India’s economy is set to maintain growth above 7 per cent in FY 2026-27, even as global growth risks slipping below 3 per cent due to geopolitical tensions, particularly in West Asia, industry body Assocham has said.
In a statement, Assocham credited strong domestic consumption and sustained investments, underpinned by government reforms, for supporting India’s growth trajectory despite rising global uncertainties.
India’s GDP is projected to expand 7.6 per cent in FY 2025-26, with exports expected to grow around 6 per cent, said Nirmal K Minda, president of Assocham. He added that the country’s consumption levels are at a multi-year high, aided by tax reforms and improvements in ease of doing business, which have also strengthened investor confidence.
“Investments are following consumption momentum, and India is likely to remain above 7 per cent growth in FY 2026-27,” Minda said.
The industry body highlighted that India has sustained growth above 7 per cent for three consecutive years despite geopolitical disruptions and tariff challenges, reflecting increased economic resilience in the post-COVID period.
However, Assocham flagged risks from the ongoing West Asia conflict, warning that prolonged tensions — particularly a potential US–Iran escalation — could disrupt global energy supply chains and push world GDP below 3 per cent.
The Middle East remains a key supplier of crude oil, LNG, petrochemicals and fertilisers, and disruptions could ripple across sectors including automotive, construction, electronics and agriculture, it said.
India’s export sectors are also exposed. Gems and jewellery exports worth USD 8.87 billion to West Asia rely heavily on Dubai as a hub, while Gulf Cooperation Council (GCC) nations account for 5.6 per cent of India’s pharmaceutical exports. Agricultural exports to the region stood at USD 7.48 billion in 2025.
“Logistics disruptions, higher freight costs and insurance risks could compress margins for exporters and delay shipments,” the statement said.
Despite these headwinds, India’s exports rose to USD 791 billion between April and February 2025-26, up from USD 748 billion a year earlier, driven by engineering goods, electronics, chemicals and agriculture. Assocham expects exports to exceed USD 870 billion this fiscal year.
On the domestic front, a depreciating rupee and rising energy prices, particularly LPG, could add pressure on inflation, it said, calling for coordinated policy measures including supply monitoring and strategic stock management.
Lead indicators such as purchasing managers’ indices — 56.9 for manufacturing and 58.1 for services in February — remain among the strongest globally, reinforcing India’s relative economic strength.
Globally, the conflict is also expected to weigh on tourism, which contributes about 11 per cent to world GDP, further dampening growth prospects.
Assocham said India’s resilience, supported by reforms and domestic demand, would help it navigate external shocks, even as global trade and supply chains face increasing strain. |
