India could grow at 6.5% in FY26, aided by falling crude prices: EY

India’s economy could grow at 6.5% in FY26, supported by falling crude oil prices, according to EY. The EY Economy Watch report for April identifies four key factors impacting India’s growth: reduced exports, global slowdown, falling crude oil prices, and excess global production capacities. Despite intensifying global trade tensions, suitable fiscal and monetary policies could sustain real GDP growth at about 6.5% in FY26 and the medium term while maintaining CPI inflation below 4%. Exports may slow due to higher tariffs and weakening global demand. However, the overall GDP impact may be limited, given the subdued role of net exports in India’s recent growth experience.

EY suggests India’s short-term strategy could include switching part of its crude oil imports to the US to improve trade balance and lower reciprocal tariff rates. A comprehensive bilateral trade agreement expected by September-October 2025 could further enhance trade stability with the US. From a medium to long-term perspective, accelerating reforms in land and labour, investing in education, skilling, and emerging technologies like AI and GenAl, and expanding PLI coverage is crucial.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.