Finance Minister Nirmala Sitharaman stated that the government is closely monitoring forex trends, attributing the rupee’s decline to a global trend of currencies weakening against a strengthening U.S. dollar.
On Friday, the rupee dropped to a record low of 88.27 against the dollar, driven by high U.S. tariffs on Indian exports and sanctions on Russian oil imports. The RBI’s intervention via state banks helped prevent a further fall.
On August 7, the Trump administration imposed a 25% tariff on Indian exports, citing continued Russian oil imports and trade restrictions. This affected industries including apparel, gems, seafood, leather, chemicals, and machinery.
Pharmaceuticals, energy, and electronics are excluded from the recent U.S. tariff hike. Since 2021, the U.S. has been India’s top trade partner, representing 20% of India’s $437.4 billion in exports for 2024–25, with total goods trade amounting to $131.8 billion.
Finance Minister Sitharaman called the GST overhaul a transformative reform, emphasising that broad tax cuts will boost consumer spending and economic growth. She pledged to ensure these savings reach consumers, noting that many sectors are already cutting prices before the revised GST takes effect.
Starting September 22, the GST revision lowers prices on around 400 items, including soaps, vehicles, and appliances. Health and life insurance premiums are now tax-free, whereas a 40% tax rate applies to certain sin and luxury items.
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The GST has been simplified to 5% for essential items and 18% for most goods, eliminating the 12% and 28% rates. Staples such as bread, milk, and paneer will be exempt from tax.
