New Delhi: India’s economy is expected to maintain steady momentum over the next two years, with the United Nations projecting growth of 6.4 percent in 2026 and 6.6 percent in 2027.
The outlook comes in a report released by the United Nations Economic and Social Commission for Asia and the Pacific, which highlights India as one of the key drivers of economic activity in the region.
Across South and South-West Asia, growth improved to 5.4 percent in 2025 from 5.2 percent in 2024, largely supported by India’s strong performance.
Domestic Demand and Services Drive 2025 Surge
India’s economy is estimated to have grown by 7.4 percent in 2025, powered mainly by strong domestic consumption. Rural demand remained firm, while tax adjustments under the goods and services tax system also supported spending.
The services sector continued to play a central role in sustaining momentum. Export activity, however, saw fluctuations. The report noted that shipments to the United States fell sharply by around 25 percent after steep tariffs were introduced in August 2025, leading to a slowdown in the second half of the year.
Inflation and Investment Trends
Inflation is projected to remain relatively stable at 4.4 percent in 2026 and ease slightly to 4.3 percent in 2027, indicating controlled price pressures.
At the same time, foreign direct investment (FDI) into developing Asia and the Pacific declined by 2 percent in 2025 amid global uncertainty, even as global flows increased. India remained among the top destinations for greenfield investments, attracting around $50 billion.
The report also flagged emerging pressure on remittance inflows. India, the world’s largest recipient with about $137 billion in 2024, could see some impact after the United States introduced a 1 percent tax on remittances in 2026. Remittances remain important for household consumption, particularly for essential expenses.
Green Jobs and Industrial Transition
According to estimates cited from the International Renewable Energy Agency, global green jobs reached about 16.6 million, with India accounting for roughly 1.3 million.
The report highlighted India’s production-linked incentive (PLI) scheme as a key example of policy support for clean manufacturing, especially in solar energy, batteries, and green hydrogen. It said such initiatives are helping reduce import dependence while building a domestic industrial base linked to the energy transition.
Overall, the UN outlook paints India as a steady growth engine in the region, even as global trade tensions and policy shifts create external headwinds.
