Strong Economic Growth Projections
India's economy is on a strong growth trajectory, with a Reuters poll forecasting a 6.7% expansion for the current fiscal year, surpassing earlier estimates. This optimistic outlook is largely attributed to resilient domestic demand and robust investment. For the first quarter of FY 2025-26, real GDP saw a significant jump of 7.8%, marking the fastest pace in nearly two years. The International Monetary Fund (IMF) and the Reserve Bank of India (RBI) anticipate India's growth to remain between 6.4% and 6.8% in 2025-26, positioning it well ahead of most major economies. With its nominal GDP exceeding $4 trillion, India now ranks as the world's third-largest economy, contributing approximately 10% to global GDP.
Mixed Fortunes in International Trade
India's coffee exports have notably surged, reaching $1.8 billion in FY25, a 40% increase that continues a four-year growth streak, bolstered by strong global demand. However, trade relations with the United States have presented challenges. India's exports to the US experienced a sharp decline of 37.5% between May and September 2025, affecting key sectors such as smartphones, pharmaceuticals, and gems. This downturn is primarily due to heightened tariffs imposed by the Trump administration. A report by think tank GTRI highlighted that this decline raises concerns over trade imbalances and could pressure India's current account deficit if prolonged. There is a growing emphasis on the need for India to secure a low-tariff trade deal with the US to boost exports and create jobs.
On other trade fronts, India and New Zealand have commenced their fourth round of negotiations for a free trade agreement (FTA), focusing on critical areas including trade in goods, services, and rules of origin. Similarly, discussions for an FTA between India and the European Union are intensifying as EU negotiators arrived in New Delhi.
Fiscal Challenges and Manufacturing Surge
Despite the positive growth outlook, India faces fiscal challenges. Slower-than-expected tax revenue growth is posing hurdles for the country to meet its fiscal deficit target of 4.5% of GDP in FY26, as noted by Union Bank of India analysts.
Conversely, the manufacturing sector demonstrated strong performance, with the Purchasing Managers' Index (PMI) rising to 59.2 in October, a near 17-year high. This acceleration was driven by robust demand, Goods and Services Tax (GST) relief, and productivity gains.
Market Dynamics and Corporate Developments
The Indian markets have shown increased volatility, indicated by a rise in the India VIX. Several Initial Public Offerings (IPOs) are currently in the spotlight, with Groww's IPO opening today, Lenskart's IPO in its third day of bidding, and Orkla India's IPO allotment being finalized.
In corporate news, the Enforcement Directorate (ED) has expanded its crackdown on Anil Ambani, attaching DAKC land worth Rs 4,462 crore, bringing the total attachments in Reliance Group's bank fraud cases to over Rs 7,500 crore. Major companies have reported strong financial results, with Bharti Airtel seeing an 89% year-on-year profit increase in Q2, and Titan's consolidated net profit rising by 59% year-on-year in the same quarter. Investment firm KKR is reportedly planning significant investments in India, and the Hinduja Group is set to invest Rs 20,000 crore in Andhra Pradesh across the energy and electric vehicle sectors. Furthermore, Bharat Biotech has established a Contract Research, Development, and Manufacturing Organization (CRDMO) arm dedicated to cell and gene therapies.
Government Initiatives
The government is actively pushing development initiatives, with Prime Minister Modi rolling out a ā¹1 trillion Research and Development and Innovation (RDI) fund aimed at 'high-risk, high-impact projects'. The government also assured adequate urea availability for the Kharif 2025 season.