India closed FY25 with real gross domestic product (GDP) growth of 6.5 percent, marginally below the Reserve Bank of India’s projection of 6.6 percent. According to the First Advance Estimates released by the National Statistics Office on January 7, India’s economy is projected to grow at 7.4 percent in FY26, led by the services sector. Financial, real estate and professional services, along with public administration, defence and other services, are expected to grow close to 10 percent.
Consumer price inflation eased to 0.71 percent in November, while unemployment rate fell to 4.7 percent, its lowest level since April, according to government data.
The central bank has raised its GDP growth forecast for FY26 to 7.3 percent, from an earlier estimate of 6.8 percent.
Global institutions have also maintained a positive outlook. The Organisation for Economic Co-operation and Development projects India’s GDP to grow 6.7 percent in FY26 while the International Monetary Fund expects it to be 6.6 percent. The Asian Development Bank has upgraded India’s growth forecast to 7.2 percent.
Ratings agencies Moody’s, S&P Global and Fitch Ratings expect a growth of 6.4 percent, 6.5 percent growth and 7.4 percent, respectively.
• Vasudha Mukherjee
For much of last year, experts said a currency reflects the demand-supply situation of the forex, in this case the dollar. It is not reflective of a national virility test. The Bloomberg spot dollar index fell 8 percent in 2025, impacted by US fiscal deficit concerns and trade war issues. But it has been stronger against the rupee and this trend is likely to continue in 2026.
A potential US-India trade deal could spark a small rally for the rupee, but not help in a major pullback.
The rupee slipped past the 91 level during intra-day trades in late December, which was a signal that the Reserve Bank of India may not aggressively protect the currency at all levels. It will allow the rupee to find its natural market level.
Most economists forecast the rupee to hit 93 to the dollar in 2026. This means worse news for India’s importers, particularly with oil prices likely to remain firm due to the events emerging out of Venezuela.
• Salil Panchal
The backdrop for 2026 is complex and heavily global. A potential trade agreement with the US could be one of the biggest swing factors. A deal that improves market access or reduces tariff uncertainty could support Indian exporters. At the same time, trade negotiations elsewhere, including the EU, will shape export demand and capital flows. Geopolitical conflicts remain another overhang.
At home, corporate earnings are expected to improve gradually, supported by expectations of moderating inflation and steady GDP growth, though private capital expenditure remains uneven.
Equity returns are likely to be modest and driven by company-specific performance rather than broad market rallies.
Gold and silver continue to serve as hedges. Gold remained resilient in 2025 amid geopolitical uncertainty and central-bank buying, while silver tracked industrial demand. In 2026, both are likely to remain relevant as volatility persists and investors look for balance alongside growth assets.
• Himani Kothari
Also Read: India’s FY26 GDP growth pegged at 7.4% in first advance estimates
The country faces mounting pressure from US tariffs of 50 percent, which briefly dampened September shipments to India’s largest trade partner when exports fell by 21 percent. Despite global headwinds, India’s overall merchandise exports hit $291.7 billion—up 2.5 percent in April-November 2025—fuelled by electronics and petroleum products. Striking a note of optimism, Commerce Secretary Rajesh Agarwal told PTI that, “based on current trends, India’s exports are poised to deliver solid growth in 2026 as well”.
To sustain PLI-driven gains in electronics, New Delhi is weighing a crucial scheme extension before March. Despite a record $223.8 billion trade deficit, high-value services exports rose 8.7 percent to $270 billion (April-November), helping offset the gap. Amid a projected WTO global trade slowdown to 4.4 percent in 2026, India is diversifying partnerships. Landmark 2026 FTAs with the UK, Oman and New Zealand are critical to boosting labour-intensive sectors and navigating global volatility.
• Samreen Wani
In 2026, technology business IPOs are going to move away from the theme of consumer-focussed businesses to a healthy mix of fintech (PhonePe), manufacturing (Zetwerk), enterprise tech (InMobi), and consumer internet businesses (Zepto, OYO, boAt) among others. The previous year was also different from the early cycle of startup IPOs in 2021, where valuations were based on future growth potential and revenues. The pattern will continue in 2026 where startups will have to show profitability and clear revenue growth for standing to test in the public markets.
Startup IPOs are also increasingly skewed towards OFS (Offer For Sale) for providing exits to early investors over raising primary capital to fuel the company’s expansion. The secondary markets opportunity will continue to grow in 2026 as well.
