India’s Growth Outlook For 2025-26: Will Resilience Propel It Ahead of Global Uncertainty?

India is well-positioned to maintain its lead among fast-growing economies in FY2025-26, Deloitte asserted in a report, citing the country’s resilient capital markets, strong domestic consumption, digitally skilled workforce, and increasing trade partnerships.

India’s Economy Poised for Continued Growth

According to the Deloitte report, India continues to outperform peer economies despite global uncertainty.

India’s economy closed FY2024-25 with a formidable 6.5% expansion, powered by a sharp 7.4% surge in the final quarter. While this pace signals a moderation from the prior years’ 9.2% and 7.6%, analysts stress that what it reflects is not a slowdown but a stabilisation following high base effects.

The strength shown in private consumption, investment, services exports, and capital markets makes it clear that the country is well-positioned to maintain its lead among fast-growing economies in FY25-26.

Capital markets, despite enduring large capital outflows for much of the fiscal year, staged a sharp rebound from April 2025. Indexed MSCI data reveal that India’s equity markets have not only recovered but have doubled in value since 2019, surpassing most emerging market rivals. Domestic investors and a return of foreign portfolio flows have reaffirmed India’s attractiveness as a long-term investment destination.

Strong Domestic Consumption Drives India’s Growth

Meanwhile, domestic consumption accounted for over 61% of GDP during FY2024-25. Easing inflation, modest monetary policy easing, tax boosts and a growing urban middle-income class all fed into sustained consumer momentum. Deloitte highlights that this demand-side strength remains one of the economy’s most durable pillars going into FY2025 26.

The report also underscores India’s emergence as a global hub for high-skilled services, leveraging a digitally skilled, youthful workforce. With AI skill penetration second only to the US, and over 1,700 Global Capability Centers operating domestically, India is steadily building a reputation for innovation and resilience in services exports.

Trade diplomacy is another key theme in Deloitte’s outlook. The UK’s trade deal, concluded in May 2025, and ongoing negotiations with the United States aim to unlock new access for Indian exporters. Negotiators are working to overcome currently high tariff barriers, such as the 25% levy on multiple US-bound exports, to sustain export momentum and expand market opportunities.

Muted Growth in Early 2025, Strong Outlook Ahead

Growth during the first three quarters remained muted, as policy caution ahead of national elections, uneven rainfall and broad global trade uncertainty weighed on momentum.

However, looking ahead, the Deloitte report forecasts India’s GDP growth in FY2025-26 to range between 6.4% and 6.7%, driven by the same engines that propelled success in FY2024-25: resilient capital markets, dynamic domestic consumer demand, and a globally competitive, digitally empowered workforce.

Coupled with an assertive push in trade diplomacy, the report concludes that India is exceptionally well placed to continue trending ahead among fast-growing economies in a volatile global landscape. 

(Inputs from ANI)

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