Based on robust growth in the June quarter and the implementation of GST reforms, EY increased India’s real gross domestic product (GDP) forecast for the fiscal year 2025–2026 (FY26) from 6.5% to 6.7%.
EY stated in its ‘Economy Watch’ report for September 2025 that, despite global headwinds affecting India’s export prospects for both goods and services, and with 1QFY26 real GDP growth of 7.8% and demand stimulation through GST reforms on the one hand, we expect India to still show an annual real GDP growth of 6.7% in FY26.
GDP Growth Outperformed RBI’s Expectations
The June quarter’s GDP growth of 7.8% exceeded the Reserve Bank of India’s (RBI) forecast of 6.5% growth during the monetary policy meeting in August. EY claims that the continuous supply chain interruptions and tariff-related concerns give India a chance to re-evaluate the structure and makeup of its global commerce, particularly with the US and China.
India has a “narrow” base of import sources and export destinations, the research continued. India is heavily reliant on the United States and, to a lesser degree, on China, according to DK Srivastava, chief policy advisor at EY India. Diversifying its import and export markets should help India find additional chances among the BRICS nations and lessen its dependency on China and the US.
How new GST 2.0 Roll Out Further Boosted GDP Growth
With the introduction of GST 2.0 earlier this month, rates were rationalised to be 5% and 18%, with a special rate of 40%. Automobiles, health, and textiles are just a few of the industries that stand to gain from this. According to Srivastava, some product categories will see considerable fee reductions under the new tariff system.
Textiles, consumer electronics, vehicles, health, and the majority of food items are among the major beneficiary sectors. Lower prices may have wide-ranging benefits in these employment-intensive industries. He went on to say that fertilisers, agricultural equipment, and renewable energy are other industries that could gain from the production side.
Farmers may profit from reduced input costs in several industries. First, a short-term impact on revenue is anticipated. EY anticipates that demand will rise in response to a significant drop in post-tax pricing, perhaps making up the revenue losses in the long run.
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•EY raises India’s FY26 GDP growth •India’s GDP grew 7.8% in the June quarter, •Supply chain disruptions and tariffs •EY suggests exploring BRICS nations •New GST structure with 5%, 18%, and •Textiles, automobiles, healthcare, |