights on the evolving outlook.

The Research Recap covers macro trends, the PM E-Drive Scheme for e-trucks, and climate finance implications of the US withdrawal from the Paris Agreement.

In our Spotlight on CSR, we connected with students through creative learning. On July 29, ICRA Board members visited the VIDYA School in Gurugram, engaging with students through cultural and creative activities.

This edition also features upcoming webinar details, media coverage, rating updates, methodologies, and our latest podcast on edge data centres. We hope you find this edition insightful and engaging.

K. Ravichandran

Chief Ratings Officer, ICRA Limited.

Aditi Nayar

Chief Economist, ICRA Limited.

Monthly Macro Wrap

This month, we highlight two key developments - US tariffs on India and India’s fiscal health. The US imposed unexpectedly adverse tariffs, prompting us to cut FY2026 GDP growth to 6.0%. Sectoral impacts remain neutral to negative. Meanwhile, strong capital expenditure and RBI dividends boost fiscal resilience. Despite weak direct taxes, India’s fiscal buffers may offset tariff-related pain. We await clarity on the penalties.

Listen to the podcast

Spotlight
on CSR

Connecting Through Creative Learning

On July 29, ICRA Board members visited VIDYA School, Gurugram, meeting and engaging with students through cultural and creative activities. The visit deepened our CSR commitment to inclusive learning through connection, conversation, and shared experiences beyond traditional classrooms. Click here to know more!

Research Recap

Economic Outlook and Macro Trends

Despite global uncertainties, India’s Q1 FY2026 investment activity held firm, driven by strong Government capex and project completions. Private capex stayed cautious, but healthy cement and steel growth supported construction GVA resilience.

Commercial Vehicles

The PM E-Drive Scheme aims to accelerate e-truck adoption in N2 and N3 categories by offering demand incentives, boosting EV component manufacturing, and expanding charging infrastructure to build a robust electrification ecosystem.

Climate Series

President Trump’s decision to withdraw the US from the Paris Agreement may disrupt climate finance flows, reduce developed nations’ contributions, and pause committed disbursements, impacting global efforts toward climate resilience and sustainability.