India’s economic outlook

At first glance, India’s GDP growth of 6.2% till Q3 FY2025 may raise eyebrows, especially when compared to the sharp 9.2% and 7.6% growth seen in the past two years. But look a little closer, and you will find this is not a sign of slowdown. It is probably a reset before a rebound. 

Why the dip in FY25? 

Temporary headwinds like election-led policy caution, and irregular rainfall in the first half, and global trade uncertainties since September 2024 muted momentum in the first three quarters of FY2025. The shadow of a high base is making this year’s growth look smaller than it truly is. But high-frequency indicators such as GST collections, auto sales, and FMCG growth are bouncing back, pointing to a strong domestic engine still humming underneath.

What’s next? 

The government is expected to boost spending through the direct tax exemptions announced earlier, giving consumers more in hand and businesses a reason to invest. This could add 0.6–0.7% to GDP growth in FY2026.  

Trade, the wildcard

If a US–India bilateral trade agreement comes through, it could flip trade headwinds into tailwinds, opening up market access and energising exports. But if global volatility persists, we may see a drag of -0.1% to -0.3%.  

Our outlook: Steady, yet cautious optimism 

Factoring it all in, Deloitte forecasts India’s GDP to grow between 6.5% and 6.7% in FY2026, powered by domestic demand, fiscal support, and stable inflation. The Impact of reciprocal tariffs imposed by the United States on Indian GDP could be rangebound Impact of reciprocal tariffs on India's exports to the US