 "Indian economy likely to grow between 6.5-6.9% in FY26, says Ficci")
Industry body Federation of Indian Chambers of Commerce and Industry (FICCI) on Thursday projected the Indian economy to clock a growth rate of 6.5–6.9 per cent in FY26, driven by easing inflationary pressures, a continuing thrust on capital expenditure (capex), and consumer spending gaining momentum.
“Considering these factors, participating economists have pegged India’s GDP growth forecast for the fiscal year 2025–26 between 6.5 per cent and 6.9 per cent—reflecting a balanced outlook that accounts for both opportunities and challenges,” the industry body noted in its latest economic outlook.
The industry body highlighted that rural consumption will be bolstered by an improved outlook for the agriculture sector, while easing inflationary pressures will drive urban consumption, particularly for low-ticket and discretionary items. Furthermore, monetary easing by the Reserve Bank of India (RBI) could also provide additional impetus to consumption.
On the investment front, the government’s focus on capital expenditure is expected to remain a key growth driver in 2025–26. Additionally, the services sector, particularly hospitality, real estate, health, and education, is expected to contribute to the creation of fresh capacity.
However, downside risks persist, such as the private capital expenditure cycle remaining subdued, with a cautious outlook limiting large-scale capacity additions.
“Factors such as geopolitical uncertainties, uneven domestic demand, and oversupply from China have kept investors on edge. However, with deleveraged corporate balance sheets, capacity utilisation rates holding up, and an uptick in demand, the momentum in private investments could build,” the outlook noted.
Similarly, merchandise exports are projected to face persistent challenges, constrained by weak global demand, potential tariff wars, and ongoing geopolitical tensions.
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On the potential impact of incoming US President Donald Trump on the Indian economy, the outlook notes the possibility of short-term disruptions through channels like exports, foreign capital flows, and input costs.
“The likelihood of tax cuts (personal and business) could increase the US fiscal deficit, while higher tariffs and stricter immigration norms could push up labour costs and inflation. The Federal Reserve, in response, could cut policy rates by less than what was anticipated. This may reduce capital inflows into emerging markets, including India, causing rupee fluctuations,” the outlook said.
The report further noted that trade tensions, including a potential US-China trade conflict, could disrupt supply chains and raise input costs in the short term. However, economists expect the US to take a calibrated approach towards India. Nonetheless, India is poised to benefit from global supply chain diversification away from China.
“Targeted industrial policies and sector-specific strategies will remain critical to seizing these opportunities. India could also benefit from lower global oil prices as US production increases. To address risks and unlock opportunities, economists recommended that India should evaluate reducing tariffs on select and specific US imports while ensuring revenue stability and minimal domestic impact,” the report noted.