India to Clock 6.6 pc Growth in FY27
While US tariffs may impact India's export performance in FY27, strong demand from Europe and the Middle East is expected to mitigate these effects, particularly for key exports like electronics.
Chennai: After an estimated growth of 7.4 per cent in FY26, India may clock GDP growth of 6.6 per cent in FY27 and 6.7 per cent in FY28, finds United Nations Department of Economic and Social Affairs. The growth will be supported by resilient consumption and strong public investment, despite US tariffs weighing on export performance.
Economic growth in India is projected to moderate from an estimated 7.4 per cent in FY26 to 6.6 per cent in FY27. Resilient private consumption, strong public investment, recent tax reforms, and lower interest rates are expected to support near-term growth, said UN DESA in its global report.
However, higher United States tariffs could weigh on export performance in FY27 if current rates persist, as the United States market accounts for about 18 per cent of total exports from India. While tariffs may adversely affect some product categories, key exports such as electronics and smartphones are expected to remain exempt.
Moreover, strong demand from other major markets, including Europe and the Middle East, is projected to partially offset the impact. On the supply side, continued expansion in manufacturing and services sectors will remain a key driver of growth throughout the forecast period.
Recent tax reforms and monetary easing should provide additional near-term support. India recorded strong growth in gross fixed capital formation, led by higher public spending on physical and digital infrastructure, defence, and renewable energy.
Employment indicators have remained broadly stable in the current year. Unemployment rate stood at 5.2 per cent in October 2025, compared with 4.9 per cent in 2024, while the labour force participation rate edged up in both rural and urban areas during the second half of the year.
Consumer price inflation fell more than expected, averaging 3 per cent in the first nine months of the year amid favourable base effects and lower food prices. Inflation is forecast at 4.1 per cent, close to the central bank’s midpoint target. The Reserve Bank of India began its easing cycle in February 2025, lowering the policy rate four times by early December, from 6.5 to 5.25 per cent.
Household expectations remain elevated and less anchored despite recent declines in headline inflation. Programmes to expand the domestic production of edible oils and pulses, modernize fertilizer and storage infrastructure, and improve logistics—even if conceived mainly to boost rural incomes and food security—have reduced dependence on imports and exposure to global shock.