Growth outlook strong, trade diversifies amid US tariff tensions: Centre
- IBEF
- October 28, 2025
India’s growth outlook for FY26 remains strong, backed by robust domestic demand, lower inflation, monetary easing, and the positive effects of Goods and Services Tax (GST) reforms, according to the Ministry of Finance’s monthly economic review. The report noted that despite global uncertainties and recent tariff tensions with the United States (US), India’s economy gained momentum in Q2 FY26, prompting upward revisions in growth forecasts by the International Monetary Fund (IMF) and the Reserve Bank of India (RBI) to 6.60% and 6.80%, respectively. The ministry added that key supply-side indicators reflected healthy trends, while festive season demand and GST rationalisation continued to support consumption. The average headline inflation forecast for FY26 has been lowered to 2.60%, compared to earlier projections of 3.70% in June and 3.10% in August.
India’s trade data for September 2025 showed early signs of export diversification even as negotiations with the United States over 50% punitive tariffs continued. The report highlighted that strong services exports helped offset the merchandise trade deficit, while rising gross foreign direct investment (FDI) inflows underscored investor confidence in India’s economy. Agricultural output remained positive, supported by a favourable monsoon, strong kharif sowing, and healthy cereal and pulse production, despite some weather-related crop losses. The ministry said ongoing structural reforms, including GST 2.0, would enhance domestic demand, boost employment, and mitigate external risks. It cautioned, however, that persistent global uncertainties could continue to pose downside risks to India’s growth trajectory.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.
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