Mumbai, Sep 23: India’s economy continued to strengthen, with provisional real GDP growth accelerating to 7.8% year-on-year in Q1 FY2027, up from 6.9% in Q1 FY2026. Amidst this backdrop, Rubix Data Sciences has released its Rubix Country Insights: India – September 2026 report, an update to its June 2025 release. Growth in FY2026 stood at 7.7%, with manufacturing and utilities growing close to 9% and services remaining a key driver. India is currently the world’s sixth-largest economy, with nominal GDP of USD 3.92 trillion in 2025, and is projected to become the fourth-largest by 2027.
Macroeconomic fundamentals remained broadly stable: retail inflation rose to 4.45% in July 2026, within the RBI’s tolerance band, while the repo rate held steady at 5.25%. The fiscal deficit is projected to narrow from 4.4% of GDP in FY2026 to 4.3% in FY2027, with debt-to-GDP estimated to decline to 56.1%.
India’s external position strengthened further, with forex reserves reaching a record USD 740.8 billion, up 6.7% year-on-year, and FDI inflows rising 17% to USD 94.5 billion in FY2026. Gross FDI of USD 30.7 billion in Q1 2027 marked the highest quarterly inflow in 15 years. Meanwhile, non-food bank credit grew by 15.9% in FY2026, led by services and MSME lending, with credit to micro and small industries up by 32.7%.
In international trade, merchandise exports grew by 17% between April and July of FY2027 despite the West Asian conflict, while services exports rose by 8.8% in the same period, supporting a widening services surplus. Telecom equipment led export growth, even as petroleum and diamond exports declined. The US remained India’s top export market even as India faces the prospect of tariffs of up to 100% under new US legislation targeting countries that continue to buy Russian oil and gas. Imports from China grew 16% year-on-year, with India’s continued dependence on Chinese supply chains. The West Asia conflict sharply disrupted trade with Bahrain, Iran, Iraq, Kuwait and Qatar, but it also accelerated diversification of India’s supply chains: new crude oil suppliers such as Oman, Venezuela and Brazil gained share alongside Russia, while the US emerged as a major supplier of petroleum gas, with its share of India’s LPG and LNG imports rising sharply between April and July of FY2027.
Policy reforms, including GST 2.0, new FTAs with the UK, Oman, New Zealand, and the EU, 100% FDI in insurance, eased land-border FDI norms, Semicon 2.0’s INR 1.27 trillion outlay, and capital-market liberalisation, are expected to support growth over the medium term. India’s credit standing also improved, with JCR upgrading its rating to ‘A-‘ in September 2026, while Fitch and S&P affirmed their ratings with stable outlooks.
Commenting on the findings, Tushar Bhaskar, President, Rubix Data Sciences said,
“A 7.8% quarterly growth rate, recorded amid open conflict in West Asia, is a strong indication of the resilience the Indian economy has built. Greater diversification in energy sourcing, trade and capital markets over the past few years has helped strengthen that resilience. But the external risks remain significant. Threat of a possible 100% US tariff linked to Russian oil purchases could affect trade, while a prolonged conflict in West Asia would put pressure on energy costs and exporters. The fundamentals remain strong, but the next few quarters will test how effectively India can manage these external pressures.”
Overall, India’s growth outlook remains anchored in resilient domestic demand, fiscal consolidation, infrastructure investment, and the new market access opened up by recent FTAs all of which the government expects will sustain GDP growth above 7% through FY2027, even as it navigates a more uncertain external environment.