India's economic outlook appears increasingly positive, marked by optimistic growth projections and strategic policy initiatives. Chief Economic Advisor (CEA) Mr. V. Anantha Nageswaran expressed confidence that India's Gross Domestic Product (GDP) growth for Fiscal Year 2026 (FY26) is likely to surpass 6.8%. This growth is primarily attributed to strengthened consumption stemming from Goods and Services Tax (GST) rate cuts and income tax relief. He noted that the economy is performing better than anticipated, with first-quarter FY26 GDP growth recorded at 7.8%, fueled by strong performance in agriculture and robust activity in services like trade, hospitality, finance, and real estate.
Echoing this sentiment, global investment bank Goldman Sachs has turned bullish on Indian equities, upgrading its stance to "overweight" and setting a Nifty index target of 29,000 by the end of 2026. This optimistic forecast is based on improving financial conditions, growth-supportive government policies, and a shift in global investment sentiment towards India, particularly away from China.
Key Sectoral Developments & Trade
Several sectors are poised for significant expansion. India's deeptech market is projected to reach US$30 billion by 2030, driven by innovation in defence and robotics. The country is also making strides in rare earth production, with plans to boost neodymium output ninefold to 500 tonnes by FY27, aiming to reduce import dependency. India's adoption of Artificial Intelligence (AI) is reportedly tripling year-on-year, propelled by a young talent pool.
On the trade front, India and the European Union recently concluded a week-long Free Trade Agreement (FTA) negotiation in New Delhi, with both parties committed to accelerating efforts for a balanced and growth-oriented agreement. Optimism also surrounds a potential bilateral trade agreement between India and the United States, which is expected to further boost exports and enhance India's global competitiveness.
Policy and Investment Landscape
Pre-Budget consultations for the Union Budget FY27 have commenced, with economists advocating for a comprehensive manufacturing policy to address employment, technology upgrading, and reduced import dependence. Suggestions include rejigging the Production-Linked Incentive (PLI) scheme to be more MSME-friendly and focusing on value addition. There is also a push for the creation of an AI ministry. The Central Board of Direct Taxes (CBDT) is preparing for a nationwide outreach program ahead of the new Income Tax Act, 2025, which will come into effect on April 1, 2026.
Household consumption has shown a recovery after several quarters of slowdown, attributed to GST rationalization and the festive season. This revival, if sustained, could offset potential drags from global slowdowns and tariffs.
Market Performance and Corporate News
Indian equity markets experienced mixed trends but showed resilience. On November 10th, benchmark indices opened higher, tracking positive global cues. Companies like Swiggy are planning significant fundraising to fuel expansion, while Hindustan Aeronautics Limited (HAL) has signed a major deal with General Electric for fighter aircraft engines. Coal India has entered a joint venture for a 1,600 MW thermal power project. Meanwhile, Indian refiners such as HPCL and MRPL are actively seeking alternative oil sources from the US and the Middle East due to US sanctions on Russian oil companies.