India’s economy is experiencing robust growth momentum, fueled by strong domestic demand, resilient services exports, and ongoing reforms, as per the latest World Bank report. The growth rate is estimated at 7.6% for the fiscal year 2025-26, surpassing previous projections, driven by the strength in consumption and investment activities. Private consumption, particularly retail demand, has played a significant role, supported by factors like lower inflation, tax rationalization, and increased consumer confidence.
Domestic demand has helped counterbalance the decline in goods exports, with services exports showing resilience and expanding by approximately 16% in recent months. The services sector, especially information and communications technology and business services, remains a key driver of economic growth, contributing to export earnings. Additionally, the manufacturing sector has witnessed an uptick, with industrial activity growing by over 10% annually between 2023 and 2025, notably led by sectors like electronics.
The World Bank report highlights that government incentives and growing investment inflows have facilitated this expansion. Schemes like production-linked incentives and enhanced infrastructure have played a crucial role in boosting output and competitiveness. Furthermore, India’s trade prospects have brightened with the signing of new free trade agreements with the European Union and the United Kingdom, expected to lower tariffs on a majority of traded goods and enhance market access for Indian businesses.
The report emphasizes that structural reforms have been instrumental in India’s economic performance, including efforts to enhance infrastructure, simplify tax systems, and strengthen the financial sector, thereby improving productivity and investor confidence. Despite external risks such as increased energy prices, India’s solid domestic fundamentals and reform agenda position it well to sustain growth, having consistently surpassed growth forecasts in recent years, reflecting resilience and steady policy support.
