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India’s Transition Towards a High-Growth, Export-Oriented and Resilient Economy

Introduction

India’s economy in FY 2025–26 has demonstrated strong macroeconomic resilience, supported by robust agricultural growth, expanding manufacturing capacity, rising services exports, improving labour indicators, strengthening trade partnerships, and deepening integration with global value chains. The Economic Survey 2025–26, multiple PIB Backgrounders, and trade-related updates highlight how India is positioning itself as a major global economic and manufacturing hub while simultaneously strengthening domestic demand and export competitiveness.

ANALYSIS

Strong Growth Momentum in the Indian Economy

India entered FY26 with stable macroeconomic fundamentals and broad-based growth across sectors. According to the Economic Survey 2025–26, real GDP growth for FY27 is projected in the range of 6.8%–7.2%, indicating sustained medium-term growth potential.Key macroeconomic trends include:

• Historically low inflation, averaging around 1.7% during April–December 2025
• Strengthened fiscal position with rising capital expenditure
• Supportive monetary conditions with the repo rate at 5.25%
• Expansion in domestic demand supported by agriculture and urban consumption
• Improvement in sovereign credibility reflected in rating upgrades

India’s economic expansion has become increasingly broad-based with contributions from:

Agriculture Emerging as a Rural Demand Stabiliser

Agriculture and allied activities continued to support rural incomes and consumption.Important developments include:

• Agricultural sector estimated to grow by 3.1% in FY26
• Agricultural GVA growth increased to 3.6% in H1 FY26
• Livestock and fisheries maintained stable growth around 5–6%
• Foodgrain production estimated at 3577.3 lakh metric tonnes in AY 2024–25
• Horticulture production reached 362.08 million tonnes

The livestock sector witnessed strong long-term expansion:

• GVA in livestock rose nearly 195% between FY15 and FY24
• Fish production increased by over 140% during 2014–2024

The agriculture sector thus continues to function as:

• A source of income security
• A stabiliser of rural demand
• A pillar of food security
• A contributor to export diversification

National Mission on Edible Oils and Oil Palm Expansion

India has intensified efforts towards reducing dependence on edible oil imports through the National Mission on Edible Oils (NMEO) and NMEO–Oil Palm (NMEO-OP).

Key Features of NMEO-OP

Mission Targets

• Bring 6.5 lakh hectares under oil palm cultivation by 2025–26
• Increase crude palm oil production to:
  • 11.20 lakh tonnes by 2025–26
  • 28 lakh tonnes by 2029–30

By November 2025:

• Around 2.50 lakh hectares newly covered
• Total oil palm coverage reached 6.20 lakh hectares

Major Palm Oil Producing States

• Andhra Pradesh
• Telangana
• Odisha
• Assam
• Arunachal Pradesh
• Nagaland
• Mizoram
• Gujarat
• Tamil Nadu
• Karnataka
• Kerala

India’s Global Ranking in Oilseed Production

India ranks:

The rise in domestic edible oil consumption also reflects changing consumption patterns:

Manufacturing and Electronics: Emerging Growth Engines

India’s manufacturing sector has gained strong momentum.

Industrial Growth Trends

• Industrial sector projected growth: 6.2% in FY26
• Manufacturing GVA:
  • 7.72% in Q1 FY26
  • 9.13% in Q2 FY26

Role of PLI Schemes

Government-led Production Linked Incentive (PLI) schemes across 14 sectors played a major catalytic role.As of September 2025:

• Investments attracted: ₹2 lakh crore+
• Incremental production/sales: ₹18.7 lakh crore+
• Jobs created: 12.6 lakh+

Electronics Manufacturing Revolution

India’s electronics sector has transformed rapidly into a major global manufacturing hub.

Electronics Components Manufacturing Scheme (ECMS)

Major Features

Expected Outcomes under ECMS

Growth in Electronics Sector

Electronics became India’s:

• 3rd largest export category in 2024–25
• Fastest growing export sector

Mobile Manufacturing Expansion

India is now the world’s second-largest mobile phone manufacturer.

Services Sector: India’s Dominant Growth Engine

The services sector emerged as the largest contributor to GVA and exports.

Major Features

• Services sector growth estimated at 9.1% in FY26
• Share in GDP increased to 53.6%
• India became the world’s seventh-largest exporter of services
• Share in global services trade rose from:
  • 2% in 2005
  • To 4.3% in 2024

Major Drivers

• IT and IT-enabled services
• Financial services
• Professional services
• GCCs (Global Capability Centres)
• Digital services
• Media and entertainment
• Space technologies

New Growth Frontiers

The Economic Survey identified emerging sectors such as:

• Orange Economy
• Data centres
• AI ecosystem
• Space commercialisation
• Concert economy
• Ocean commercialisation

India’s data centre capacity is projected to rise:

• From 1.4 GW in 2025
• To around 8 GW by 2030

Export Diversification and Global Trade Integration

India’s external sector performance remained resilient despite global uncertainty.

Export Performance

India ranks:

• 3rd among Global South economies in trade partnership diversity according to UNCTAD Trade and Development Report 2025

Importance of Export Diversification

Export diversification helps:

• Reduce dependency on few commodities
• Improve resilience against global shocks
• Strengthen macroeconomic stability
• Encourage innovation and productivity
• Expand global market access

India’s Expanding Free Trade Architecture

India has significantly expanded its FTA network.

Major Agreements

India–EU Free Trade Agreement

The India–EU FTA, termed the “Mother of All Deals”, concluded in January 2026.

Major Features

• Covers 97% of EU tariff lines
• Immediate duty elimination for:
  • 90.7% of India’s exports
• Market access in:
  • IT
  • ITeS
  • Education
  • Business services

Key Beneficiary Sectors

• Textiles
• Leather
• Gems and jewellery
• Sports goods
• Marine products
• Chemicals

India–Oman CEPA

Signed in December 2025.

Important Provisions

• Zero-duty access on 98.08% tariff lines
• Strong support to:
  • Agriculture
  • Textiles
  • MSMEs
  • AYUSH
  • Pharmaceuticals

It also marked:

• First-ever commitment by any country on traditional medicine

India–UK CETA

Major achievements include:

• Duty-free access to 99% of Indian exports
• Easier mobility for Indian professionals
• Double Contribution Convention reducing dual social security burden

Labour Market and Financial Sector Improvements

Labour Indicators

• LFPR increased to 56.1%
• Female LFPR rose to 35.3%
• Unemployment declined to 4.8%
• e-Shram registrations crossed 31 crore

Banking Sector Strengthening

• GNPA ratios declined to multi-decadal lows
• CRAR stood at 17.2%
• MSME credit growth reached 21.8%

Static Part

Economic Survey

UNCTAD

Production Linked Incentive (PLI) Scheme

ECMS

NMEO-OP

Updated – 30 January 2026 ; 3:47 PM | PIB, PIB Trade Partnerships Backgrounder, PIB Electronics Components Manufacturing Scheme,