Key takeaways

• Manufacturing PMI climbed to 58.8, signaling robust domestic production.

·         Old Rule → Circular Issued → 50% Investment Allowed → Permitted Instruments Listed → No Prior Approval Needed → Trustee Due Diligence → Higher Returns, Better Utilization

• US Tariff of 25% may shave 0.3% off GDP growth by year‑end.

• RBI Liquidity operations absorbed nearly ₹3 lakh crore in one day, showing surplus cash.

• Bank Credit growth slowed to 9.8% YoY; deposits shifted toward longer tenors.

• Forex Reserves rose to US$698 bn, strengthening external resilience.

• Services Trade surplus remains healthy at US$16.2 bn.

• Policy Update: Maharashtra trusts can now invest 50% of funds in market instruments, broadening yield opportunities.

This year, India’s services sector continues to be the heartbeat of its economy. According to recent government and RBI data, services comprise over 55% of India’s Gross Value Added (GVA), a substantial climb from 50.6% just ten years back. Post-pandemic, the sector has averaged over 8% annual growth, fueling job creation, driving export surpluses, and attracting formidable foreign direct investments.

Recently, The Maharashtra government’s July 2025 reform permitting public and charitable trusts including temples to invest up to 50% of their corpus in SEBI‑regulated equity mutual funds, ETFs, AA‑rated corporate and sovereign debt, and large‑cap equities markedly modernizes fiduciary capital deployment. This expansion transforms idle institutional funds into productive capital, enhancing market depth and return potential.

The latest RBI release highlights this upward trajectory in detail. For the quarter April to June 2025, monthly export receipts from services consistently topped $32 billion. Export growth not only remained steady but showed acceleration—8.8% in April, 9.6% in May, culminating in a robust 12% year-on-year surge by June. The story on the import side is more nuanced: a modest rise in April, a dip in May, but a strong rebound in June. This consistent services surplus demonstrates India's competitive edge, particularly in world-leading IT, business consulting, and digital offerings.

They mean that even when global goods trade stutters, India’s massive “invisible” exports help improve the current account, bolster foreign reserves, and build macroeconomic stability. A strong services trade surplus also provides resilience in global downturns, supporting domestic currency strength and lowering systemic country risk key parameters for institutional and FPI investors seeking allocation dynamism.

Manufacturing PMI : Engine of Growth

India’s manufacturing activity in July 2025 continued to accelerate, underpinned by broad-based strength across critical sub-indices. The rise in new orders from 60.5 to 61.0 signals sustained demand momentum, which typically leads to increased production in the near term. Output also rose from 58.6 to 59.2, indicating a strengthening of factory activity. The employment index moved up to 53.5 from 52.8, pointing to improved labor market conditions and a positive hiring outlook. Meanwhile, input prices increased modestly from 51.6 to 52.0, reflecting manageable cost pressures helpful in maintaining corporate margins while supporting headline inflation stability.

Money Market and Liquidity Dynamics

On the liquidity front, India’s overnight money markets remained deep and largely collateralized. The triparty repo segment dominated with over ₹398,000 crore in daily volume, followed by market repo operations. Call money, which is unsecured lending between banks, remained a small portion at ₹18,012 crore indicating a clear preference for lower-risk funding. Notably, the term triparty repo rate stood higher at 5.53%, compared to overnight rates around 5.43–5.45%, reflecting a normal tenor premium. The funding environment remains stable, with no signs of stress or excessive tightness, allowing the RBI to remain on hold while still ensuring adequate liquidity.

Overnight vs. Term Money

RBI Balance Sheet & Forex Resilience

The RBI’s balance sheet and foreign exchange reserves also signal continued macro stability. As of the latest week, total reserves stood at ₹6.04 lakh crore, with a week-on-week increase of over ₹48,000 crore. Forex assets grew to ₹5.1 lakh crore, up 5% year-on-year, underscoring India’s capacity to manage external shocks. Notably, gold holdings saw a sharp 22.2% annual increase, suggesting strategic diversification amid global uncertainty. The combination of growing reserves and stable market liquidity reinforces India’s external resilience, giving the central bank a buffer in navigating global volatility or capital flow pressures.

A rising reserve buffer strengthens India’s defense against external shocks. Large gold increases suggest valuation gains and strategic diversification. From an international finance angle, higher reserves can support the rupee and reduce VIX‑driven volatility.

India’s Fixed Income Market: Breaking Out in 2025

Perhaps the most compelling transformation in this cycle is playing out in India’s fixed income market. Historically undervalued by both domestic savers and global investors, 2025 is marking the era where bonds step out from the shadows to become a powerful capital market engine. Size tells the story: the Indian bond market, particularly corporate bonds, has ballooned to ₹226 trillion. This is not just a number—it signals increased capex, robust infrastructure funding, and, crucially, that Indian debt is now finding resonance in global passive portfolios.

Fueling this market confidence is a supportive policy environment. The RBI has eased monetary conditions, enacting three rate cuts in 2025 alone—taking the repo rate from 6.50% down to 5.50% by June, and market consensus points to a possible move to 5.25% this August. This monetary easing compresses yields (especially in 5–10 year government and AAA corporate bonds), rewarding duration bets and driving capital flows from bank FDs to high-quality bonds and credit mutual funds.

Portfolio decisions are rapidly evolving. Short-term bonds have outperformed on a risk-adjusted basis in H2 2025, as the yield curve flattens and inflation moderates to a six-year low of just above 2%. For the informed investor, this means it’s time to revisit duration strategies, tighten credit risk assessment, and use diversified debt funds or direct platforms for bond access. The global context adds another layer: index inclusion for India’s G-Secs (J.P. Morgan and FTSE listings) is expected to drive $30–40 billion per year in new passive inflows, bringing price stability but also linking Indian debt yields more closely to global risk sentiment and capital flows.

Macroeconomic Outlook: Growth, Stability, and Balanced Opportunity

Zooming out further, India’s economic outlook in mid-2025 is among the world’s most promising. GDP is expected to grow by 6.5% this year—driven by domestic demand, infrastructure spending, and export dynamism supported by resilient services. Inflation has cooled sharply, touching lows not seen in almost a decade. On the fiscal front, prudent budget management and higher-than-expected RBI dividends have allowed the government to post a fiscal surplus in the early months of the year, further buoying confidence in sovereign risk and financial stability.

India’s currency remains stable, with foreign exchange reserves supported by a steady services surplus and robust portfolio inflows. Both FPI and FDI activity are on an upswing, as investors look to India for balanced risk-return prospects against a backdrop of global uncertainty and fragmentation.

Quick Reference Table: India July–August 2025

Conclusion : A Market for Opportunity And Discipline

The Indian economy in mid-2025 is a testament to the power of sound macroeconomic stewardship, market reform, and financial innovation. Services sector exuberance, fixed income market maturation, and SEBI’s investor-first approach are together building a sustainable, resilient, and vibrant investment landscape. For anyone with stakes in Bharat’s growth—be it through investment, business, or policy it is an exciting time.

In the era of instant data and global flows, staying informed, diversified, and disciplined is not a luxury—it is survival. Regular engagement with regulatory releases, market data, and conceptual best practices will allow you to thrive in this dynamic, opportunity-rich landscape. India’s growth is not just a story; it’s an investment reality for the disciplined and the prepared.