India’s real gross domestic product (GDP) projection for the financial year 2025-26 (FY26) has been raised to 6.7 per cent by EY. This is up from the previous 6.5 per cent on the back of strong growth in the June quarter and goods and services tax (GST) reforms.
“With 1QFY26 real GDP growth at 7.8 per cent and stimulation of demand through GST reforms on the one hand, constrained by global headwinds affecting India’s export prospects, both in goods and services, we expect India to still show an annual real GDP growth of 6.7 per cent in FY26,” EY said in its ‘Economy Watch’ report for September 2025.
EY highlighted that the ongoing tariff-related uncertainties and supply chain disruptions provide an opportunity for India to re-examine the pattern and composition of its international trade with the rest of the world, especially with the US and China.
It further said that the base of India’s export destinations and import sources is narrow.
“India is considerably dependent on the US and, to some extent, on China. India may do well to diversify its export destinations and import sources, seeking more opportunities amongst the BRICS countries and reducing its reliance both on the US and China,” said DK Srivastava, chief policy advisor, EY India, in the report.
According to EY, the ongoing tariff-related uncertainties and supply chain disruptions provide an opportunity for India to re-examine the pattern and composition of its international trade with the rest of the world, especially with the US and China.
Recently, ICRA has also revised the GDP forecast in its September 2025 macroeconomic update. India’s real GDP growth forecast for FY2026 has been revised to 6.5 per cent, up from previous estimates.
This adjustment reflects the positive impact of recent policy measures, including the GST rationalisation, and robust economic performance in the first quarter of the fiscal year.
Icra’s revised projections indicate a nominal GDP growth of 8.3 per cent for FY2026, with a potential for a rate cut by the RBI if inflationary pressures remain subdued and economic growth continues to strengthen.
Icra’s Chief Economist Aditi Nayar highlighted that the GST rate cuts are expected to moderate inflation and stimulate demand across various sectors.
While the immediate effect on the CPI inflation is anticipated to be minimal, the long-term benefits are expected to support economic growth.