India’s economy is projected to grow at 6.4 percent in 2026 and
6.6 percent in 2027, maintaining its position as a key growth
driver in the Asia-Pacific region, according to a report by the
United Nations Economic and Social Commission for Asia and
the Pacific (UN-ESCAP). In its Economic and Social Survey of
Asia and the Pacific 2026, ESCAP noted that the region grew
by 5.4 percent in 2025, up from 5.2 percent in 2024, supported
significantly by India’s strong performance. India recorded 7.4
percent growth in 2025, driven by robust consumption, particu
larly in rural areas, GST rate cuts, and export frontloading ahead
of tariff hikes by the United States, The Times Of India reported.
The report highlighted a slowdown in economic activity in the
latter half of 2025, largely due to a sharp 25 percent decline in
exports to the US following the imposition of 50 percent tariffs in
August last year. However, the services sector continued to act
as a key growth engine.
Inflation is expected to remain stable, with projections of 4.4
percent in 2026 and 4.3 percent in 2027, indicating a relatively
controlled price environment alongside steady economic
expansion.
ESCAP noted that foreign direct investment inflows into
developing Asia-Pacific economies declined by 2 percent in 2025
amid global uncertainties. Despite this, India remained among
the leading destinations for greenfield investments, attracting
around $50 billion in the first three quarters of the year.
The report also underscored the importance of remittances in
sustaining domestic consumption. India, the world’s largest
recipient, received about USD 137 billion in 2024. However, a 1
percent tax on remittances imposed by the US from January
2026 could pose challenges.
The report emphasised the role of clean energy transition in
driving future growth and job creation. Globally, an estimated
16.6 million green jobs have been created, with India accounting
for around 1.3 million. Policy initiatives such as production
linked incentives are expected to support domestic
manufacturing in sectors including solar energy, batteries, and
green hydrogen, strengthening India’s industrial base.The UN
outlook aligns with projections by the International Monetary
Fund, which also expects India to remain the fastest-growing
major economy globally. While global risks such as geopolitical
tensions and trade disruptions persist, the report noted that
India’s strong domestic demand, policy support, and integration
into global supply chains are likely to sustain its growth
momentum in the coming years.