India bets on up to 7.2% growth next year, outpacing most major economies

India has forecasted its economy to grow between 6.8% to 7.2% in the fiscal year 2027, outpacing most major economies.

The world’s fourth-largest economy is targeting this growth on the back of a stable domestic economy and fewer external uncertainties as it aims to conclude a trade deal with the U.S. “this year,” India’s finance ministry said in its economy survey for the financial year 2026.

India is expected to remain the fastest-growing economy in the world, according to the International Monetary Fund, which has pegged its growth at 6.4% in 2026 and 2027. In contrast, the IMF projects the world economy to grow by 3.3% in 2026, marginally shrinking to 3.2% in 2027. Major economies like Germany, the U.K and Japan are likely to grow in the low single digits.

The outlook for the Indian economy in the next fiscal year is “one of steady growth amid global uncertainty, requiring caution, but not pessimism,” the report said.

As reported earlier this month, India’s economy is projected to grow 7.4% in the fiscal year ending March 2026, higher than the 6.5% growth in the last fiscal.

Since August, Indian exports to the U.S. have been tariffed at over 50%, and while negotiations are ongoing, a deal remains elusive.

But according to the economic survey, India’s economic growth has not been hampered by the slowdown in exports to the U.S.

Textiles, marine products, gems and jewelry, auto components, and leather goods are the key exports from India, which have been affected due to U.S. tariffs. But according to the data shared by the Indian government, these products have found alternative markets.

India’s marine products are now being sold in countries like China and Malaysia, while the country’s exports of auto components to the UAE are also on the rise, the report said.

Despite tariff shocks, the finance ministry said India’s growth “accelerated” in the current fiscal year due to a slew of structural reforms and policy measures.

In September last year, India lowered its goods and services tax rates across products and services to boost domestic consumption. The country has also announced multiple trade deals as it looks to diversify markets for its exports.

But even as India retains its growth story amid an increasingly uncertain global economic environment, its weak currency is a cause of concern for the government.

India runs a trade deficit in goods that its net trade surplus in services and remittances cannot fully cover. The country needs foreign capital flows to maintain a healthy balance of payments. When these flows run dry, the rupee weakens, the report highlighted.

In 2025, the rupee emerged as the weakest Asian currency due to a record outflow of capital from foreign investors. Most experts see the currency falling further against the dollar.

While the economic survey points to the global system as the reason for India’s macroeconomic success not translating into currency stability and capital inflows, economic experts take a different view.

Global investors will not consider investing in India while global interest rates remain high in other major economies.

“If an investor can make 4%-4.5% in the U.S. without currency risk,” capital flows will not come to India, explains Anubhuti Sahay, head of India economics research at Standard Chartered Bank.

She added that while India’s growth story makes a strong investment case, India needs to improve the ease and speed of doing business in the country to attract capital.

The return that investors expect from a strong growth market like India gets eroded because it takes a lot of time to set up a business in the country, Sahay said.