India’s economy is projected to expand by 6.4% in 2026 and 6.6% in 2027, according to a new report released by the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP). 

In its Economic and Social Survey of Asia and the Pacific 2026, released on Monday, ESCAP said South and South-West Asian economies grew 5.4% in 2025, up from 5.2% in 2024, largely driven by India’s strong performance. 

India growth rose to 7.4% in 2025 

The report said India’s economic growth accelerated to 7.4% in 2025, supported by robust consumption demand, particularly from rural areas, along with goods and services tax (GST) rate cuts and export frontloading ahead of US tariff measures. 

However, economic momentum moderated in the second half of 2025 after exports to the US declined 25% following the imposition of 50% tariffs in August 2025. Despite the slowdown, the services sector remained a key engine of growth. 

Inflation to stay within range 

ESCAP projected India’s inflation at 4.4% in 2026 and 4.3% in 2027, indicating relatively stable price pressures over the medium term. 

The report noted that foreign direct investment (FDI) inflows into developing Asian and Pacific economies fell amid rising trade tensions and geopolitical uncertainty. 

After increasing 0.6% in 2024, FDI inflows to the region fell 2% in 2025, even as global FDI flows rose 14%. 

Within the Asia-Pacific region, India attracted the highest share of greenfield FDI in the first three quarters, with announced investments worth $50 billion. It was followed by Australia ($30 billion), South Korea ($25 billion), and Kazakhstan ($21 billion). 

Remittances support households, but risks emerge 

The report said remittances from overseas workers continued to rise, helping households cope with weak domestic employment conditions. In India and the Philippines, nearly 40% of remittance inflows are used for essential expenses, including healthcare. 

However, India, the world’s largest remittance recipient with $137 billion in 2024, may face pressure after the US imposed a 1% tax on all remittances from January 2026. 

Citing estimates from the International Renewable Energy Agency (IRENA), the report said there were 16.6 million green jobs globally, with annual job creation averaging 0.8 million between 2012 and 2024. Of the global total, China accounted for 7.3 million jobs, India 1.3 million, and the rest of Asia 2.5 million. 

ESCAP said governments can use the clean energy transition to create new industries and strengthen economic growth. 

It highlighted India’s Production Linked Incentive (PLI) scheme as an example of how macroeconomic policy can promote green industrial development through incentives for domestic manufacturing of solar modules, batteries, and green hydrogen. 

The report stated that targeted industrial policies across Asia-Pacific economies are helping scale clean technology manufacturing and accelerate the energy transition.