India’s central banking authority is expected to implement three more interest rate cuts this year, in addition to the 25 basis point cut it already made earlier, bringing the current repo rate to 6.25%. These upcoming cuts—possibly totalling another 75 basis points—are being considered in response to slowing economic momentum, particularly due to rising global trade tariffs impacting Indian exports.

Why Are More Cuts Expected?

Recently introduced tariffs on Indian exports, now averaging around 26–27%, are predicted to reduce India’s GDP growth by up to 40 basis points in the current fiscal year. This slowdown, coupled with fragile global demand and softening investment sentiment, is prompting policymakers to consider more accommodative monetary steps.

Despite these headwinds, inflation is projected to remain under control—hovering near 4.2%, which leaves adequate room for the central bank to lower rates without risking price instability. With GDP growth estimates at approximately 6.7%, there’s further flexibility to stimulate demand.

What to Expect in the Coming Months

A potential 25 basis point cut is likely in the upcoming monetary policy review, with more reductions expected later in the year depending on inflation and growth trends. If these predictions materialize, the repo rate could reach 5.50% or lower by year-end.

Impact on Businesses and Exporters

• Lower borrowing costs: Interest-sensitive sectors, such as manufacturing and exports, could benefit from reduced cost of capital.
  
• Support for domestic demand: As consumer sentiment improves due to cheaper credit, internal market demand could partially offset the global slowdown.
  
• Improved liquidity: Easier monetary conditions make funding more accessible for businesses, especially MSMEs and export-oriented units.
  
• Review loan strategies: Companies should re-evaluate fixed vs. floating rate loan portfolios and prepare for policy-driven fluctuations.
  

Nekura Logistics: Helping You Stay Ahead of Policy Shifts

At Nekura Logistics Private Limited, we keep a close watch on fiscal and monetary developments that can affect your global trade and supply chain decisions. We provide:

• Advisory support on how interest rate changes affect logistics planning and cash flow
  
• Custom solutions to optimise cost structures in changing economic climates
  
• End-to-end export/import assistance, factoring in evolving monetary and trade policies
  

Conclusion

As economic pressures mount due to external tariffs and slower private investment, India is likely to pursue more rate cuts in 2025. This shift toward accommodative policy is designed to stabilise growth and protect the economy from global volatility. For businesses involved in exports, imports, and industrial production, it’s the right time to align strategies with these expected changes.

Nekura Logistics is your reliable partner to turn policy changes into competitive advantages — with foresight, agility, and action.