NEW DELHI: India Ratings & Research (Ind-Ra) and the Asian Development Bank (ADB) have both revised downward their FY26 GDP growth projections for India, citing global uncertainties, particularly stemming from the US tariff regime, and a weaker investment climate.
In its mid-year economic outlook, Ind-Ra lowered its FY26 growth forecast to 6.3 per cent, down 30 basis points from its earlier estimate of 6.6 per cent made in December 2024. The agency flagged an “uncertain global scenario” driven by unilateral US tariff hikes and subdued domestic investment as key headwinds.
“Major headwinds are: i) uncertain global scenario from the unilateral tariff hikes by the US for all countries and ii) weaker-than-expected investment climate. The major tailwinds are: i) monetary easing, ii) faster-than-expected inflation decline, and iii) likely above-normal rainfall in 2025,” said Devendra Kumar Pant, Chief Economist and Head of Public Finance at Ind-Ra.
ADB view
Echoing similar concerns, the ADB, in its Asian Development Outlook (July 2025), cut its FY26 India GDP forecast to 6.5 per cent, down from 6.7 per cent in April. It attributed the downgrade primarily to the impact of US baseline tariffs and the resulting policy uncertainty, which it said could weigh on investment flows.
“In addition to the effects of lower global growth and the direct impact of additional US tariffs on Indian exports, heightened policy uncertainty may affect investment flows,” the ADB report said.
Despite the revisions, both agencies acknowledged India’s economy remains resilient. ADB noted that robust domestic consumption, buoyed by a revival in rural demand, and strength in the services and agriculture sectors, particularly due to forecasts of above-normal monsoon rains, will continue to support economic activity.
Looking further ahead, ADB also revised its FY27 GDP growth estimate slightly downwards to 6.7 per cent, from its earlier 6.8 per cent projection in April. However, it said the expected recovery would be aided by rising investments, assuming reduced policy uncertainty, and favourable financial conditions due to recent repo rate and cash reserve ratio (CRR) cuts by the RBI.
