New Delhi: India’s GDP growth is likely to remain at 6.5% in the current financial year and may accelerate to 6.7% in 2026-27, S&P Global Ratings said on Monday.
In its latest Economic Outlook for the Asia-Pacific region, S&P Global said India’s GDP growth would be driven by strong domestic demands.
“We anticipate that India’s GDP will grow by 6.5% in fiscal 2026 (ending March 2026) and 6.7% in fiscal 2027, with risks evenly balanced. Domestic growth remains robust, driven by strong consumption, despite the impact of US tariffs,” the rating agency added.
India’s gross domestic product (GDP) expanded by 7.8% in the April-June quarter of the current financial year. The Reserve Bank of India (RBI) has pegged the July-September growth at 7%. The growth momentum is projected to decelerate significantly in the second half of the current fiscal.
According to S&P Global, the Indian economy is likely to maintain the growth momentum in 2025-26 similar to the previous year, despite the US tariff.
“The spike in the effective US tariff on India is weighing on the expansion of export-oriented manufacturing in the country. But there are signs the US may lower tariffs on Indian products,” it said.
The US has imposed a steep 50% tariff on majority of Indian goods effective from August 27. However, the two sides are negotiating a trade deal, which is likely to substantially lower the tariff.
“If India can secure a trade agreement with the US, it will reduce uncertainty and enhance confidence, which would boost labour-intensive sectors,” S&P noted.
Despite external challenges India’s growth momentum is likely to continue on the back of positive domestic factors. “Lowered goods and service tax (GST) rates will support middle-class consumption and complement income tax cuts and interest rate reductions introduced this year. These changes are likely to make consumption a greater driver of growth compared with investment, in this fiscal year, and the next,” S&P Global said.
The rating agency has lowered its projection on India’s consumer price inflation to 2.5% for the current financial year. However, the headline inflation is projected to accelerate to 5% in 2026-27 and remain elevated at 4.4% in 2027-28 and 4.5% in 2028-29. In 2024-25, India’s Consumer Price Index (CPI) inflation stood at 4.6%.
“In India, we have reduced our CPI inflation forecast to 2.5% for the current fiscal, as food inflation remains lower than we anticipated. However, we expect food inflation to normalise and forecast about 5% headline inflation the next fiscal year,” it said.
On the weakness in the value of Indian rupee, S&P Global said, “Capital outflows have contributed to currency weakness. Added uncertainty from unexpectedly high US tariffs and the lack of a trade deal with US have further squeezed the rupee.” The Indian rupee dipped to a record low of Rs 89.49 against a dollar on Friday.