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India's GDP will grow faster than estimated earlier despite the impact of US tariffs on Indian economy—the fourth largest in the world, according to the International Monetary Fund.
IMF now sees India's GDP growth rate for 2025-26 at 6.6% versus 6.4% earlier but has lowered its estimates by 20 basis points to 6.2% for 2026-27, its World Economic Outlook report released on Tuesday showed. The upward revision was on “carryover from a strong first quarter more than offsetting the increase in the US effective tariff rate on imports from India since July”, IMF said.
India's financial year runs from April to March. One basis point is one-hundredth of a percentage point.
In April-June 2025, India grew at its fastest in at least a year, clocking a GDP growth rate of 7.8%, according to government data. That was largely due to strong private consumption.
It's worth mentioning here that India effected sweeping GST reforms on 22 September 2025. That's set to boost the domestic demand for soaps to small cars, in the face crippling US tariffs.
India GDP Growth Rate
IMF's upgrade of India's GDP growth rate comes a week after the World Bank raised its India growth forecast for FY26 to 6.5% from 6.3%, while trimming its projection for FY27 by 20 basis points to 6.3% due to US tariffs.
The IMF has projected growth of emerging market and developing economies to moderate from 4.3% in 2024 to 4.2% in 2025 and 4% in 2026.
“Beyond China, emerging market and developing economies more broadly showed strength, sometimes because of particular domestic reasons, but recent signals point to a fragile outlook there as well,” it said. Higher US tariffs are curtailing external demand and rising trade policy uncertainty is weighing on investment in major export-led economies, the report said.
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