Page 20 - Policy Economic Report - July 2025

July 2025 POLICY AND ECONOMIC REPORT
OIL & GAS MARKET

6. ADB, India Ratings lower FY26 growth forecast for India on US tariff impact, global uncertainty

• The Asian Development Bank (ADB) has trimmed its GDP growth forecast for India to 6.5% for
FY26, down from its April estimate of 6.7%, due to concerns over the potential impact of the US
tariffs and uncertainty surrounding related policy measures.

• ADB expects services and agriculture to be key drivers of India’s growth, with the farm sector
supported by a forecast of above-normal monsoon rains.

• It also said India’s inflation forecast for the ongoing fiscal year had been lowered to 3.8%,
reflecting a faster-than-expected decline in food prices due to better agricultural production.

• India’s services sector output rose to a 10-month high in June, driven by higher sales, new orders,
and positive demand trends. The seasonally adjusted HSBC India Services PMI Business Activity
Index, compiled by S&P Global, rose to 60.4 in June, up from 58.8 in May, 58.7 in April, and 58.5
in March.

• India Ratings and Research (Ind-Ra) also lowered its FY26 GDP growth forecast for India—to 6.3%
from 6.6% projected in December—citing a shift in both domestic and global conditions.

7. India's GDP to double to $10.6 trn by 2035: Morgan Stanley

• India may turn the world’s third-largest economy by 2028 and double its gross domestic product
(GDP) to $10.6 trillion by 2035, according to a recent Morgan Stanley report.

• States will lead the country’s rapid expansion, with Maharashtra, Tamil Nadu, Gujarat, Uttar
Pradesh, and Karnataka among those expected to each achieve a $1 trillion economy.

• Gujarat, Maharashtra, and Telangana are now the top-performing states by GDP, while others like
Chhattisgarh, Uttar Pradesh and Madhya Pradesh have significantly climbed economic rankings
over the last five years, it noted.

• The country’s decentralised growth, driven by state-level reforms and industrial expansion, will
be a critical engine in achieving national economic targets, according to the report.

8. Net FDI inflows fell 98% in May as repatriation increased 24%: RBI Bulletin

• Net foreign direct investment (FDI) into India fell 98% year-on-year to $35 million in May amid
higher repatriation by overseas investors and a fall in gross inflows, according to latest central
bank data published in RBI’s monthly Bulletin.

• Net FDI was 99% lower compared with April 2025. Gross inflows fell 11% YoY to $7.2 billion in
May, while repatriation of FDI increased nearly 24% to $5 billion. Outward FDI increased to $2.1
billion from $1.8 billion a year ago.

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