India’s economy projected to grow by 6.5% in FY26: EY

Despite the global trade tension and slowing the international economy, the fall in crude oil prices and the decline in managed inflation levels, India’s economy may increase by 6.5% in the current financial year.
EY’s latest Economy Watch report released on Friday outlined the four major global factors shaping India’s development approach: low exports, a global recession, fall in crude oil prices, and a glut in global production capabilities.
EY India Chief Policy Advisor DK Srivastava said, “With suitable fiscal and monetary policies, India may be able to maintain the actual GDP growth at about 6.5% in FY 26, while CPI is lowering inflation.”
One of the main tailwinds for the Indian economy is a sharp fall in global oil prices. Crude prices, which were $ 75 per barrel in early April, fell to $ 65 by mid-month and are expected to remain in the range of $ 60–65 per barrel via FY26. This is expected to reduce inflation pressure and help in domestic development.
Meanwhile, exports are expected to take a hit from growing global tariffs and weak demand. However, EY suggested that loss to overall GDP may be limited as net exports have played a small role in India’s recent growth.
To navigate this atmosphere, the report recommends India to consider anti-dumping measures to combat India’s risk from additional production countries. This suggests a re -introduction of its crude oil sourcing strategy, such as increasing imports from the US, which can help improve business balance and soften the effects of recent tariff hikes.
The report also highlighted the potential advantage of a comprehensive bilateral trade agreement with the US, which is expected by September -October 2025, and urges India to deepen economic relations with UK, European Union and other major regional players.
“India’s response to these global disruption should be strategic and multi-tendency. We see the ability to be relatively strong for India, provided that it continues to manage its comprehensive economic basic principles through a development-oriented fiscal policy and adjustment monetary stance,” Srivastava said.
Medium to long -term, EY emphasized the need for continuous reforms in land and labor laws, more investment in education and skills, and focus on emerging technologies such as AI and generative AI. The expansion of the production-link incentive (PLI) scheme is also seen as an important development lever.
The estimated growth of 6.5% for FY26 aligns with estimates from global agencies. While the IMF and the World Bank have increased India’s growth by 6.2% and 6.3% respectively, the Reserve Bank of India and S&P global rating have also increased by 6.5%. OECD and Fitch have kept their estimates slightly lower at 6.4%.
These estimates come amid global trade uncertainty after US President Donald Trump announced a mutual tariff on imports from other countries.