**World Bank Raises India’s FY26 Growth Forecast to 6.5%**

*By Mudit Dube | Oct 07, 2025, 05:30 PM*

The World Bank has revised its economic outlook for India, raising the GDP growth forecast for the fiscal year 2025-26 to 6.5%. The report also projects a strong economic performance with GDP growth of around 7% for Q2 FY26.

**Trade Concerns Weigh on FY27 Forecast**

Despite the optimistic forecast for FY26, the World Bank has downgraded its growth prediction for FY27 from 6.5% to 6.3%. This downward revision is primarily attributed to the impact of higher tariffs imposed by the United States on Indian exports.

The report highlights that India was initially expected to face lower US tariffs compared to its competitors starting April 2025. However, by the end of August, India encountered considerably higher tariffs, which are likely to dampen its economic momentum in the following year.

**Impact of Tariffs on India and South Asia**

According to the World Bank, nearly one-fifth of India’s goods exports in 2024 were destined for the US market, accounting for about 2% of India’s GDP. The increased tariff barriers under US President Donald Trump’s administration are expected not only to affect India’s exports but also to have broader implications for the South Asian region.

South Asia’s overall growth rate, projected at a robust 6.6% for 2025, could slow down to 5.8% in 2026 as a result of these trade measures. The tariff-driven slowdown presents challenges for sustained economic growth across the region.

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The World Bank’s revised forecasts underscore the importance of trade dynamics in shaping India’s economic prospects, highlighting both opportunities and risks in the near term.
https://www.newsbytesapp.com/news/business/world-bank-increases-india-s-fy26-growth-forecast-to-6-5/story