India's Economic Growth Outlook Remains Strong for FY26
The Indian Finance Ministry, in its latest monthly economic report, has conveyed a robust growth outlook for the fiscal year 2025-26. This positive projection is primarily attributed to strong domestic demand, favorable monsoon conditions, lower inflation, monetary easing, and the beneficial effects of Goods and Services Tax (GST) reforms. The ministry noted that the economy gained momentum in Q2FY26 despite global economic and trade policy uncertainties, including higher tariffs imposed by the United States in August.
Reflecting this optimism, both the International Monetary Fund (IMF) and the Reserve Bank of India (RBI) have revised India's GDP growth forecasts upwards. The IMF now projects a 6.6% growth, while the RBI's Monetary Policy Committee (MPC) expects an increase of 6.8% for FY26, indicating upward revisions of 20 and 30 basis points, respectively. These forecasts position India as one of the fastest-growing emerging market economies, expected to outpace China's projected growth of 4.8%. The report also highlighted that core inflation is expected to remain subdued through early FY27, with the average headline inflation for 2025-26 revised down to 2.6%.
New GDP Series to Capture Digital Economy and Gig Sector
In a significant development, India is preparing to roll out a new GDP series early next year, shifting its base year from 2011-12 to 2022-23. This updated series aims to better reflect the country's rapidly expanding digital footprint, incorporating richer data on e-commerce, gig work, logistics, and digital payments. Officials believe this will provide a more detailed and accurate picture of India's economic transformation, especially considering the rise of e-commerce platforms and app-based aggregators as central to the nation's growth story.
Indian Equity Markets Rally, But Business Sentiments Moderate
Indian equity benchmarks experienced a positive trading session on Monday, October 27, 2025, with the BSE Sensex closing up 566.96 points (0.67%) at 84,778.84 and the NSE Nifty50 settling 170.9 points (0.67%) higher at 25,966.05. This rally was largely driven by investor expectations of an imminent US-China trade deal and softer-than-expected US inflation data, which fueled hopes for additional rate cuts in 2025. PSU Bank, Realty, Metal, and Oil & Gas indices were among the top performers.
However, a survey by the National Council of Applied Economic Research (NCAER) indicated that India's business sentiments moderated in the September quarter (Q2FY26) after three consecutive quarters of improvement. This moderation was attributed to international uncertainties and domestic GST reforms, as well as the impact of additional US tariffs on India.
Trade Dynamics: US Tariffs and Opportunities in Russia
India's trade performance continues to be robust, with strong services exports effectively offsetting the merchandise trade deficit. Merchandise trade data for September 2025 also showed early evidence of diversification in export destinations. Despite ongoing trade deal negotiations, India currently faces 50% punitive tariffs on its exports to the US, with half of these duties imposed in retaliation for its purchases of Russian oil. This has led to about 55% of Indian exports to the US being affected by these tariff hikes.
Conversely, new European Union sanctions on Russia are opening up new opportunities for Indian businesses. The Moscow-based Indian Business Alliance (IBA) noted that these sanctions have spurred local production and innovation in Russia, leading to increased bilateral trade with India. Indian companies are now supplying essential goods, machinery, and consumer items, filling gaps left by Western companies and resulting in India's trade with Russia reaching a record $68.7 billion.
E-commerce Exports and Gold Prices
Indian sellers leveraging Amazon's platform for global markets have exported over $20 billion worth of goods since 2015. Amazon aims to increase cumulative e-commerce exports from India to $80 billion by 2030, driven by increasing global demand and digital infrastructure.
Meanwhile, gold and silver prices saw a decline on October 27, 2025. This fall was primarily due to progress in US-China trade deal negotiations and a stronger dollar, which reduced the safe-haven demand for precious metals.