India’s Growth Projections
- FY26: 6.5% (up from 6.3%)
- FY27: 6.3% ⬇ (due to US tariffs)
- South Asia overall: 5.8% in 2026 (down from 6.6% in 2025)
Key Factors Impacting Growth
- High US tariffs: 50% on ~75% of Indian exports to the US
- AI adoption & automation risks – 22% of jobs exposed
- Global uncertainties & trade policies
New Delhi
The World Bank has revised India’s GDP growth projections, raising the forecast for FY26 to 6.5% from 6.3% but lowering it for FY27 to 6.3%, citing high US tariffs and emerging AI-related uncertainties as key factors. The broader South Asia region is expected to slow to 5.8% in 2026 from 6.6% in 2025.
The report notes that India remains the world’s fastest-growing major economy, supported by strong consumption growth, robust agricultural output, and rising rural wages. Reforms like the simplified GST structure are expected to further bolster economic activity. However, higher-than-anticipated US tariffs—50% on about three-quarters of Indian exports to the US—pose a drag, as nearly one-fifth of India’s exports in 2024 went to the US, accounting for around 2% of GDP.
South Asia’s economic outlook is further shaped by AI adoption, with approximately 22% of jobs exposed to automation risks. The report recommends policies to improve labor mobility, upskilling, and infrastructure, enabling the region to leverage AI while mitigating workforce disruptions.
Franziska Ohnsorge, World Bank Chief Economist for South Asia, emphasized that trade openness and AI adoption could transform the region. Measures such as easing regulations for firm growth, enhancing transport and digital connectivity, and providing safety nets for affected workers will be critical to channel resources toward productive sectors, boost investment, and support job creation across South Asia.
