The Indian economy demonstrates strong resilience
According to the latest data released by the Indian Ministry of Statistics and Planning, India's gross domestic product (GDP) for the fiscal year 2025/2026 increased by 7.7% year-on-year, reaching 323 trillion rupees (approximately 14 Indian rupees per Chinese yuan). Against the backdrop of increasing external environmental uncertainty, the Indian economy has demonstrated strong resilience, with infrastructure investment and expanding domestic consumption being important driving forces.
According to the Indian Ministry of Finance, multiple industries in India, including manufacturing, trade, hotels, transportation, communications, and real estate, achieved double-digit growth in the 2025/2026 fiscal year, with the manufacturing sector growing at a rate of 10.7%. It is understood that India's manufacturing industry is supported by five major industries including electronics, automobiles, machinery and equipment, pharmaceuticals and chemicals, and textiles, and its industrial structure is undergoing a transformation towards high added value. To further expand the scale of the manufacturing industry, the Indian Industrial and Internal Trade Promotion Agency recently proposed a manufacturing revitalization plan covering about 100 products, involving multiple fields such as precision engineering equipment and electronic components, to enhance India's local manufacturing capabilities. In the first half of this year, the overall growth rate of India's foreign trade exports remained at 15%.
In recent years, the Indian government has increased its investment in infrastructure, allocating over 100 billion US dollars for several consecutive years to areas such as highways, ports, and airports. India's 2026/2027 fiscal year budget plans to increase public capital expenditure to a record high of 12.2 trillion rupees. The Indian Ministry of Finance stated that it will continue to maintain the growth momentum of public capital expenditure. Benefiting from long-term tax incentives and policy support, foreign companies are also increasing their infrastructure investment in India. For example, various technology companies such as Microsoft, Google, and Amazon have invested over $67.5 billion in data centers in India as of the beginning of this year.
With a large population and relatively young consumer groups, the growth rate of private consumption expenditure in India has increased from 5.8% in the previous fiscal year to 7.7% in the 2025/2026 fiscal year, and the proportion of private consumption expenditure to GDP has also risen to 61.5%, reaching a new high since the 2011/2012 fiscal year. Private consumption in India is mainly concentrated in the fields of automobiles, home appliances, and services, with a synchronous recovery trend in urban and rural consumption.
However, the growth rate of Indian agriculture in the 2025/226 fiscal year was 3.2%, lower than the previous fiscal year's 4.2%. Affected by global energy shortages and fertilizer supply disruptions, it is expected that the growth rate of India's agricultural industry will continue to slow down in the 2026/2027 fiscal year. As the world's third largest importer and consumer of oil, India relies on sea transportation for nearly 90% of its oil, and about 50% of its oil comes from the Middle East region. The obstruction of shipping in the Strait of Hormuz has pushed up India's domestic energy and industrial production costs, and caused severe inflation. The Reserve Bank of India (RBI) stated that the surge in oil prices poses a short-term downside risk to India's economic growth.
Given the increasing uncertainty in the international trade environment and rising inflation expectations, the Reserve Bank of India has adopted a contractionary monetary policy and lowered its GDP growth forecast for the 2026/2027 fiscal year to 6.6%. The Reserve Bank of India believes that macroeconomic risks in India are on the rise, and high inflation will be a significant factor hindering growth. Diversified energy imports and strong foreign exchange reserves can provide moderate buffering, and the Indian economy has the ability to cope with external shocks.
Tahir Farouk, the editor in chief of Pakistan's Daily United, told reporters that India's economy has shown strong resilience and vitality in the 2025/26 fiscal year, but still faces pressure from uncertain US tariffs and global energy supply chain disruptions. In the new fiscal year, the Indian economy will continue to seek growth space under multiple pressures.