India Ratings and Research (Ind-Ra) on Tuesday raised India's GDP growth projection for the current fiscal to 7% on the back of high growth in the June quarter and less impact of the US tariff hike on global growth and trade.
Ind-Ra expects GDP in FY26 to grow 7% year-on-year (YoY), 70 basis points higher than its earlier forecast of 6.3% (projected in July 2025), the rating agency said in a statement.
The RBI has projected India's GDP growth in the current fiscal year at 6.8 %, better than the 6.5% expansion in the last fiscal year.
31 October 2025
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India's real gross domestic product (GDP) grew at the fastest pace in five quarters at 7.8% in the April to June period of FY26. The official data for Q2 (July-September) GDP growth estimates is scheduled to be released on November 28.
Ind-Ra said both domestic and global landscapes have changed significantly since its last forecast in July 2025.
Major headwinds are the uncertain global scenario due to the US unilateral tariff hikes for all countries, with the tariffs on India being one of the highest since the end of August 2025.
The major tailwinds for the economy since the July forecast are faster-than-expected inflation decline, increasing the real wage rate, especially in rural areas and GST rationalisation, said Ind-Ra Chief Economist and Head Public Finance, Devendra Kumar Pant.
The two major factors for the sharp upward revision in growth forecast are sharper-than-expected GDP growth in the June quarter and the impact of the US tariff hike on global growth and trade being lower than the estimated earlier.
Ind-Ra, while forecasting the FY26 growth at 6.3%in July, had assigned a key risk of tariff war and any capital outflow.
Ind-Ra believes the risks to FY26 growth are evenly balanced.
"A faster Indo-US trade deal and favourable weather conditions during winter months have the potential to push GDP growth higher than 7%. However, if the demand revival (consumption and investment) is weaker than expected, it could pull down GDP growth," the agency said.
Ind-Ra expects private final consumption expenditure (PFCE) to grow 7.4 % YoY in FY26 (FY25: 7.2%), driven by GST rationalisation and lower inflation.
Ind-Ra said Indian exports to the US fell 11.9% and 8.9% YoY in September and October 2025, respectively. While exports averaged USD 7.2 billion per month in FY25, they averaged USD 7.4 billion from April to October 2025, but dropped to USD 5.9 billion during September-October 2025.
"Although exports to the US improved sequentially in October 2025, it is too early to call it a revival. A bilateral trade deal with the US and finding alternative markets for Indian exports would be essential for reviving Indian exports," Ind-Ra said.
