Key Takeaways

*    Labour reforms unified 29 laws under four Labour Codes, extending social security and workplace safety.

*    Next-Gen GST simplified taxation, expanded the taxpayer base to 1.5 crore.

*    The Export Promotion Mission (₹25,060 crore) strengthens MSME and first-time exporter support with finance, compliance, and market access.

*    Rural employment reforms provide 125 days of guaranteed paid work.

Setting the Stage: India’s 2025 Economic Vision

Economic reforms in 2025 reflect a maturing phase of India’s governance, where the emphasis shifted decisively from “expanding regulatory frameworks” to “delivering measurable outcomes”. The focus moved towards simplifying systems, reducing compliance burdens, and improving predictability for citizens and businesses. Across taxation, GST, labour regulation, and business compliance, reforms were designed to make every day economic interactions smoother, faster, and more transparent, strengthening trust in institutions and policy certainty.

The year’s initiatives emphasized ease of living, ease of doing business, and inclusive growth, aligning regulatory structures with India’s evolving economic aspirations. From simplified tax regimes and Next-Generation GST to modern labour codes and expanded MSME definitions, the Government ensured that reforms not only reduced friction in everyday economic activities but also empowered youth, women, small businesses, and rural communities. Collectively, these measures illustrate a governance approach rooted in outcome-driven policymaking, fostering trust, predictability, and long-term economic resilience, according to a PIB Feature release.

Key Reforms Shaping Growth and Opportunity

Income Tax Reforms
In a major relief for Indian families and individual taxpayers, the Union Budget 2025-26 introduced substantial reforms in direct taxation, ensuring that annual incomes up to ₹12 lakh are exempt from income tax under the new regime, with the effective exemption rising to ₹12.75 lakh for salaried taxpayers on account of the standard deduction. This change reaffirmed the Government’s commitment and left millions of middle-class households with higher disposable income, boosting consumption, savings, and investment.

In July 2024, the Government announced a comprehensive overhaul of the Income-tax Act, 1961 leading to New Income Tax Act, 2025 - a landmark development to simplify language, remove obsolete provisions and consolidate & restructure provisions. An internal Departmental Committee, constituted by Central Board of Direct Taxes (CBDT) for comprehensive review of the existing Act, undertook the reform with three guiding principles:

    Textual and structural simplification, improved clarity and coherence.
    No major tax policy changes, ensuring continuity and certainty.
    No modifications of tax rates, preserving predictability for taxpayers.

The Income Tax Act, 2025 modernizes India’s direct tax framework by simplifying and streamlining tax legislation, making it more accessible, transparent, and less prone to litigation. A key reform is the introduction of a unified “Tax Year - the twelve-month period of the financial year commencing on the 1st April”, replaces the earlier concepts of Assessment Year and Previous Year. It not only improves clarity and makes it easier for taxpayers to understand the financial period their income and tax filings, but also reduces ambiguity in compliance and interpretation.

The Act strengthens digital-first enforcement, faceless tax administration, consolidates compliance provisions such as Tax Deducted at Source (TDS) under a single section, empowers the Government to introduce technology-enabled schemes, and enhances dispute-resolution mechanisms.

Labour Reforms
In a landmark reform, the Government consolidated 29 existing labour laws into four Labour Codes – the Code on Wages, 2019, the Industrial Relations Code, 2020, the Code on Social Security, 2020 and the Occupational Safety, Health and Working Conditions Code, 2020.

The new framework enhances ease of doing business while expanding wage security, social protection, and workplace safety for workers, including women, migrant, gig, and platform workers.

Rural Employment Reforms
Rural employment reforms anchored in the enactment of the Viksit Bharat - Guarantee for Rozgar and Ajeevika Mission (Gramin) Act, 2025, replaces the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) with a modern statutory framework that enhances livelihood security and integrates employment with community development.

Ease of Doing Business Reforms
To ensure that Quality Control Orders (QCOs) do not disrupt domestic production, the Government has implemented them in a phased and MSME-friendly manner through the Bureau of Indian Standards (BIS).

Other MSME Reforms
The Budget 2025-26 expanded the definition of an MSME, raising investment and turnover limits to enhance confidence and generate employment for our youth, while credit guarantee cover for Micro and Small Enterprises doubled from ₹5 crore to ₹10 crore, improving access to formal finance for expansion and modernization, with higher limits and term loans for startups and exporters boosting growth and competitiveness.

GST 2.0 Reforms
The Goods and Services Tax (GST) reforms, represent another landmark step in reshaping India’s indirect tax framework to align with the aspirations of a young, entrepreneurial, and consumption-driven economy. The latest Next-Generation GST reforms, mark a decisive step towards simpler taxation, lower burden on citizens, and improved ease of doing business. They significantly strengthen GST’s role as a citizen-centric, business-friendly, and growth-oriented tax system.

Overall, the Next-Generation GST reforms reinforce GST as a simpler, fairer, and growth-oriented tax system, delivering ease of living for consumers and ease of doing business for enterprises, while supporting consumption-led growth and long-term fiscal sustainability.

Export Promotion mission
In a major boost to India’s trade competitiveness, the Union Cabinet approved the Export Promotion Mission (EPM) as a flagship structural reform with an outlay of ₹25,060 crore for FY 2025–26 to FY 2030–31. Announced in the Union Budget 2025–26, EPM marks a strategic shift from fragmented export support schemes to a single, outcome-based and digitally driven framework, aimed at empowering MSMEs, first-time exporters, and labour-intensive sectors. The Mission integrates financial support (Niryat Protsahan) including affordable trade finance and credit enhancement with non-financial enablers (Niryat Disha) such as quality compliance, branding, logistics, and market access.

Other Trade Reforms
During the year, trade and ease of doing business reforms focused on simplifying procedures, digitising interfaces, and reducing transaction costs, especially for MSMEs. Key measures included digital integration of trade systems (National Single Window, Trade Connect, ICEGATE, e-Commerce Export Hubs), Next Gen GST 2.0 with risk-based refunds,  District Business Reform Action Plan (D-BRAP 2025)  launched by DPIIT to decentralise approvals and inspections EoDB reforms, and MSME/start-up support across 154 targeted reforms. Enhanced market access through GeM and MSME-SAMBANDH has strengthened MSME participation in Government procurement. Additionally, export incentives under the Foreign Trade Policy and disbursal of ₹58,000 crore under Remission of Duties and Taxes on Export Products scheme (till March 2025) have provided a further boost.

Driving Outcomes: Towards a Future-Ready Economy
Taken together, the year’s economic reforms reflect a clear shift towards outcome-based governance, reducing friction for citizens and businesses, enhancing transparency and efficiency, and laying the foundation for sustained, inclusive growth. By simplifying taxation, modernizing labour laws, strengthening MSMEs, boosting rural employment, and advancing digital payments, these measures collectively foster trust, resilience, and global competitiveness in India’s economy.