India’s growth surge: From economic resilience to global trade power

Even as conflicts in West Asia, volatile energy prices, rising tariffs, a weakening rupee and mounting climate pressures rattle economies worldwide, India has continued posting some of the strongest growth numbers globally.

The country isn't just weathering these headwinds. It is using domestic demand, public investment and increasingly assertive trade diplomacy to turn a difficult global moment into opportunity, cementing its place as the world's fastest-growing major economy. That diplomatic momentum will be on full display this month as India hosts the BRICS Summit in Delhi.

India's economy grew 7.8% in the first quarter of FY27, extending a run of performance that has consistently beaten expectations. The figure sits well above the 6.4-6.7% range projected by the IMF, World Bank and Reserve Bank of India for the full year — forecasts that already placed India ahead of every other major economy.

Global growth is expected to average around 3.2% in 2026; China trails India at 4.5-4.6%, the US sits at 2.3-2.4%, and the Euro Area lags further still at a muted 1.3%. Even the broader basket of emerging and developing economies is projected to grow only around 4.2%. India has held the title of fastest-growing major economy through the post-pandemic years and continues to lead emerging Asia, a region the IMF expects to expand roughly 5% in 2026.

The recovery since the pandemic has been remarkable. GDP contracted sharply by about 6% in 2020-21, but rebounded to 8.7% the following year on pent-up demand and fiscal support. The growth moderated to around 7 per cent in FY24 and FY25 as the initial low-base effect faded, before accelerating in FY26, when the June quarter clocked a five-quarter high of 7.8%, comfortably ahead of the Reserve Bank of India's 6.5 per cent estimate. The RBI has since revised its full-year FY27 forecast to 6.7%.

Three engines are driving this momentum. Domestic consumption remains the biggest, with a growing middle class, rising urbanisation and resilient rural demand keeping private spending strong despite tariff pressure on exports. Public capital expenditure is the second: government capex has more than doubled since FY21, with Budget 2026 setting a record outlay of roughly Rs 12.2 lakh crore for transport, power and digital infrastructure through programmes like PM Gati Shakti. Third, manufacturing is expanding around 9%, powered by the Production Linked Incentive scheme, which has turned India from a net importer to a net exporter of mobile phones and pulled in fresh manufacturing FDI. Construction is growing even faster on housing and urban infrastructure spending.

These gains are underpinned by structural reforms — Aadhaar and UPI, GST rationalisation, and support for financial inclusion, start-ups, skilling and MSME credit. GST collections rose 15% in August, the third straight month of double-digit growth. High-speed rail corridors, metro expansions and the UDAN air-connectivity scheme aim to stitch India's regions into a single market, while Budget 2026 also carried banking reforms, bond-market incentives and a FEMA review — all pitched as building blocks toward the 'Viksit Bharat' (Developed India) vision for 2047.

India's approach to trade has shifted from wariness about broad tariff cuts to a sharper focus on selective, commercially driven agreements. Prime Minister Narendra Modi has taken on the role of lead trade negotiator, combining bilateral diplomacy with multilateral summits to push through deals stalled for years, including the pact with the EU. The government frames these agreements as instruments of both the 'Make in India' push and the 'Viksit Bharat 2047' vision.

At the same time, Modi's engagement with Russia, China and Central Asia, even as tariff tensions persist with the US, signals a strategy of diversifying partnerships rather than leaning on any single bloc. His recent meetings with Russian President Vladmir Putin and Chinese President Xi Jinping at the Shanghai Cooperation Organisation summit in Bishkek underlined that balancing act: Russia remains important for energy and connectivity, China stays economically significant despite strategic friction, and Central Asia offers openings in minerals and energy. With India hosting the BRICS summit this month, managing relationships across the West, Russia, China and the Global South look set to remain the defining feature of India’s trade diplomacy through 2026-27.

Under the Modi government, India has implemented six FTAs — with Mauritius, the UAE, Australia, the European Free Trade Association, Oman and, most significantly, the UK. The India-UK Comprehensive Economic and Trade Agreement, signed in July 2025 and in force since 15 July 2026, is India's most comprehensive pact with a partner outside Asia. It gives duty-free access to 99% of Indian exports to the UK, cuts India's average tariff on UK goods from about 15% to 3%, and targets doubling bilateral trade to $112 billion.

After eighteen years of on-and-off talks, India and the EU concluded a landmark FTA in January 2026, linking economies worth a combined $24 trillion and opening duty-free access to 450 million European consumers, with a dedicated digital-trade chapter. A separate FTA with New Zealand has also been signed and should take effect by year-end.

The gains span sectors. Labour-intensive exporters — garments, textiles, footwear, carpets, processed foods, marine products and leather — get immediate tariff relief, with MSMEs flagged as particular beneficiaries. Automotive, engineering goods and pharmaceuticals gain better market access, while IT, financial services, education and consulting benefit from provisions easing cross-border movement of skilled workers. Advanced manufacturing, clean energy and semiconductors stand to gain from investment and tech-cooperation clauses in both deals. Dairy and certain agricultural products remain largely shielded, though — a reminder that India's trade opening, while extensive, is still carefully calibrated.

With growth outpacing every major economy and new trade pacts widening market access, India enters the BRICS-hosting month on strong footing. Sustaining this momentum will depend on managing global volatility while balancing diverse partnerships across the West, Russia, China and the Global South.