ADB raises India’s FY27 growth forecast to 6.9% on strong demand, lower US tariffs

The Asian Development Bank (ADB) has raised India’s economic growth forecast for fiscal year 2027 to 6.9%, citing resilient domestic demand and a lower effective tariff burden from the United States.

In its December 2025 report, ADB had projected India's GDP growth at 6.5% for 2026-27 fiscal.

"Despite a worsening global economic and geopolitical environment, growth in India is forecast to remain robust at 6.9 per cent in fiscal year 2026 (2026-27). Activity will be underpinned by strong domestic demand, supported by easing financing conditions, and lower US tariffs on Indian goods," the report said.

The ADB noted that a lower effective US tariff rate compared with the previous year would support export growth, although net exports are still expected to weigh on output in the near term due to higher imports, particularly energy.

It also warned that a prolonged conflict in the Middle East could undermine India's macroeconomic performance through multiple channels.

Inflation is projected to rise to 4.5% in FY2026, partly due to higher food and energy prices amid geopolitical tensions, before easing to 4.0% in FY2027 as price pressures moderate.

"While limited pass-through could cushion the effect on inflation and growth in the near term, it would increase fiscal pressure through higher subsidy requirements," ADB said.

Across developing Asia and the Pacific, growth is expected to slow to 5.1% in 2026 and 2027 from 5.4% last year, weighed down by ongoing trade uncertainty and conflict in the Middle East.

“A prolonged conflict in the Middle East is the single biggest risk to the region’s outlook,” ADB Chief Economist Albert Park said, warning it could push up energy and food prices and tighten financial conditions.