Government points to 2025 as a year of big reforms

DEspite several international pressures in 2025, including unprecedented tariffs imposed by the US authorities and tougher visa rules, the native american authorities has said in its year-end assessment that 2025 saw a warm crowd on policy changes, even as political disagreements and tense Parliament proceedings marked both the monsoon and winter sessions.In the assessment, shared with the media, the government said the period stood out as one where India chose to “think bigger, move faster, and reform deeper” under the leadership of Prime Minister Narendra Modi.From the recently passed Sustainable Harnessing and Advancement of Nuclear Energy for Transforming India (SHANTI) Bill aimed at opening up the nuclear sector, to moves to rationalise GST rates, the reforms span labour laws, taxation, ease of doing business, trade, education, energy and rural employment, and were linked to the PM’s August 15 speech at the Red Fort in a call for regulatory changes and rewriting laws for “21st century India”.Labour reforms in focusThe four new labour codes finally came into force this year, replacing 29 older labour laws. They focus on wages, industrial relations, social security and workplace safety. As per the government, nearly 10 million gig workers get annual social security support between ₹5,000 and ₹10,000. Between 50 and 70 million contract workers are being brought under Employees’ Provident Fund and Employees’ State Insurance.A national minimum wage is expected to help 150 to 180 million low paid workers by raising their earnings. The government said changes could expand the formal workforce by 15% and bring nearly 500 million working age women into the labour force. For the industry, the reforms are expected to cut compliance requirements by 60 to 70% per factory.GST simplified to two slabsWith the unified Goods and Services Tax (GST) moving to a two-slab structure of 5% and 18%, the government said the idea was to make things easier for households, MSMEs, farmers and labour-intensive sectors, while continuing to have higher taxes on so-called sin goods. The government linked the change to strong festive demand, pointing to ₹6.05 trillion of Diwali sales.According to the government’s assessment, consumers saw an average GST burden drop of 5%, with some seeing reductions of up to 20%, putting roughly ₹1 lakh crore back in people’s hands. Lower GST on life and health insurance is estimated to have led to annual savings of ₹50,000 crore through cheaper premiums. Earlier in the year, the Union budget provided significant income tax relief for middle class families, with individuals earning up to ₹12 lakh a year having to pay no tax.The year also saw the old Income Tax Act, 1961 being replaced with the new Income Tax Act, 2025. The government said the new law simplifies exemptions, cuts down litigation and brings more clarity, marking a shift away from decades’ old, complex drafting.New push on rural employmentBrought in to replace the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), the contentious Viksit Bharat G-RAM-G Bill, 2025, which was passed in the Parliament amid disruptions, raised guaranteed rural employment from 100 to 125 days. According to the government, this could increase annual wage entitlement by about ₹6,675 per household and add up to ₹60,000 crore in wages each year across 86 million active job cards.In the Parliament, proceedings in both houses was repeatedly interrupted by opposition protests, with members raising objections over the introduction and passage of the legislation.Faster building permits and fewer clearance delaysThe government said it eased rules for building manufacturing units by moving away from a uniform 33% green cover rule to a system based on pollution potential. This, it claimed, could unlock around 1.2 lakh hectares of industrial land, cut project costs by up to 20%, and help attract investments of between ₹20 lakh crore and ₹30 lakh crore.Units inside industrial parks that already have environmental clearance will now usually not need separate approvals, cutting delays by six to 18 months. Another 32 industries were added to the “White Category”, reducing compliance for 3,000 to 5,000 units each year.Ease of Doing Business and bigger room for small companiesA review of Quality Control Orders removed mandatory compliance for 76 product categories, with over 200 more set to be deregulated. The government said this could boost exports, cut manufacturing costs in sectors such as footwear and automobiles, and lower prices for consumers. The changes are also expected to create 3-3.3 million direct jobs, along with a similar number of indirect jobs.The definition of “small companies” was expanded to include firms with turnover up to ₹100 crore. The government said this will cut compliance costs for about 10,000 companies, saving roughly ₹2 lakh a year per firm. Micro, Small and Medium Enterprises (MSME) investment and turnover limits were also raised from April 1, allowing businesses to grow without losing MSME benefits.Insurance, trade reformsThe government allowed up to 100% foreign direct investment (FDI) in insurance companies, and believes the move could bring 80-100 million more people under insurance coverage over the next five years and attract $8-12 billion in foreign investment, while also easing long term fiscal pressure.At the same time, India pushed ahead with trade agreements, signing deals with the UK and Oman, finalising a free trade agreement (FTA) with New Zealand, and operationalising its pact with the European Free Trade Association, comprising Switzerland, Norway, Iceland and Liechtenstein, which includes a $100 billion investment commitment over 15 years. Trade talks are also underway with the EU, US, Mexico, Israel, Canada and the Gulf Cooperation Council.Changes in securities markets and business lawsThe Securities Market Code Bill was introduced to bring all securities laws under one umbrella. The government said this could cut compliance costs by ₹500-1,000 crore a year and unlock new investment through fintech.Under the Jan Vishwas reforms, more than 200 minor offences were decriminalised and 71 outdated laws repealed. The government’s assessment said MSMEs could save ₹65,000 to 85,000 a year in legal and compliance costs.Maritime, education and nuclear reformsFive maritime laws were passed to modernise shipping and port rules. In education, the Viksit Bharat Shiksha Adhishthan Act replaced multiple regulators with a single body aligned with the National Education Policy 2020.Parliament passed the SHANTI Bill, opening select civilian nuclear projects to private and foreign players, while keeping strategic areas under government control. The government said this could attract $100-50 billion in investment by 2047.The measures above, the government said, came at a time of strong economic performance, with India recording 8% GDP growth in the first half of 2025-26, beating analyst estimates, as the country works toward its long term goal of Viksit Bharat by 2047.