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Informist, Wednesday, Nov. 26, 2025

 

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--IMF: India FY26 GDP seen 6.6%, FY27 at 6.2% with prolonged 50% US tariffs 
--CONTEXT: IMF releases 2025 consultation report on India 
--IMF: India growth expected to stay robust on favorable domestic conditions 
--IMF: GST cuts to help cushion adverse impact of US tariffs on India 
--IMF: More geoecon fragmentation can cause lower India economic growth 
--IMF: More geoecon fragmentation to cause lower trade, FDI in India 
--IMF: More geoecon fragmentation to cause tighter fincl condition for India 
--IMF: New trade pacts can boost India exports, pvt investment, employment 
--IMF: See significant near-term risks to India economic outlook 
--IMF: India's advanced econ ambition can be aided by structural reforms 
--IMF: Despite external headwinds, India growth expected to remain robust
--IMF: India headline inflation projected to remain well contained 
--IMF: Unpredictable weather shocks can affect India crop ylds, rural demand 
--IMF: India inflation to remain benign, average 2.8% FY26 
--IMF: Unpredictable weather shocks can reignite price pressures in India 
--IMF: India inflation to remain benign, converge to 4% target in FY27
--IMF: India monetary policy should remain nimble, with easing bias 

 

NEW DELHI – India's GDP may grow 6.2% in 2026–27 (Apr-Mar) if the 50% tariff imposed by the US on Indian goods continues to stay in the next financial year as well, the International Monetary Fund, which has projected India's GDP to grow 6.6% in FY26, said Wednesday. But there are significant near-term risks to the economic outlook, the agency said.

 

The conclusion of new trade agreements and faster implementation of structural reform domestically could boost exports, private investment, and employment, thus posing an upside risk to the outlook, the IMF said in its consultation report on India for 2025. The conclusion of the trade deal with the US alone could eliminate or lower the 50% tariff, helping the GDP grow over 6.2% in FY27. With December approaching, there are hopes of the conclusion of the trade deal as New Delhi and Washington had set the aim to conclude an early tranche of the deal in the fall of 2025.

 

But further deepening of geo-economic fragmentation, which may lead to tighter financial conditions, higher input costs, and lower trade, and foreign direct investment, pose significant downside risks to India's economic outlook, the multilateral agency said.

 

"Despite external headwinds, growth is expected to remain robust, supported by favourable domestic conditions," the IMF said. The favourable domestic conditions emanate from the impetus to consumption demand after the government rolled out reforms to the Goods and Services Tax structure in September. In fact, the reforms to GST could also help cushion the adverse impact of tariffs, according to the IMF. 

 

In fact, the GST reforms also have a one-off effect on controlling inflation, the IMF said. India's headline inflation is projected to stay contained, and food prices are expected to remain benign, according to the IMF. The multilateral agency has estimated India's inflation to average 2.8% in FY26 and converge to 4% in the next financial year.

 

But unpredictable weather shocks could affect crop yields, adversely impact rural consumption and reignite inflationary pressures, the agency cautioned. Hence, in the current uncertain environment, monetary policy should remain nimble, with an easing bias, the IMF recommended. 

 

The IMF recommended the Indian government undertake comprehensive structural reforms, which could also help the country become an advanced economy. Under structural reforms, prioritising high and efficient public investment, labour market flexibility, streamlined regulations, and trade and investment liberalisation could boost competitiveness and attract Foreign Direct Investment, the IMF said. "Strengthening the insolvency framework and judicial capacity would support firm dynamism and productivity."   End

 

Reported by Krity Ambey

Edited by Ashish Shirke

 

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