India has displayed steady and robust economic growth while facing global challenges and geopolitical concerns and it continues to maintain its position as the fastest-growing major economy. India is estimated to clock in a GDP growth of 6.2 and 6.3 per cent in FY25 and FY26, respectively, backed by strong domestic demand, substantial infrastructure development initiatives, a spike in rural demand and effective government policy measures.
The report underscores a sustained drop in inflation in recent months, shrinking fiscal deficit due to an increase in tax revenue and growth in exports year on year in FY25, highlighting a robust macroeconomic foundation for India. These trends also play a key role in reinforcing economic stability and investor confidence. The manufacturing sector continues to expand sharply despite experiencing a slowdown for over a year, driven by significant domestic and global demand.Â
Major government initiatives such as Make in India and the Production Linked Incentive (PLI) scheme further boost domestic production and enhance India’s competitiveness. Over the past two decades, India has consistently contributed a sizable share to global activity and growth. The nation continues to cement its position as a sought-after hub for innovation and entrepreneurship with its rapidly expanding startup ecosystem and its status as the world’s third most preferred destination for technology investments. As increased volatility and constraints on global capital flows have affected foreign direct investment (FDI) flows to India in the past few years, the country is focusing on deregulation to boost growth and attract investment by fostering a more business-friendly environment.Â
This involves streamlining regulatory requirements and simplifying administrative processes to improve the ease of doing business. The government also announced an increase in capital expenditure in the union budget for FY26 by earmarking around INR11.2 trillion (USD134.5 billion), emphasising its commitment to infrastructure-driven growth. The report further highlights key government initiatives, including the National Single Window System and BharatTradeNet, to streamline business approvals and payments. It also mentions policies such as the National Investment and Infrastructure Fund and the National Manufacturing Mission to attract private and institutional investments, create a dynamic micro, small and medium enterprises (MSME) sector and a future-ready workforce for in-demand jobs.Â
India’s strong economic performance presents an opportunity for the country to implement essential structural reforms to realise the ambition of becoming an advanced economy by 2047.
