Market Radar India: Economic friction meets a reform blitz

Tariff fears cause a November slowdown, but record banking inflows and private credit signal long-term confidence

November 25, 2025Real Estate

Key Takeaways

To counter a November economic slowdown caused by US tariff fears, the government is launching a winter legislative push to deregulate critical sectors such as atomic energy and insurance to sustain growth.
Global confidence remains robust with a record USD 8 billion entering the banking sector this year while the nation rises to become the second-largest real estate private credit market in the APAC region.
A structural shift toward deep tech and consumer platforms is exposing a critical skills gap that has sparked urgent industry-wide upskilling programmes to ensure the workforce can support future growth.

The Macro View

India’s economic momentum encountered friction in November as the manufacturing purchasing managers’ index (PMI) slipped to 57.4 from 59.2 in October, marking the slowest expansion in business activity since May.

This deceleration stems partly from the dampening effect of US tariffs on export-driven sectors, which has contributed to a record trade deficit.

To counteract these external pressures and sustain the 8% growth trajectory required for developed nation status by 2047, the government is orchestrating a legislative reform blitz for the upcoming winter parliament session.

This strategic push includes over a dozen bills aiming to ease business conditions in sectors such as atomic energy, where the goal is to open power generation to non-state firms, and insurance, where the government proposes removing the 74% foreign direct investment (FDI) cap to attract global capital.

Financial Sector

Despite short-term macroeconomic tremors, the long-term thesis for India’s financial services remains robust, evidenced by global banks acquiring USD 8 billion worth of stakes in Indian lenders this year - a sharp rise from USD 2.3 billion in 2023.

This influx is reshaping the landscape through major transactions, such as Emirates NBD’s USD 3 billion acquisition of a majority stake in RBL Bank and Sumitomo Mitsui’s entry into Yes Bank.

Simultaneously, the sector is witnessing significant consolidation and churn as players refine their strategies.

While Deutsche Bank is in negotiations to divest its retail and wealth management portfolio to domestic heavyweights such as Kotak Mahindra or Federal Bank, the Reserve Bank of India (RBI) is reviewing regulations to potentially relax the 15% shareholding cap for foreign investors, signaling a more open regulatory environment.

Real Estate & Private Credit

A profound transformation is occurring in financing, where India has rapidly ascended to become the second-largest market for real estate private credit in the APAC region, capturing 36% of regional fundraising between 2020 and 2024.

Assets under management (AUM) in this niche have surged exponentially from USD 0.7 billion in 2010 to USD 17.8 billion in 2023, driven by developers seeking flexible alternatives to traditional bank lending.

This domestic credit boom aligns with global sentiment found in the Colliers 2026 Global Investor Outlook, which highlights that international investors are increasingly pivoting toward India for higher returns.

The Colliers report notes that while established markets remain popular, India is drawing specific attention for capital deployment at scale, particularly in high-growth asset classes such as data centres - fuelled by the expanding tech sector - and industrial & logistics (I&L), which continues to see rising demand from e-commerce growth.

Trend Spotlight

The narrative of Indian technology is evolving beyond legacy IT services, which have faced headwinds this year, toward a dynamic deep tech ecosystem encompassing space technology, drones, and consumer internet giants such as Zomato and Swiggy.

However, this ambition faces a critical bottleneck: despite a massive working-age population, only 4.4% of the workforce is formally skilled, creating a severe shortage of talent for advanced industries.

To bridge this gap, both the government and private sector are launching aggressive initiatives, such as the India Skills Accelerator, to ensure the demographic dividend translates into productive capability for the modern economy.