From taxes to jobs to laws: How 2025 became India’s biggest reform year

India strengthened its trade footprint through multiple agreements, including the India–UK CETA, India–Oman CEPA, and FTAs with New Zealand and the European Free Trade Association (EFTA) (AI Generated Image)

The year 2025 emerged as a defining chapter in India’s reform journey, marked by sweeping policy changes aimed at simplifying governance, modernising laws and aligning economic growth with global ambition. Under Prime Minister Narendra Modi, the government pushed through structural reforms across taxation, labour, trade, energy and regulation, signalling a decisive shift towards scale, clarity and long-term competitiveness.

India’s economic momentum remained strong through the year, with GDP growth touching 8.2 per cent—outpacing global estimates. The expansion was underpinned by reforms spanning labour laws, GST, income tax, infrastructure, foreign investment and trade agreements, alongside a broad deregulation drive impacting both industry and small businesses.

Labour Reforms: Placing workers at the core of India’s growth story

2025 marked the first full year in which India’s four Labour Codes began reshaping the employment landscape in a visible manner. By consolidating 29 central labour laws into four streamlined codes, the reforms aimed to provide regulatory clarity for employers while strengthening protections for workers.

The new framework focused on fair wages, smoother industrial relations, expanded social security coverage and improved workplace safety. Officials said the reforms were designed to support a workforce of over 64 crore people, boost female labour participation and sustain employment growth as the economy expands.

Next-generation GST reforms: A simpler, fairer, more transparent system

India’s Goods and Services Tax (GST) structure underwent major simplification in 2025, transitioning to a two-slab system of 5 per cent and 18 per cent. The move was aimed at reducing disputes, easing compliance and improving transparency for households, MSMEs, farmers and labour-intensive sectors.

Consumer sentiment reflected the impact, with record festive sales during Diwali and Navratri. SBI Research projected that despite rate rationalisation, GST revenues in FY26 would exceed budget estimates, reinforcing the government’s argument that a simpler tax regime can remain fiscally strong.

Income Tax Revolution: Relief for the Middle Class

One of the most significant changes in 2025 was the overhaul of personal income tax. Individuals earning up to Rs12 lakh annually were exempted from income tax, offering substantial relief to middle-class households.

The government also replaced the Income-tax Act of 1961 with the new Income Tax Act, 2025, scrapping decades of amendments and complex provisions. The new law rationalised exemptions, reduced litigation and strengthened voluntary compliance, signalling a shift towards technology-driven tax administration.

Maritime and Blue Economy Reforms

Parliament passed five key maritime legislations during the Monsoon Session, modernising India’s shipping and port governance framework. The new laws replaced colonial-era Acts dating back to 1908 and 1925.

The reforms aimed to reduce documentation, lower logistics costs, promote coastal shipping and strengthen maritime safety, positioning India to expand its blue economy and align with global maritime standards.

The Great EoDB Reset: India unshackles its entrepreneurs through QCO reform

Ease of Doing Business reforms gained momentum with a sweeping review of Quality Control Orders (QCOs). Mandatory compliance was removed for 76 product categories, while over 200 more were identified for deregulation, easing compliance pressure on MSMEs and exporters.

Letting small companies think big

The definition of “small companies” was expanded to include firms with turnovers of up to Rs 100 crore, allowing growing enterprises to scale without facing disproportionate regulatory burdens.

A new definition for bigger MSME ambitions

Effective April 1, 2025, the MSME classification thresholds were significantly raised to remove disincentives for expansion. Investment and turnover limits were increased across micro, small and medium enterprises, enabling firms to grow while retaining MSME benefits and government support.

Significant reforms in FDI

The government allowed 100 per cent foreign direct investment in the insurance sector, a move expected to attract global capital, enhance competition and improve customer services in India’s growing insurance market.

Opening global markets for Indian manufacturers and MSMEs

India strengthened its trade footprint through multiple agreements, including the India–UK CETA, India–Oman CEPA, and FTAs with New Zealand and the European Free Trade Association (EFTA). The EFTA deal included a binding $100 billion investment commitment over 15 years.

Negotiations also advanced with the European Union, Canada, Israel and the Gulf Cooperation Council, supported by a ₹25,000 crore export promotion scheme aimed at achieving the $1 trillion export target.

Market Securities reform

A landmark Securities Market Code Bill was introduced to unify India’s securities laws into a single framework, aimed at strengthening governance, reducing compliance burden and supporting technology-driven capital markets.

Jan Vishwas: Ending the era of criminalisation

Under the Jan Vishwas reforms, over 200 minor offences were decriminalised and hundreds of outdated laws repealed. With Jan Vishwas 3.0 on the anvil and similar reforms adopted by NDA-governed states, the initiative evolved into a nationwide movement to reduce regulatory fear for businesses.

The new era For India’s nuclear journey

Parliament passed the SHANTI Bill, replacing the Atomic Energy Act, 1962, and subsuming nuclear liability provisions into a unified framework. The law opened select civilian nuclear projects to private and foreign participation while retaining government control over strategic areas, enabling large-scale investment and technology infusion.

A landmark in rural employment reform

The Viksit Bharat–G RAM G Bill, 2025, enhanced rural employment guarantees from 100 to 125 days, linking work with village infrastructure creation. The reform aimed to transform rural employment into a driver of durable assets and higher incomes.

India’s Legal Overhaul

The Bharatiya Nyaya Sanhita (BNS) came into full effect in January 2025, replacing the Indian Penal Code of 1860. The new law addressed modern challenges such as cybercrime, organised crime and economic offences, while formally recognising digital evidence, e-FIRs and mandated timelines for trials.