India’s GDP Growth Revised to 6.7% by ADB

The risk posed by US tariffs have prompted the Asian Development Bank (ADB) to reduce its growth forecast for India. In FY26, the economy is expected to grow by 6.7%, instead of 7%.

In its April 2025 outlook report, the ADB also noted that global economic uncertainty could slow down investment projects in India. This can potentially cause instability in India’s financial market and impact its export potential.

However, the ADB report also mentions some positive news. India’s goods exports to the US are a relatively small part of its GDP, accounting for only 2%. A potential trade agreement between India and the US can mitigate future risks to economic growth. Currently, the Indian government is in negotiations with the USA.

ADB on Factors Supporting India’s Growth

The ADB highlighted several factors that would support India’s economic growth. These include favorable monetary and fiscal policies. Apart from this, rising rural incomes and moderating inflation are also expected to contribute positively. The ADB expected India to record a GDP growth of 6.8% in FY27.

Challenges with Food Inflation

The ADB pointed out that managing food inflation alongside extreme weather events will be a challenge for India. This poses risks to the agricultural sector.

The report also warned that a mismatch between demand and supply could lead to higher food inflation and raise inflationary expectations. This could happen unless policies are implemented to strengthen the food supply chain.

Growth Forecast of ADB for Developing Asia

The ADB projects that developing Asia and the Pacific will grow by 4.9% in FY26. This is a decrease from the 5% growth recorded last year.

The growth forecasts were finalised before US President Donald Trump announced tariffs on several nations on April 2.

Conclusion

The ADB has slightly lowered India’s growth forecast for FY26 due to potential risks from US tariffs and global uncertainty. However, favourable domestic policies and a possible trade deal may mitigate the risks of economic slowdown. The ADB has emphasised the importance of open trade for Asia to navigate future economic headwinds.

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