India’s economy is expected to grow at a steady 6.6 per cent in the financial year 2025–26, according to Deloitte’s latest forecast. The global consultancy firm said the outlook reflected a careful balancing act between domestic stimulus measures and mounting global trade challenges.
Despite a slowdown in the third quarter of FY2025, with year-on-year growth easing to 6.1 per cent, Deloitte noted that the economy had shown resilience. This moderation was attributed to election-related uncertainty, erratic rainfall in early 2024, and turbulence in global trade. However, the broader picture remains encouraging, with revised figures showing a strong 9.2 per cent expansion in FY2023–24, driven by robust domestic demand.
Recent upticks in GST collections, automobile sales and FMCG consumption indicate that the underlying momentum in the economy is picking up again.
Looking ahead to FY26, Deloitte identified two major forces shaping India’s growth path. On the domestic front, income tax cuts announced in the Union Budget 2025 are expected to boost consumer spending. The measures, which will lead to a revenue loss of Rs 1 trillion annually, aim to increase disposable income for middle-class households and stimulate demand.
However, global trade remains a major concern. Indian exports to the US currently face a 10 per cent ad valorem base tariff, on top of an existing 2.2 per cent MFN tariff, bringing the total effective rate to 12.2 per cent. A paused reciprocal tariff of up to 16 per cent could potentially raise this burden to 28.2 per cent by the end of FY26 if not resolved.
“Depending on how effectively India navigates the upcoming bilateral agreement, total reciprocal tariffs could range from a high of 26 per cent to a more moderate 10 per cent, or land somewhere in between,” Deloitte said.
Despite the uncertainty, the firm remains cautiously hopeful. “Deloitte forecasts growth to be 6.6 per cent as tax stimulus partly offsets the impact of trade uncertainties India’s economic outlook for FY2026 hinges on a delicate balance between evolving trade relations and government efforts to boost domestic consumer demand,” the report stated.
Last week, World Bank also revised India’s GDP growth forecast for FY 2025-26 to 6.3 per cent, a 0.4 percentage point cut from its previous estimate of 6.7 per cent.
