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The World Bank on Tuesday raised India's growth projection to 7.2 percent in fiscal year (FY) 2025/26 (April 2025 to March 2026), as domestic demand has remained robust, reflecting strong private consumption, supported by earlier tax reforms and improvements in real household earnings in rural areas. Alongside resilient services exports, merchandise exports rose in November, despite increases in U.S. import tariffs on many Indian goods. Growth in India is projected to slow to 6.5 percent in FY2026/27. Despite higher tariffs on certain exports to the United States'which accounts for about 12 percent of India's merchandise exports' the growth forecast has remained unchanged relative to June projections, primarily because adverse impacts of higher tariffs will be offset by stronger momentum in domestic demand and more resilient exports than previously anticipated. Growth is set to inch up to 6.6 percent in FY2027/28, underpinned by robust services activity, as well as a recovery in exports and a pickup in investment, it said in the latest Global Economic Prospects.

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