India's economy expanded sharply by 8.2% in the second quarter of fiscal year 2025-26, exceeding expectations and marking the fastest growth in six quarters. This growth topped the Reserve Bank of India's projections and followed a strong 7.8% growth in the first quarter. The National Statistics Office reported growth across all sectors, with primary up 3.1%, secondary 8.1%, and tertiary 9.2%. Chief Economic Adviser V Anantha Nageswaran said, "Now we can comfortably say full year growth will be 7% or north of 7%." Inflation remained historically low, reaching just 0.25% in October 2025 before rising slightly to 0.71% in November, well below the RBI's 4% target. The RBI called this a "rare goldilocks" phase of strong growth with low inflation and cut the repo rate from 6.25% to 5.25% in 2025 to support the economy. In September, the government launched GST 2.0, simplifying tax slabs to 5% and 18%, with some items taxed at 40%. This eased compliance and reduced costs for consumers and businesses. The 2025 Union Budget gave big income tax relief by raising the no-tax limit to Rs 12 lakh, benefiting the middle class. India signed major trade deals in 2025: Free Trade Agreements with New Zealand and Oman, and progress on deals with the UK and Israel. These pacts aim to boost exports despite global protectionism. However, the Indian rupee weakened sharply, dropping to near Rs 91 per US dollar in December due to strong dollar demand and foreign fund outflows. Foreign institutional investors sold a record Rs 1.58 lakh crore in equities in 2025, the steepest annual outflow ever. U.S. tariffs doubled to 50% on Indian goods by August, adding pressure amid tense trade talks. Mexico also imposed up to 50% tariffs on India from January 2026, threatening exports in key sectors. Meanwhile, India-Russia trade hit $68.7 billion in 2024-25, dominated by discounted Russian oil imports despite Western sanctions. Prime Minister Modi said the growth numbers "reflect the impact of our pro-growth policies and reforms." The year 2025 was a mix of strong growth, easing inflation, global tariff challenges, and currency pressure. India enters 2026 ready to face external headwinds while maintaining domestic economic strength.