Deloitte has projected India’s economic growth at 6.5–6.7 percent for the current fiscal year, citing a boost in domestic demand due to tax incentives announced in the Union Budget 2025, even as global trade uncertainties continue to pose risks.
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The consulting firm pegged India’s GDP growth for FY25 at 6.3–6.5 percent and noted that the economic outlook for FY26 will depend on the balancing act between emerging global trade relations and government-led efforts to spur domestic consumption.
“Growth this fiscal will be contingent on two opposing forces,” Deloitte stated in its India Economy Outlook. One key positive driver is the tax incentives introduced to enhance consumer spending, while the main challenge is the volatility in global trade networks.
According to Deloitte, the Rs. 1 lakh crore tax incentive announced in the FY26 Budget is aimed at benefiting the middle class and stimulating spending. Despite the tax cuts, Deloitte expects heightened economic activity to make up for revenue losses, helping the government maintain its fiscal deficit targets.
Ms. Rumki Majumdar, Economist at Deloitte India, remarked, “The tax exemptions announced during the budget will increase disposable income in the hands of the young population with higher income elasticity.”
On the trade front, Deloitte highlighted potential setbacks stemming from tariff uncertainties. It noted that depending on the outcome of India’s trade negotiations, especially with the United States, reciprocal tariffs could range from 10 percent to 26 percent.
Ms. Majumdar added, “Depending on India’s ability to negotiate with the US and come up with a bilateral trade agreement quickly, trade tariffs may potentially shave 0.1–0.3 percent off India’s growth.”
Deloitte concluded that securing a bilateral agreement with the US by this fall could open new opportunities and cushion India from the fallout of global trade disruptions.
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