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đź“°RBI Says GST Reforms Will Boost Consumption | Daily India Briefing

Three stories on Indian markets that you can't miss.

RBI says goods and services tax reform will boost consumption. India’s fuel exports surge to multi-year highs. India wants to import more U.S. energy.

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1. RBI Says GST Reforms Will Boost Consumption

Vegas Mall November 2019

India’s recent goods and services tax (GST) reforms will lower retail prices and help spur consumer demand, the RBI said in its monthly bulletin on Wednesday, striking an optimistic tone on growth despite external headwinds.

The changes, which took effect this month, cut tax rates on a range of household goods from toothpastes to air conditioners. The RBI said the reforms should “progressively result in a sustained positive impact through significant gains in ease of doing business, lower retail prices and strengthening of consumption growth drivers.” It also noted that higher seasonal crop sowing would help contain food inflation.

The assessment comes just days before the central bank’s October 1 policy review, the first since Washington imposed punitive tariffs on Indian exports. While most economists expect rates to remain unchanged, some, including Barclays and Capital Economics, see room for further cuts. The RBI has already reduced its policy repo rate by 100 basis points this year, but paused in August.

Despite the tariff shock and disruptions to India’s IT sector from higher U.S. visa fees, the bulletin emphasized resilience in the economy. It pointed to stronger-than-expected 7.8 percent GDP growth and an S&P sovereign rating upgrade as evidence of momentum.

Healthy corporate balance sheets, income-tax relief, and the transmission of past rate cuts set the stage for stronger consumption in the second half of 2025, the RBI said, potentially creating a “virtuous cycle” of higher investment and sustained growth.

2. India’s Fuel Exports Surge to Multi-Year Highs

India’s refiners are exporting gasoline and diesel at their highest levels in years, boosted by expanded crude processing capacity and greater ethanol blending in domestic fuel, according to traders and analysts.

The world’s second-biggest crude importer, sourcing about a third of its oil from Russia, has raised refinery runs to redirect surplus barrels overseas. Consultancy Wood Mackenzie estimates India’s crude processing will rise by as much as 160,000 barrels per day (bpd) this year to 5.51 million bpd, with gasoline exports reaching a record 400,000 bpd. Data provider Kpler forecasts 2025 gasoline exports at 387,000 bpd, mostly to Asia.

Ethanol blending has played a key role. India lifted its ethanol mix in gasoline to 20 percent this year, up from 12 percent in 2023, freeing more conventional fuel for export. “The growth in gasoline exports is supported by a rising share of ethanol blending,” said WoodMac analyst Priti Mehta.

Diesel exports are also climbing, with Wood Mackenzie expecting volumes at 610,000–630,000 bpd in 2025, the highest in four years. Europe, facing winter heating demand and refinery maintenance-driven supply constraints, has emerged as a prime buyer. Reliance Industries recently shipped 2 million barrels of diesel to Europe on a Very Large Crude Carrier, an unusual move signaling surging demand.

The surge supports Indian refining margins while offsetting supply shortfalls from Saudi Arabia, which faces refinery maintenance. It also coincides with Europe’s phased ban on petroleum products refined from Russian crude.

3. India Seeks More US Energy Imports to Bolster Trade Talks

Modi and Trump in 2019

India is signaling plans to expand oil and gas purchases from the United States as it looks to ease trade tensions and secure concessions on tariffs. Commerce Minister Piyush Goyal said in New York that energy cooperation would play a central role in strengthening ties.

“We expect to increase our trade with the US on energy products in the years to come,” Goyal said, emphasizing that India’s energy security goals would have “a very high element of US involvement.”

The comments come as New Delhi attempts to persuade Washington to roll back punitive 50 percent tariffs imposed on Indian exports last month. The Trump administration justified the move partly as punishment for India’s continued reliance on Russian crude, which has made the country the largest buyer of Russian seaborne oil. Washington has argued that those purchases help finance Moscow’s war in Ukraine.

By stepping up imports of US oil and natural gas, Indian officials hope to reduce the trade imbalance with the US and create leverage in ongoing negotiations. The strategy follows a thaw in relations after Trump and Modi spoke earlier this month, though momentum faltered again after Washington introduced a $100,000 (₹8.8 million) fee on new H-1B visas, widely used by Indian tech workers.

Goyal stressed that US energy would be vital in helping India diversify supplies and stabilize costs for the world’s third-largest oil consumer.

See you tomorrow.

Written by Eshaan Chanda & Yash Tibrewal. Edited by Shreyas Sinha.

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