The year 2025 was a very tough and historic year for the Indian Rupee. Market volatility along with US protectionism and India’s macroeconomic pressures combined to create a “perfect storm”. Due to the aggressive trade policies of the Trump administration, tariffs on India reached 50% by August, with the 25% surcharge on Russian oil being a big blow.

India’s “China Plus One” advantage was weakened by comparatively lower tariffs on Vietnam and China. Its impact was clearly visible on labour-intensive sectors like textiles, gems & jewelery and marine exports.

Rupee crossed psychological levels of ₹90–₹91 in December 2025. FII outflows, rising trade deficit and RBI’s market-driven stance made the rupee Asia’s worst performer. Imported inflation increased and put pressure on GDP growth by 0.3–0.5%.

However, Aatmanirbhar Bharat, Make in India, export diversification and possible India-US BTA raised new hopes for 2026.