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Grant Thornton Bharat expects India's economy to grow between 7.3 per cent and 7.5 per cent in FY26, before slowing to around 7 per cent in FY27, in line with official estimates. Growth is being driven by services and manufacturing, while exports remain resilient despite global headwinds. The consultancy flagged geopolitical risks to supply chains, highlighted the importance of re-industrialisation, and called for continued ease-of-doing-business reforms. It also expects the rupee to stabilise near current levels and sees scope for one more limited rate cut.
India's economic growth is expected to remain strong in the near term, with momentum supported by services and manufacturing, even as global uncertainties continue to pose risks. According to Grant Thornton Bharat, the economy is likely to expand between 7.3 per cent and 7.5 per cent in the financial year ending March 2026, before easing slightly in the following year. Advertisement
The consultancy's assessment broadly aligns with the First Advance Estimates released by the National Statistics Office, which project India's growth at 7.4 per cent in 2025-26, compared with 6.5 per cent recorded in the previous financial year. This performance is expected to keep India positioned as the fastest-growing major economy globally, aided by resilience in domestic demand and steady output from key sectors.
Speaking to PTI, Rishi Shah, Partner and Economic Advisory Services Leader at Grant Thornton Bharat, said exports have remained relatively stable despite higher US tariffs on Indian goods and other external challenges. He noted that while the current year's growth outlook remains favourable, expansion in 2026-27 could moderate to around 6.7 per cent to 7 per cent as global pressures intensify.
Shah highlighted external factors as a key area of concern, particularly geopolitical developments that could disrupt global trade and supply chains. Issues emerging from regions such as South America and the Middle East were identified as potential risks that may affect commodity flows and logistics in the coming years.
He also pointed out that the impact of policy decisions tends to unfold gradually, often becoming clear only after several years. In this context, Shah underlined the importance of India positioning itself effectively in the current phase of global re-industrialisation, as several advanced economies are shifting focus back to domestic manufacturing and industrial capacity.
On expectations from the upcoming Union Budget, Shah described it as a directional document that reflects the government's long-term approach. He said the primary focus should remain on improving ease of doing business, which would help sustain investment and productivity growth over time.
Addressing the depreciation of the rupee, Shah said the currency is likely to stabilise around the current level of 90 to a US dollar. He added that a slightly weaker currency could be manageable for India, noting that the country imports a large share of its critical goods and that currency flexibility can serve certain economic objectives.
Shah also indicated that there may be limited room for further monetary easing. With inflation remaining around 4 per cent or slightly below, despite volatility in food prices, he said there is a case for one additional repo rate cut of 25 basis points, but not beyond that. The Reserve Bank of India has already reduced the repo rate by a cumulative 125 basis points to 5.25 per cent since beginning its rate-cutting cycle last year. The central bank's Monetary Policy Committee is scheduled to meet in the coming weeks to review the policy stance.
Source PTI
FAQ
Q1. How does Grant Thornton Bharat assess India’s economic growth outlook for FY26 and FY27?
Grant Thornton Bharat expects India’s economy to grow between 7.3 per cent and 7.5 per cent in FY26, reflecting strong momentum in key sectors such as services and manufacturing. However, the consultancy anticipates a gradual moderation in growth to around 6.7 per cent to 7 per cent in FY27. This slowdown is attributed mainly to rising global uncertainties and external pressures rather than weaknesses in domestic fundamentals.
Q2. How does this growth projection compare with official government estimates?
The consultancy’s outlook broadly aligns with the First Advance Estimates released by the National Statistics Office, which project economic growth of 7.4 per cent for 2025–26. This compares with growth of 6.5 per cent recorded in the previous financial year. Together, these estimates reinforce India’s position as the fastest-growing major economy, supported by resilient domestic demand and sustained output across sectors.
Q3. What sectors are driving India’s current growth momentum?
India’s near-term growth continues to be led by the services and manufacturing sectors. These segments have shown steady output and demand despite global headwinds. Manufacturing has benefited from policy support and capacity expansion, while services have remained robust due to domestic consumption and export-oriented activities such as IT and business services.
Q4. What risks could affect India’s growth trajectory in the coming years?
Grant Thornton Bharat flagged geopolitical risks as a major concern, particularly disruptions to global trade and supply chains. Developments in regions such as the Middle East and South America could affect commodity availability, logistics, and pricing. These external factors may exert pressure on growth in FY27, even if domestic demand remains relatively stable.
Q5. What policy priorities did the consultancy highlight, especially in the context of global re-industrialisation?
The consultancy emphasised the importance of India positioning itself strategically amid a global shift towards re-industrialisation, where several advanced economies are focusing on domestic manufacturing. It highlighted that policy impacts are often realised over several years, making it essential for India to continue reforms that improve ease of doing business, attract investment, and enhance productivity over the long term.
Q6. What are Grant Thornton Bharat’s expectations regarding the rupee and interest rates?
According to the consultancy, the Indian rupee is likely to stabilise near its current level of around 90 per US dollar. A moderately weaker currency is seen as manageable, given India’s import dependence and the flexibility it offers in external trade. On monetary policy, with inflation hovering around 4 per cent, Grant Thornton Bharat sees room for only one more limited repo rate cut of about 25 basis points, following the cumulative 125 basis points of easing already undertaken by the Reserve Bank of India.
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