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India’s economy is set to maintain a robust growth trajectory above 7 per cent in fiscal year 2026-27, propelled by strong domestic consumption and investment, even as global economic growth faces potential slowdowns due to geopolitical tensions, according to industry body Assocham.
Photograph: Amit Dave/Reuters
Key Points
- India’s GDP is expected to grow above 7 per cent in FY27, following a projected 7.6 per cent expansion in FY26, driven by robust domestic consumption and investment.
- The country has sustained growth above 7 per cent for the past three years, demonstrating resilience against global headwinds and benefiting from business environment reforms.
- India’s purchasing managers’ index for manufacturing (56.9) and services (58.1) in February 2026 were the highest among major economies.
- Total exports are anticipated to cross $870 billion in FY26, up from $824 billion in the previous year, with key sectors like engineering goods and electronics contributing significantly.
- Geopolitical tensions in West Asia pose risks to global economic growth, potentially affecting crude oil supplies, logistics costs, and commodity prices, which could impact India’s trade and inflation.
India’s economy is expected to maintain growth of above 7 per cent in 2026-27 (FY27), supported by strong domestic consumption and investment, even as global growth could slip below 3 per cent amid geopolitical tensions, industry body The Associated Chambers of Commerce and Industry of India (Assocham) said on Thursday.
India’s gross domestic product (GDP) is projected to expand by about 7.6 per cent in FY26 and remain above 7 per cent in the following financial year, despite rising global uncertainties, the industry body said in a statement.
Sustained Economic Resilience
“India’s GDP growth estimate of about 7.6 per cent for 2025-26 remains unchanged, and we expect GDP growth of over 7 per cent in the upcoming financial year 2026-27,” said Nirmal K Minda, president of Assocham, adding that domestic consumption and investments are likely to continue driving economic activity.
India has sustained growth above 7 per cent for the past three years despite global headwinds, reflecting the resilience of the domestic economy, the industry body said.
It added that reforms aimed at improving the business environment and boosting investment have strengthened business confidence.
India’s purchasing managers’ index stood at 56.9 for manufacturing and 58.1 for services in February 2026, the highest among major economies including the United States, China and Germany, the industry body noted.
Export Performance and Outlook
Additionally, India’s total exports rose to $791 billion during April–February of FY26, up from $748 billion in the same period a year earlier. Assocham said the country’s exports are being driven by sectors such as engineering goods, electronics, chemicals, gems and jewellery, and agricultural products.
The chamber expects India’s overall exports to cross $870 billion in FY26, compared with $824 billion in the previous year.
Geopolitical Risks and Inflationary Pressures
However, Assocham cautioned that prolonged geopolitical tensions in West Asia could affect global economic growth as the region is a major supplier of crude oil, liquefied natural gas, petrochemicals and fertilisers, and disruptions in the region could affect global energy supply chains.
“India’s gems and jewellery sector exported about $8.87 billion to West Asia, with Dubai serving as a key trade hub. Logistics disruptions can delay shipments and increase costs for traders and manufacturers,” the statement said.
Assocham said a prolonged conflict involving the United States and Iran could raise logistics costs, create volatility in commodity prices and disrupt global supply chains, potentially slowing global trade.
Rising freight costs and shipping disruptions could also affect sectors such as gems and jewellery, pharmaceuticals and agricultural exports that have significant trade links with West Asia.
The chamber also flagged potential inflationary pressures from currency movements and rising energy prices.
The recent depreciation of the rupee has increased costs in some energy segments, including LPG cylinders, which could affect the inflation trajectory, it said.
“A coordinated policy approach that includes supply monitoring and strategic stock management will help India navigate global energy fluctuations while safeguarding economic stability,” it added.
Global Agency Forecasts
Recent forecasts by global agencies also point to continued strength in India’s growth outlook.
In its “Economic Outlook Asia-Pacific Q2 2026” report, S&P Global Ratings raised its forecast for India’s growth in FY27 by 40 basis points to 7.1 per cent, while projecting 7.6 per cent growth in FY26 after revising its estimate upward.
The ratings agency said growth will be supported by steady private consumption, investment and exports, though the pace of expansion is expected to moderate slightly from FY26 levels.
