India’s GDP growth pegged at 7.4% for 2025–26 in advance estimates

The Centre has pegged India’s GDP growth at 7.4% for FY26 despite global trade tensions and US tariffs

January 7, 2026

Services sector powers India’s 7.4% GDP growth projection

Growth projected despite US tariffs and trade tensions

India’s economy is projected to grow at 7.4 per cent in the financial year 2025–26, according to the Centre’s advance estimates released on Wednesday by the Ministry of Statistics and Programme Implementation.

The projected growth marks an improvement over the 6.5 per cent expansion recorded in 2024–25 and comes amid significant global and geopolitical headwinds, including steep tariffs imposed by the United States on Indian exports.

The estimates are notable as they reflect economic resilience during a year in which the US imposed 50 per cent tariffs on India, including an additional 25 per cent penalty linked to India’s purchase of Russian oil. India and the US are currently engaged in discussions on a proposed trade agreement, which is yet to be finalised.

According to the ministry, strong performance in the services sector has been the primary driver of growth in the current fiscal.

“Buoyant growth in the services sector has been found to be a major driver in the estimated real GVA growth rate of 7.3 per cent in FY 2025–26,” the ministry said in its statement.

Manufacturing and construction are estimated to grow at around seven per cent during the fiscal, while growth in agriculture and utility services such as electricity and water supply is expected to remain moderate.

The ministry also projected nominal GDP growth of eight per cent during the year.

Real GDP at constant prices is estimated to reach ₹201.9 lakh crore in 2025–26, compared with ₹187.97 lakh crore in 2024–25. Nominal GDP at current prices is projected to rise to ₹357.14 lakh crore from ₹330.68 lakh crore in the previous fiscal, reflecting an overall growth rate of eight per cent.

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