The IPO-hopefuls will be required to deliver performance under closer public scrutiny to continue to attract interest from retail investors, while also timing their issues in the right window to reap maximum benefits.
• Payal Ganguly
A defining development will be the move to agentic AI systems—tools that can initiate actions, execute workflows and make limited decisions autonomously. While these systems hold the potential to raise productivity across sectors—from banking to back office operations—they also bring new governance risks around errors, bias and liability.
Regulatory clarity will also shape AI’s trajectory. India is expected to lean on existing data protection, sectoral and liability frameworks rather than rush into sweeping AI specific laws, placing the onus on enterprises to demonstrate responsible use, data provenance and human oversight.
For India’s technology services industry, 2026 will be less about building standalone AI products and more about embedding AI into large enterprise contracts in credible, revenue linked ways.
• Naini Thaker
Carmakers, however, have lined up major launches for 2026, alongside plans to expand charging infrastructure and ease concerns over driving range—two constraints that have held back wider adoption.
The market remains concentrated, led by Tata Motors, MG Motor and Mahindra. That balance could begin to shift. Maruti Suzuki, India’s largest carmaker, is set to enter the segment with the e-Vitara, a move that could reshape volumes, provided pricing aligns with its mass-market positioning.
Manufacturers are also expected to roll out a wave of new models and facelifts as portfolios mature. The product mix is tilting decisively toward sport utility vehicles (SUVs). Of the 29 EV launches and facelifts expected in 2026, 18 are SUVs, roughly double the number seen in 2024. Sedans are slipping into a niche role, mirroring trends in petrol and diesel cars, while models such as the Kwid EV point to action in the hatchback space.
Competition is also widening. Chinese manufacturers are gaining ground, with VinFast emerging as the fourth-largest EV player in December and BYD continuing to build momentum. Tesla, after a slow start, bears watching.
• Himani Kothari
A key theme to watch out for is the gradual erosion of exclusivity pressure. Indian drugmakers are positioning early—through process innovation, biosimilar research and supply chain scale—to be credible global suppliers once legal windows open. Contract manufacturing, formulation partnerships and export oriented capacity expansion are likely to accelerate through 2026. The global rollout of oral GLP 1 drugs could further reshape expectations around accessibility, even if meaningful price relief in the Indian market remains some way off.
Beyond obesity, GLP 1s’ expansion into diabetes, cardiovascular and liver disease indications open a multi year pipeline opportunity for Indian pharma—provided companies move beyond volume driven playbooks to greater clinical depth and regulatory sophistication. In 2026, weight loss drugs will mark a strategic inflection point for India’s role in global pharma value chains.
• Naini Thaker
India’s bond yields have not fallen sharply in recent months despite lower interest rate cuts. The Reserve Bank of India has lowered rates by 125 basis points in 2025. The benchmark 10-year bond yields are likely to be in the 6.5 to 6.6 band in the near term, impacted by debt supply.
Higher bond yields make bank loans and other forms of credit more expensive. Despite economic data in recent quarters suggesting that consumption demand is on the rise, banks have found it difficult to lend aggressively, though this may start to improve by the middle of 2026.
The year is likely to see margins starting to improve for most banks, though pressure on microfinance sustains. Asset quality will also get better. The biggest challenge will be to improve deposit growth.
• Salil Panchal
For platforms, 2026 will centre on balancing growth with rising pressure on payouts, retention and service quality. As supply normalises after the rapid post pandemic expansion, incentives are being reduced, exposing the volatility of gig incomes and driving higher churn. This is pushing platforms to experiment with hybrid models that preserve flexibility while offering limited guarantees around earnings, insurance or skill development.
Regulation will increasingly shape gig work. India has avoided treating gig workers as formal employees, but with an estimated 7 to 8 million platform workers and rapid growth, political pressure is building. States such as Rajasthan, Karnataka and Telangana have begun creating gig worker welfare frameworks, while the Code on Social Security, 2020, provides legal recognition to the category although enforcement remains uneven. The question is who pays. Platforms cite thin margins, consumers resist higher fees, and governments remain cautious—making cost sharing, rather than legal classification, the defining issue for the sector’s sustainability.
• Naini Thaker
First Published: Jan 08, 2026, 12:44
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