Economic Activity Slows in November, Inflation Eases
India's private sector activity moderated to a six-month low in November, with the HSBC Flash India Composite Output Index falling to 59.9 from 60.4 in October. This slowdown was largely attributed to a sharp decline in manufacturing output, even though the services sector witnessed some improvement. Optimism regarding future output and hiring also saw a decline.
On a more positive note, inflationary pressures continued to abate. Input cost increases were the weakest in over five years, and output charge inflation dropped to an eight-month low. Consumer inflation recorded a historic low of 0.25% last month, leading to increased speculation that the Reserve Bank of India (RBI) might cut the repo rate by 25 basis points at its next policy meeting.
Rupee Hits Record Low Amid Trade and Fed Uncertainty
The Indian rupee experienced a significant depreciation, crashing to a record low of 89.48 against the US dollar. This decline was driven by a reduced risk appetite among investors, dimming expectations of a Federal Reserve interest rate cut, and ongoing uncertainty surrounding a potential US-India trade deal. The rupee's value has been under pressure since late August, following the imposition of steep US tariffs on certain Indian exports. This has also contributed to India's merchandise trade deficit reaching a record high in October, as exports to the U.S. fell by nearly 9% year-on-year. In response, the Indian government has announced measures exceeding $5 billion, including credit guarantees and bank loans, to support exporters.
Positive Long-Term Economic Outlook and Rising Forex Reserves
Despite the short-term moderation, Union Minister of Commerce & Industry, Mr. Piyush Goyal, expressed strong confidence that India will remain the fastest-growing major economy for decades. He projected India's growth to stay near 7% in the current fiscal year, highlighting robust Q1 FY26 growth of 7.8% and anticipated Q2 figures exceeding 7%. This positive sentiment is reinforced by S&P Global Ratings upgrading India's sovereign credit rating in August after an 18-year gap.
India's foreign exchange reserves also saw a healthy increase, jumping by $5.54 billion to reach $692.57 billion for the week ending November 14. This rise was primarily attributed to a significant increase in the value of gold reserves.
Key Policy and Industrial Developments
The government has implemented new labor codes aimed at establishing universal social security, ensuring minimum and timely wage payments, and promoting safe workplaces. Prime Minister Narendra Modi welcomed these reforms, emphasizing their role in empowering workers, simplifying compliance, and fostering job creation.
Additionally, the National Industrial Classification (NIC) 2025 was released, transitioning to a six-digit system and aligning with UN-ISIC Revision 5 for enhanced international comparability. The updated classification now includes new categories for emerging digital activities like cloud infrastructure, blockchain, e-commerce, fintech services, and the platform economy, including the gig economy. However, the Index of Eight Core Industries recorded zero growth in October 2025, marking its weakest performance in 14 months.
Bilateral Trade and Corporate News
India is actively pursuing stronger trade ties. Negotiations for a Free Trade Agreement (FTA) with Israel have been initiated. Furthermore, India and Afghanistan have agreed to appoint dedicated commercial attachés in each other's embassies and reactivate air freight corridors to boost bilateral trade, aiming to surpass the pre-2021 level of $1.8 billion.
In corporate news, Tata Consultancy Services (TCS) announced a major joint venture with global private equity firm TPG, planning to invest approximately ₹18,000 crore in HyperVault AI Data Centre Ltd for building AI and sovereign data centers across India. Hyundai Motor India invested ₹21.46 crore in FPEL Tamil Nadu Wind Farm. The Enforcement Directorate (ED) provisionally attached assets worth ₹1,452 crore linked to companies associated with Anil Ambani's Reliance Group. Meanwhile, Reliance Industries Ltd (RIL) halted imports of Russian crude oil at its Jamnagar Special Economic Zone (SEZ) refinery. Indian equities closed lower on Friday, with the Sensex slipping 401 points and the Nifty declining 124 points.