India’s economy is expected to grow between 7.5 and 7.8 per cent in the current financial year, supported by strong festive demand, resilient domestic consumption and robust performance in the services sector, according to a recent economic outlook report.
The report notes that while growth momentum remains firm in FY26, expansion could moderate to 6.6–6.9 per cent in FY27 due to a higher base effect and continued global economic uncertainties. Despite external headwinds, India’s underlying economic fundamentals remain strong.
India’s real GDP grew 8 per cent in the first half of FY26, reflecting resilience amid global trade disruptions, policy shifts in advanced economies and volatile capital flows. Pro-growth policy measures implemented over the past year have helped sustain momentum and reinforce investor confidence.
Economists highlighted that the policy focus is gradually shifting from demand-side stimulus toward supply-side reforms. Greater emphasis is being placed on strengthening MSMEs, improving productivity and developing tier-2 and tier-3 cities as emerging growth centres.
Although global risks remain elevated, their impact is expected to be limited in FY26. Progress toward a potential India–US trade agreement by the end of the fiscal year is likely to support foreign investment inflows and contribute to currency stability.
The report credits key policy actions taken in 2025, including tax exemptions, interest rate cuts and GST rationalisation, for boosting domestic demand and supporting economic recovery. Moderating inflation has further improved consumption sentiment, while trade diversification through multiple free trade agreements has enhanced export prospects.
India’s evolving trade strategy, including agreements with the United Kingdom, New Zealand and Oman, operationalisation of the EFTA pact and ongoing negotiations with Israel, is expanding market access and strengthening India’s manufacturing and services footprint beyond traditional markets.
Additional assessments point to strong industrial output growth, stable GST collections and favourable global factors such as softer crude oil prices and easing interest rates. Together, these trends are expected to support sustained consumption, investment and infrastructure-led expansion in the coming months.
