India’s Economy Steady Amid Global Risks: CareEdge Report
Global trade headwinds, tariff risks, and slowing credit growth weigh on India’s economic outlook, though strong FDI inflows and robust services exports provide key support.
According to CareEdge’s Economic Pathway – October 2025 report, India’s economy remains resilient despite heightened global uncertainties. While merchandise exports face tariff-related challenges, domestic indicators and foreign investments continue to underpin stable growth.
CareEdge’s latest Economic Pathway report highlights that global economic uncertainty remains elevated even as the U.S. reduces trade policy volatility through recent international agreements. For India, the domestic growth trajectory is stable, supported by robust services exports, healthy FDI inflows, and moderate inflation levels.
Trade and Manufacturing:
India’s non-petroleum exports grew 7.3% year-on-year in FY26 so far, driven by engineering and electronics exports, though overall merchandise exports contracted by 4% due to weaker petroleum trade. The merchandise deficit widened slightly to USD 122.9 billion. Manufacturing exports rose 8.5%, with telecom instruments leading a 39.8% surge in electronics exports.
Services and FDI:
Services exports grew by 8.7% year-on-year during the first five months of FY26, maintaining a strong trade surplus of USD 80 billion. FDI inflows rose sharply by 33%, with net inflows doubling to USD 21.4 billion, signaling sustained investor confidence.
Monetary Policy & Inflation:
The RBI maintained its repo rate at 5.5% while revising GDP growth to 6.8% and reducing its inflation forecast to 2.6% for FY26, citing GST rationalisation and easing food inflation. CareEdge projects average CPI inflation at 2.4%.
Domestic Conditions:
PMI indicators remained in the expansion zone, and GST collections stayed robust. However, moderating passenger vehicle sales and power demand hinted at softening consumption. The upcoming festive season and tax cuts are expected to revive demand momentum.
External Sector & Currency:
Despite strong fundamentals, foreign portfolio outflows persisted, totaling USD 11.9 billion in 2025. The rupee weakened to record lows amid tariff pressures, H-1B visa fee hikes, and global uncertainties. CareEdge expects the rupee to trade between ₹85–87 per USD by FY26-end.
Forecast Summary (FY26):
- GDP Growth: 6.5%
- CPI Inflation: 2.4%
- CAD: 0.9% of GDP
- Fiscal Deficit: 4.4% of GDP
- 10-Year G-Sec Yield: 6.3%–6.5%
- USD/INR: 85–87 range
CareEdge concludes that India’s economy remains well-positioned for moderate growth amid a stable policy environment, improving liquidity, and ongoing government support for manufacturing and exports.