India continues to be one of the fastest-growing major economies globally, maintaining strong economic momentum through June. Both the industrial and services sectors in India have shown stability, as reported by the Reserve Bank of India (RBI). Despite uneven southwest monsoon conditions affecting the farm sector, the impact on food inflation is expected to be mitigated by ample foodgrain stocks.
The RBI’s July bulletin highlighted the sustained momentum in external trade, with significant growth in exports and imports during Q1 2026-27. Recent developments such as the operationalization of the India-UK Comprehensive Economic and Trade Agreement are expected to further strengthen trade ties. Additionally, foreign investments have shown signs of recovery, indicating growing confidence in the Indian economy.
While the global economy faces uncertainties like supply chain disruptions and fragmented trading relationships, India has managed external uncertainties well. This resilience is attributed to robust demand conditions and the consistent performance of the industrial and services sectors. Retail inflation saw a slight increase in June, while core inflation, excluding precious metals, remained low. Liquidity conditions have improved, supporting strong credit growth.
The RBI’s bulletin also noted positive trends in India’s external sector, with a steady outlook and increased foreign investments. Foreign direct investment (FDI) and foreign portfolio investment (FPI) have shown positive growth, with FPI flows turning positive in June and continuing through July. Despite some market fluctuations following geopolitical events, India’s key external vulnerability indicators remained stable as of end-March 2026.
