India’s economy is set to expand by 6.4% in 2026 and 6.6% in 2027, as per a United Nations report. The United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) highlighted that South and South‑West Asia saw a growth of 5.4% in 2025, up from 5.2% in 2024, mainly driven by India’s robust growth of 7.4% in 2025.
The report attributed India’s strong growth to robust rural consumption, goods and services tax cuts, and export front‑loading before the United States’ tariffs. However, economic activity slowed down in the latter half of 2025 after a 25% drop in exports to the United States due to the imposition of 50% tariffs in August 2025. Services continued to be a significant growth driver, according to the United Nations.
Inflation in India is predicted to be at 4.4% in 2026 and 4.3% in 2027, the report further stated. The report also mentioned a decline in foreign direct investment (FDI) inflows to developing Asian and Pacific economies amid trade tensions and geopolitical uncertainties, with a 2% decrease in 2025 despite a global surge of 14%.
The countries attracting the most greenfield FDI in the Asia-Pacific region were India, Australia, the Republic of Korea, and Kazakhstan, with announced investments of $50 billion, $30 billion, $25 billion, and $21 billion, respectively. Personal remittances from Asian and Pacific workers abroad helped sustain household consumption and mitigate vulnerable domestic employment conditions.
Around 40% of remittances in India and the Philippines are utilized for essential expenses like medical costs. The report highlighted concerns about India potentially facing significant losses due to a 1% tax on all remittances imposed by the United States since January 2026. The report commended India’s production-linked incentive scheme for promoting green industrial development through incentives for domestic manufacturing of solar photovoltaic, batteries, and green hydrogen.
