India’s GDP Forecast to Grow Strongly at 7.4% in FY26 Even as Global Trade Tensions Persist
The National Statistics Office (NSO), under the Ministry of Statistics and Programme Implementation, projects India’s economy to grow at a robust 7.4 per cent in the financial year 2025-26, based on its first advance estimates of Gross Domestic Product (GDP). This represents a significant acceleration from the 6.5 per cent growth recorded in FY25 and highlights the resilience of Asia’s third-largest economy amid global uncertainties.
The strong growth outlook comes despite mounting global tariff headwinds, including punitive duties on Indian exports under recent U.S. trade measures that have raised costs for key sectors. However, domestic demand, rising investment and a rebound in manufacturing and services activity are offsetting these external pressures, underpinning healthy economic momentum.
Sectoral data point to broad-based expansion. The services sector continues to lead growth, while manufacturing and construction show notable gains, reflecting sustained activity in industrial output. Private consumption and gross fixed capital formation (investment) also remain key drivers of demand, further supporting the growth trajectory.
Nominal GDP, which includes inflation, is estimated to grow around 8 per cent in FY26, reinforcing the strength of the recovery and providing a solid base for fiscal planning ahead of the Union Budget later this month. Economists note that while growth may moderate in the second half of the year due to weaker global demand and cooling investment trends, the overall outlook remains positive.
This forecast underscores India’s position as one of the fastest-growing major economies in the world, navigating external challenges while securing sustained domestic expansion.
