ADB revises India's FY26 growth forecast to 6.7% amid US tariff risks

The Asian Development Bank on Wednesday trimmed its growth forecast for India’s economy in FY26 to 6.7 per cent from 7 per cent earlier, citing risk from US tariff levies. Global economic uncertainty may also affect completion of investment projects in India, said ADB in its April 2025 outlook report. “A major risk arises from US [United States] tariff levies on India’s and other countries’ exports, which could reduce trade and investment flows and potentially create volatility in the domestic financial market.” However, the report said risks could potentially be mitigated by a trade agreement between India and the US, which is being negotiated and the fact that India’s merchandise exports to the US account for a relatively low 2 per cent of gross domestic product (GDP). Favourable monetary and fiscal policies, rising rural incomes, and moderating inflation would support India’s growth, ADB said. GDP growth for FY27 was projected at 6.8 per cent in the report. Addressing food inflation alongside extreme weather events will be a challenge for India, imposing risks on agricultural outlook. “A structural mismatch between demand and supply trends could give rise to higher food inflation and raise inflationary expectations unless policies are implemented to build resilience into the food supply chain,” said ADB. Countries in developing Asia and the Pacific are projected to grow 4.9 per cent in FY26, down from 5 per cent last year. The growth forecasts were finalised before US President Donald Trump announced tariffs on several nations on April 2. “Rising tariffs, uncertainties about US policy, and the possibility of escalating geopolitical tensions are significant challenges to the outlook. Asian economies should retain their commitment to open trade and investment, which have supported the region’s growth and resilience,” said ADB Chief Economist Albert Park.