INR likely to be one of the outperformers in Asia in coming months

India's PM Modi allowed the temporary executive order on land acquisition to lapse after failing to secure enough support. He also abandoned the plan to call a special session of parliament to secure approval for implementing GST, which means likely delay to the April 2016 "deadline" for rolling out the GST. 

Finally, major strikes and protesting took place against Modi's Labour reform plans in early September. Reforms on tax, labour and land are all crucial if India is to attract FDI. Again, RBI is doing its part to help, announcing a range of measures to liberalise financial markets. 

For example, it increased the current USD30bn limit for foreign investment in govt bonds by USD18bn (by March 2018 in stages; currently fully utilized and up to 5% of outstanding). Meantime, the coming Pay Commission Report, where employee salaries are linked to performance, could help in lifting domestic demand and productivity meaningfully.
 "INR is likely to be one of the outperformers in the region. India is among the best positioned in Asia to benefit from lower oil prices and it is also relatively insulated from China's economic growth slowdown (from a trade perspective) with exports to China accounting for just ~5% of India's total exports in 2014", says RBC capital markets. 

The bigger issue for INR watchers is the progress of structural reform or lack thereof. India has a historically disappointing investment cycle related to land, labour and tax issues. Since late August, key reform bills have suffered major setbacks.