Tue Oct 28,
Insights
India's FY26 economic growth outlook remains strong, according to the government's latest Monthly Economic Report, which cautioned that rising geopolitical tensions and the potential reintroduction of protectionist measures in response to global overcapacity are headwinds to trade growth.
Weather shocks and moderating credit growth could test the country;s resilience ahead, it noted.
India’s economic growth outlook for this fiscal (FY26) remains strong backed by robust domestic demand, easing inflation and consumption tax cuts, according to the government’s latest Monthly Economic Report, which cautioned that rising geopolitical tensions and the potential reintroduction of protectionist measures in response to global overcapacity are headwinds to trade growth.
The trade policy uncertainty (TPU) index surged by 386.4 per cent year on year in the third quarter (Q3) this year—the second-highest reading since 1960, underscoring volatility in global trade policy, it noted.
Although the index fell by 32 per cent quarter on quarter as negotiations advanced and supply chains adjusted, the report by the Department of Economic Affairs (DEA) cautioned that the global trade environment remains fragile.
Inflation eased to 1.54 per cent in September and the country’s trade performance has been robust, with total exports up by 4.4 per cent year on year (YoY) in the first half of FY26 to $413.3 billion.
With structural reforms and continued fiscal prudence, India’s growth trajectory remains strong, though weather shocks and moderating credit growth could test its resilience ahead, it added.