India's Economic Growth Forecast: 6.4% in 2026 and 6.6% in 2027
Economic Projections for India
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New Delhi, April 21: According to a recent report from the United Nations, India's economy is expected to grow by 6.4% in 2026 and 6.6% in 2027.
The United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) highlighted that the economies in South and South-West Asia are projected to grow by 5.4% in 2025, an increase from 5.2% in 2024, primarily driven by India's impressive growth rate of 7.4% in 2025.
Factors contributing to India's robust growth include strong rural consumption, reductions in goods and services tax, and a strategic front-loading of exports prior to the imposition of tariffs by the United States.
However, economic activity is anticipated to slow down in the latter half of 2025, as exports to the U.S. are expected to decline by 25% due to the introduction of 50% tariffs in August 2025. The services sector continues to be a significant contributor to growth, according to the UN.
The report also forecasts inflation rates in India at 4.4% for 2026 and 4.3% for 2027.
It was noted that foreign direct investment (FDI) inflows to developing economies in Asia and the Pacific have decreased amid ongoing trade tensions and geopolitical uncertainties, following a 0.6% increase in 2024. In 2025, FDI in the region fell by 2%, despite a global increase of 14%.
"In the Asia-Pacific region, the countries that attracted the most greenfield FDI in the first three quarters included India, Australia, the Republic of Korea, and Kazakhstan, with significant investments announced," the report stated.
Workers from Asia and the Pacific employed abroad have increased their remittances, which have helped mitigate the effects of challenging domestic employment conditions and supported household consumption.
Approximately 40% of these remittances are allocated for essential expenses in India and the Philippines, such as healthcare costs.
However, as the largest recipient of remittances globally, with $7 billion in 2024, India may experience a notable decline due to a 1% tax on all remittances imposed by the United States starting January 2026.
The report praised India's production-linked incentive scheme, highlighting its role in promoting green industrial development by encouraging domestic manufacturing of solar panels, batteries, and green hydrogen.
This initiative has reduced reliance on imports and fostered new industrial stakeholders committed to supporting the transition, the report concluded.