India’s GDP growth estimated at 7.4% in FY26 as services, manufacturing lead recovery
- 7th January 2026
- 12:00 AM
- 3 min read
Summary
India’s economy is estimated to grow 7.4% in FY26, up from 6.5% in FY25, according to the government’s first advance estimates released on January 7. The growth pickup is led by services, manufacturing and steady investment, even as some sectors like agriculture and mining remain under pressure.Mumbai| 7 January
India’s economy is expected to regain momentum in FY26, with real GDP growth forecast at 7.4%, based on the first advance estimates released by the National Statistical Office under the Ministry of Statistics and Programme Implementation.
These estimates are the first formal input for Union Budget planning and mark a rise from 6.5% growth recorded in FY25.
Services remain the main growth driver
The data shows that services continue to power the economy, with the sector’s gross value added (GVA) growth estimated at 9.1% in FY26, compared with 7.2% in FY25.
Strong growth is expected in:
- Financial, real estate and professional services
- Trade, hotels and transport
- Public administration and defence
As a result, services now account for about 51% of India’s economy, the highest share under the current GDP series.
Manufacturing and investment show improvement
Manufacturing growth is projected to rise to 7% in FY26, from 4.5% in the previous year, signalling a recovery in industrial activity.
Investment activity also picked up. Gross fixed capital formation (GFCF) — a key measure of capital expenditure — is estimated to grow 7.8%, higher than 7.1% in FY25, pointing to continued spending on factories, machinery and infrastructure.
Exports are estimated to grow 6.4%, broadly in line with last year, even as global trade conditions remain uncertain.
Some sectors remain weak
Not all sectors performed well. Agriculture growth is estimated at 3.1%, lower than 4.6% last year, mainly due to a high base.
Mining is projected to contract by 0.7%, while growth in electricity and construction is also expected to slow compared with last year, making them the weaker pockets of the economy.
Consumption steady, government spending rises
On the demand side, household consumption growth is estimated at 7%, slightly lower than 7.2% in FY25, suggesting steady but moderated consumer spending.
In contrast, government consumption is projected to grow 5.2%, sharply higher than 2.3% last year, reflecting increased public spending support.
Nominal GDP growth lower than last year
In nominal terms, India’s GDP growth for FY26 is estimated at 8%, lower than 9.8% in FY25, and slightly below market expectations. Nominal GDP matters as it forms the base for tax collections, fiscal deficit calculations and debt ratios.
How this compares with forecasts
The Reserve Bank of India had earlier forecast GDP growth of 7.3% for the current year. Global and domestic agencies remain broadly aligned, with most projections ranging between 6.8% and 7.2% for the next fiscal year.
GDP Base Year will Shift
FY26 estimates are important as they are expected to be the last set of GDP numbers under the current 2011–12 base year. A revised GDP series with a 2022–23 base year will be released next month, which could change historical growth numbers.
