Deloitte Pegs India’s FY26 GDP Growth at 6.4–6.7% on Strong Domestic Demand

Deloitte India has forecast India’s economic growth for FY 2025–26 at 6.4–6.7%, citing resilient domestic demand, strategic trade initiatives, and a supportive macroeconomic environment. The projection comes against a backdrop of global economic turbulence, where India continues to stand out as one of the fastest-growing large economies.

Key Drivers of Growth

The Deloitte report identifies a “virtuous trifecta” propelling India’s economic momentum, India’s stock markets remain robust, drawing strong domestic and foreign investor interest. Rising disposable incomes and expanding middle-class consumption continue to fuel retail and service sectors. Skilled talent in technology, manufacturing, and services enhances India’s attractiveness for global businesses.

Boost from Strategic Trade Negotiations

India is actively engaging in high-impact trade negotiations,

• UK: A strategic trade agreement signed in May is expected to strengthen bilateral cooperation.
• US: Ongoing negotiations aim to enhance technology transfer, AI collaboration, and digital economy partnerships.
• European Union: A much-anticipated trade deal could be finalised by the end of 2025, potentially unlocking market access, job creation, and investment flows.

These trade pacts are projected to boost income, create jobs, and enhance India’s market presence globally. They also open opportunities in AI, digital transformation, and innovation-led startups.

Inflation Eases, Demand Strengthens

With inflationary pressures easing, domestic demand is expected to remain the primary engine of growth. Strong household spending, increased urban consumption, and steady rural demand are all contributing to an optimistic economic outlook.

The government’s policy push for infrastructure development and investment-friendly reforms is further reinforcing private sector confidence.

Risks and Challenges

Despite the positive outlook, Deloitte warns that India must closely monitor trade exposure and geopolitical developments. Key risks include, Regional conflicts affecting global supply chains. Restrictions on critical minerals and specialised fertilisers that could impact manufacturing and agriculture. Potential volatility in commodity prices driven by global economic uncertainty.

A Balanced Outlook for FY26

Deloitte’s forecast underscores that India’s growth will be shaped by a balance between domestic resilience and external opportunities. While global headwinds remain, India’s strong fundamentals and proactive trade diplomacy position it well for continued expansion.