Whalesbook
India's Growth Forecasts
The UN projects India's economy will grow 6.4% in 2026 and 6.6% in 2027. This follows a robust 7.4% expansion in 2025, driven by strong private spending, especially in rural areas, and positive effects from goods and services tax adjustments.
Exports also saw a surge in 2025 as companies prepared for anticipated U.S. tariffs. The services sector remained a key driver of this overall growth.
US Tariffs and Remittance Tax Impact
Economic activity slowed in the second half of 2025, largely due to a 25% decrease in exports to the U.S. This followed the U.S. imposing a 50% tariff in August 2025.
Additionally, a 1% U.S. tax on remittances, effective January 2026, presents a potential challenge for India, the world's largest recipient of such funds.
While global foreign direct investment (FDI) rose 14%, FDI into the Asia-Pacific region fell 2% in 2025. India bucked this trend, attracting the largest share of greenfield FDI in the region with $50 billion in announced investments through the first three quarters of 2025.
Focus on Green Jobs and Policy
The report also highlighted the growth of green jobs in India, which reached 1.3 million in 2024, accounting for 8% of the global total.
India's production-linked incentive (PLI) scheme was cited as an effective policy for boosting domestic manufacturing of solar panels, batteries, and green hydrogen. This initiative supports the energy transition and aims to reduce reliance on imports.