India growth outlook: S&P sees 6.5–6.7% expansion ahead; warns US tariffs still weighing on export sectors
The agency said a combination of tax cuts and monetary policy easing will bolster consumption-led growth despite the drag from higher US tariffs.As cited by news agency PTI, S&P noted that India’s real GDP grew 7.8 per cent in April–June, the fastest pace in five quarters.
Official GDP numbers for July–September will be released on November 28.
“We anticipate that India’s GDP will grow by 6.5 per cent in fiscal year 2026… and 6.7 per cent in fiscal 2027, with risks evenly balanced,” S&P said in its Economic Outlook Asia-Pacific report, adding that strong domestic consumption continues to support momentum.The RBI has forecast 6.8 per cent GDP growth for the current fiscal, compared to 6.5 per cent last year, PTI reported.According to S&P, securing a trade agreement with the US would help reduce uncertainty and lift confidence, particularly for labour-intensive sectors.
It added that lowered GST rates, combined with income-tax cuts and interest rate reductions this year, will push consumption to play a larger role in growth than investment in FY26 and FY27.The government’s Budget for FY26 raised the income-tax rebate limit to Rs 12 lakh from Rs 7 lakh, providing Rs 1 lakh crore in relief to the middle class.
In June, the RBI cut policy rates by 50 basis points to a three-year low of 5.5 per cent.
Additionally, GST rates on about 375 items were slashed from September 22, making mass-consumption goods cheaper, PTI noted.S&P said elevated US tariffs continue to weigh on India’s export-oriented manufacturing, though there are early signs Washington may lower duties on some Indian products.
The agency added that the US’s revised trade policy approach is forcing governments and firms to focus on securing exemptions, diverting resources from productivity-enhancing efforts.
