Indian economy likely to grow at 6.5 percent in FY 2026, CII claims

India's GDP is expected to grow at 6.5 percent in the ongoing fiscal year, said Confederation of Indian Industry (CII) President Sanjeev Puri. India's economy is capable of withstanding geopolitical issues of a temporary nature, he has stated.

In an interview with PTI, he stated that the nation must sign bilateral trade agreements with key trading partners so that national interest is protected amid increasing trade barriers. Highlighting increasing private investment in sectors including energy, transport, metals, chemicals, and hospitality, Puri stated that due to ongoing geopolitical uncertainties, there could be "some caution" investment.

On the economic growth forecast for India, he said, "We are expecting a rate of 6.5 per cent. We believe this number is fundamentally achievable, because the fact is that we are starting with a reasonable base, strong economic fundamentals."

Elaborating on the reasons, he said, "Interest rates have come down in recent times. Inflation is softening. Personal income tax is being rebated from April 1. Investment in the public and private sector has increased in the latter half of last year."

On the trend of higher tariffs proposed by US President Donald Trump on several major economies and rising protectionism globally, Puri acknowledged that "there are more and more barriers to trade at the moment", suggesting that India should enter into bilateral trade agreements that are mutually beneficial and in the national interest.

"So, the countries with which India wants to trade, the big countries like the US and the EU are important. Whatever we have to do from a national interest perspective, we should do it and I think these bilateral trade agreements are the most important." He also recommended creation of a three-tier tariff structure for some sectors to enhance competitiveness. The CII president also stressed the need to focus on domestic drivers of growth and competitiveness.

He said a lot of work remains to be done on agriculture, climate change and adaptation. "These domestic drivers of growth and competitiveness are something we should really work hard on so that these can take away some of the uncertainties. I think further reduction in interest rates is expected," Puri said. He said rural demand is growing, while urban demand has been a bit stagnant, although it will also start increasing in a few quarters.