6.9% and the Road Ahead: What India’s FY27 Growth Signals for Business and Capital

Indian Ratings and Research expect India’s GDP to grow by 6.9 percent in FY27, moderating from an estimated 7.4 percent in FY26. At first glance, this looks like a slowdown. Look deeper, and it reflects an economy recalibrating amid reforms, global uncertainty, and shifting demand patterns.

FY26 has been a strong base year.

GDP growth is expected to touch around 7.4 to 7.5 percent, supported by impressive sectoral momentum. Manufacturing gross value added expanded by about 9.1 percent in the first half of FY26, while services grew close to 9.2 percent. Private consumption has also held firm, with growth expected to exceed 7 percent.

These numbers underline the resilience of domestic demand, even as external conditions remain uneven.

The FY27 outlook, however, is shaped by both opportunity and caution. On the positive side, domestic reforms are expected to play a meaningful role. Income tax cuts and GST rationalisation are likely to lift disposable incomes, helping sustain consumption across rural and urban India. With inflation expected to remain benign, real wage growth could further strengthen purchasing power. 

This combination creates a supportive backdrop for consumer-facing businesses and services-led growth.

India’s exports grew by 5.5 percent year-on-year in FY26, largely driven by services exports. Merchandise exports, however, faced pressure due to weak global demand and higher tariffs from the United States. Global trade slowdowns remain a key risk, especially for sectors dependent on external markets.

At the same time, ongoing and potential foreign trade agreements could provide incremental support if executed swiftly.

What’s the picture now?

The current account deficit is expected to stay modest at around 1 percent of GDP, offering macro stability. Yet a gradual weakening of the rupee toward the ₹92 per US dollar level by FY27 could complicate cost structures for import-dependent industries, even as it supports exporters and services providers.

What makes this outlook particularly interesting is the divergence of views among economists. While some expect growth to ease toward 6.5 percent in FY27, others remain confident of 7 percent or higher expansion. This split highlights the importance of scenario-based planning. Businesses and investors can no longer rely on a single growth assumption. Flexibility and data-driven decision making will be critical.

For entrepreneurs, this environment rewards agility. For investors, it calls for selectivity and a sharper understanding of sectoral tailwinds and headwinds. The growth story is intact, but the path forward is less linear than before.

As India balances domestic reform momentum with global uncertainty, how are you factoring this evolving macro picture into your business strategies or investment decisions? Where do you see the biggest opportunities emerging as FY27 approaches?