ADB Raises India FY27 Growth Forecast To 7% On Strong Investment, Services Export Growth

The Asian Development Bank (ADB) has revised India’s economic growth forecast for FY27 upward to 7% from its earlier projection of 6.6%, citing stronger investment activity and continued resilience in services exports.

The multilateral institution, however, reduced its FY28 growth estimate marginally to 7.1% from the previous forecast of 7.3%.

“The Indian economy remains resilient despite heightened geopolitical tensions and high commodity prices,” ADB said in its September 2026 Asian Development Outlook.

Investment and services drive growth outlook

The revision follows stronger-than-anticipated economic performance in the first quarter of FY27, when India’s gross domestic product expanded 7.8% year-on-year.

Services remained a major growth contributor, expanding 10%, supported by a 12.1% increase in financial, real estate and professional services. Manufacturing growth stood at 9.2%, driven by sectors such as electronics, textiles and rubber and plastics.

Investment activity also strengthened, with gross fixed capital formation rising 11.9% in the first quarter, its fastest pace in four years. ADB said both government spending and private sector investment supported this expansion.

The lender expects investment momentum to continue due to relatively low interest rates, higher public capital expenditure and stronger corporate balance sheets. Private investment is expected to remain firm in areas including data centres and energy projects.

Exports are also expected to support growth, with electronics shipments remaining strong and technology services benefiting from rising demand linked to artificial intelligence development.

Inflation outlook and economic risks

ADB lowered its FY27 inflation forecast to 5% from 5.2%, citing limited transmission of higher global energy prices to consumers as government measures helped absorb part of the impact.

The bank retained its FY28 inflation forecast at 4%, expecting lower energy prices and improved agricultural supplies under normal monsoon conditions.

However, ADB highlighted risks from geopolitical tensions, especially in the Middle East, and weather uncertainties linked to El Niño.

A delayed monsoon withdrawal and higher temperatures could affect crop yields and increase post-harvest losses, particularly due to lower reservoir levels compared with the previous year.