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ADB cuts India's FY26 growth forecast to 6.5% on US tariff impact
'This revision is primarily due to the impact of US baseline tariffs and associated policy uncertainty. In addition to the effects of lower global growth and the direct impact of additional US tariffs on Indian exports, heightened policy uncertainty may affect investment flows,' the ADB said in its Asian Development Outlook July 2025.
Services and agriculture sectors are expected to be key drivers of growth, the latter supported by a forecast of above-normal monsoon rains, ADB said.
ADB has also revised India's inflation forecast for FY26 downward to 3.8 per cent, reflecting a faster-than-expected decline in food prices due to better agricultural production. The FY27 inflation forecast remains unchanged.
India's GDP growth for 2026–27 (FY27) has been revised downwards to 6.7 per cent from the April 2025 projection of 6.8 per cent.
The improvement in the growth projection compared to FY26, ADB said, was on account of rising investments, under the assumption of reduced policy uncertainty. Favourable financial conditions backed by recent reductions of the repo rate and the cash reserve ratio by the monetary authorities would also aid growth.
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