India's GDP may increase 7.3% in FY25

India's economic growth outlook for FY25 has improved, with the World Bank, IMF, and Moody's Ratings raising their GDP growth forecasts to around 7% or higher. Strong public infrastructure investment, manufacturing expansion, and healthy foreign capital inflows have supported this positive outlook.

Key highlights:

• World Bank revised India's FY25 GDP growth forecast from 6.6% to 7%.
• IMF also projects 7% GDP growth for FY25.
• Moody's Ratings increased its estimate from 6.8% to 7.2%.
• India's economy grew by 8.2% in the previous fiscal year.
• The manufacturing sector expanded by 9.9%.
• Foreign exchange reserves reached approximately ₹55.6 lakh crore (USD 670.1 billion) in August.
• Merchandise export ambitions target approximately ₹83 lakh crore (USD 1 trillion) by 2030.
• Trade integration and participation in global value chains remain key drivers of future growth.

Several international institutions have upgraded India's economic growth outlook for FY25.

According to the World Bank, government spending on infrastructure projects has played an important role in supporting economic activity. Despite global economic uncertainties, India has continued to demonstrate resilience and stable growth.

The upward revision by multiple institutions reflects confidence in India's economic fundamentals and policy measures. Strong domestic demand, continued capital expenditure, and stable financial conditions have supported economic activity across sectors. These factors have helped India maintain growth momentum even as several global economies face slower expansion.

India's economic performance has been driven by multiple domestic factors.

The India Development Update report highlighted that the economy grew by 8.2% in the previous fiscal year. Strong investment activity across infrastructure and housing sectors contributed significantly to this performance.

Manufacturing also remained a major growth engine, recording nearly double-digit expansion.

How are employment and foreign investments improving?

Economic growth has been accompanied by positive labour market trends.

Urban unemployment levels have gradually improved, with stronger participation from women in the workforce. Better employment opportunities can support household consumption and economic expansion.

India's external position has also strengthened. Robust foreign portfolio investment inflows have helped reduce the current account deficit.

Higher foreign exchange reserves provide an additional buffer against global economic volatility.

The World Bank emphasises that trade will be a critical component of India's long-term growth strategy.

India aims to increase its merchandise exports to approximately ₹83 lakh crore by 2030. To achieve this objective, the report recommends:

• Deepening trade integration with global markets
• Lowering trade barriers to improve export competitiveness
• Reducing trade and logistics costs
• Expanding participation in global value chains
• Diversifying the country's export basket across sectors and markets

As global supply chains continue to evolve after the pandemic, countries that improve competitiveness and logistics infrastructure could benefit from new trade opportunities.

Note: ₹83 lakh crore is an approximate conversion of USD 1 trillion and may vary based on exchange rates.

Which sectors could benefit from global trade opportunities?

Several sectors are well-positioned to capitalise on shifting global value chains.

Government initiatives such as the National Logistics Policy and digital infrastructure improvements can help these industries become more competitive internationally.

These sectors have already established a presence in international markets and may benefit from growing global demand. Continued investments in technology, innovation, and infrastructure can further improve their competitiveness. Diversification across multiple industries can also reduce dependence on a limited set of export categories.

The World Bank expects India's growth trajectory to remain positive beyond FY25.

The institution forecasts GDP growth of around 7% for FY25 while maintaining a favourable outlook for the following two fiscal years. Continued infrastructure development, investment activity, and export expansion are expected to support this momentum.

However, sustaining high growth will require continued reforms, stronger trade integration, and improvements in competitiveness.

Conclusion

India's GDP growth outlook has strengthened as major global institutions, including the World Bank, the IMF, and Moody's Ratings, have upgraded their forecasts for FY25. Increased public infrastructure spending, manufacturing sector growth, improved employment conditions, and strong foreign investment inflows have contributed to this positive outlook.

Looking ahead, greater participation in global value chains, lower trade barriers, and export diversification could help India achieve its long-term economic goals. With merchandise export ambitions of approximately ₹83 lakh crore by 2030 and continued policy support, the country remains well-positioned to benefit from evolving global trade opportunities.