India’s FY27 growth outlook resilient despite global disruptions: EY India

EY India on Tuesday said domestic growth outlook remains resilient despite global disruptions on the back of multiple factors, including industrial growth, and renewed public capex among others. EY India said services continue to drive growth and India’s export basket continues to evolve toward higher-value segments.

“India’s 1QFY27 growth outlook remains resilient despite global uncertainties, supported by strong services activity, industrial growth, exports and renewed public capital expenditure growth,” EY India said in EY Economy Watch for July.

“Services continue to be a key driver of economic growth, with the ISP showing a strong growth of 20.8% in April 2026, driven by retail trade, accommodation and food services, telecommunications, and administrative services,” it added.

The report said increase in overall IIP growth (2022-23 series) to a five-month high of 5.1% in May 2026 signalling sustained industrial growth momentum. “Government’s capital expenditure showed a growth of 13.4% during the first two months of FY27 after posting a low growth of 1.6% in FY26, reflecting a revival of government support to growth,” the report said.

“India is steadily progressing toward the $1 trillion exports milestone, which calls for an annual growth of 15.3% in FY27. This is supported by healthy growth in both goods and services exports, reflecting the increasing diversification and competitiveness of its export sector,” it added.

The report said the country’s export basket continues to evolve toward higher-value segments, with refined petroleum products, engineering goods, electronics, pharmaceuticals, chemicals, and defence products increasing their contribution to merchandise exports over time. “Going forward, the outlook for both goods and services exports may be shaped by emerging global developments, including trade fragmentation in goods and the adoption of AI in services delivery,” EY India pointed out.

“Export diversification through bilateral FTAs, growth of intra BRICS+ trade and local currency trade settlement arrangements may support long-term export growth, helping businesses access new markets and strengthen resilience,” it added.

Quoting OECD, EY India said among major emerging economies, India is projected by the OECD to be the only economy witnessing a decline in its general government debt-to-GDP ratio through FY28, reflecting progress toward medium-term fiscal consolidation.

EY India said introduction of the Producer Price Index (PPI) represents a significant modernization of India’s statistical framework, aligning inflation measurement more closely with international best practices and providing clearer insights into production-stage price movements.

On the newly launched Index of Services Production (ISP), EY India said it marks an important addition to India’s economic data architecture, covering 19 services sectors that account for nearly 60% of services output and providing a broader assessment of services sector performance.