Under tariff pressure, India is expected to achieve an economic growth of 7.4% in the fiscal year 2026

Despite facing U.S. tariff pressures and geopolitical tensions, the Indian government expects the economy to grow by more than 7% this fiscal year, maintaining its position as the fastest-growing major economy in the world. On January 7, the Ministry of Statistics and Programme Implementation of India released estimated data showing that the GDP is expected to grow by 7.4% for the fiscal year ending in March next year, slightly below the median economist expectation of 7.5%. Final data will be released after the end of the fiscal year. Notably, India plans to revise its GDP calculation method, potentially in February, which could significantly impact growth expectations. The department stated that at this rate, the nominal GDP of India will reach approximately 357.14 trillion rupees (USD 400 billion). HDFC Bank economist Sakshi Gupta noted that the data reflects that "despite rising global uncertainties, the Indian economy continues to perform well." However, some economists are concerned about the nominal GDP growth being lower than expected, believing this indicates that weak income growth may increase pressure on the government to cut spending to meet deficit targets. DBS Bank economist Radhika Rao stated, "Market focus will shift to nominal growth rather than real growth rates. Spending may need to be curtailed in FY2026 to stay within deficit targets." U.S. High Tariffs Impact Export Industries India remains one of the few major economies that has not reached a trade agreement with the United States, and uncertainty poses pressure on economic prospects. Last August, U.S. President Trump imposed a 50% tariff on Indian export goods, the highest rate in the Asia-Pacific region. According to Xinhua News Agency, President Trump warned on January 4 that if India does not limit its purchases of Russian oil as requested by the U.S., the U.S. may continue to raise tariffs on Indian products. In August 2025, the U.S. government imposed punitive tariffs on Indian goods exported to the U.S. citing India's imports of Russian oil. The tariffs have severely impacted India's labor-intensive export industries, including textiles, gems and jewelry, and leather products. Goldman Sachs predicts that even assuming India reaches a trade agreement with the U.S. before March, the Indian economy's growth rate will slow to 6.8% in the next fiscal year