On the external front, the report highlighted India’s resilience, with rising FDI inflows, strong service exports, and healthy remittances reinforcing its appeal as an investment destination. Expanding international partnerships including a bilateral investment treaty with Israel and negotiations for a Comprehensive Economic Partnership Agreement (CEPA) with Oman are expected to diversify trade beyond energy imports.
India’s macroeconomic stability has also been recognised globally. Japanese agency R&I upgraded India’s sovereign rating from BBB to BBB+, the third such upgrade in FY26 after Morningstar DBRS and S&P Global Ratings. Additionally, the OECD revised India’s 2025 growth forecast upward to 6.7%, citing strong domestic demand and GST reforms.
Still, the Finance Ministry cautioned against complacency. Persisting tariff uncertainties, visa restrictions, and geopolitical frictions could spill over into India’s exports, employment, and consumption. “For now, the risks appear manageable, but they are there,” the report said, calling the US visa move a reminder that trade-related uncertainties can affect even the services sector, which has so far remained insulated.
The report urged greater investment in water storage, desilting, and agricultural productivity, alongside a strict commitment to fiscal discipline, to ensure inclusive growth and maintain lower capital costs. It also emphasised the importance of speed and precision in execution at all levels of government.
Looking ahead, the ministry underlined that regulatory reforms, infrastructure development, and cooperative federalism will be crucial in cushioning the economy from external shocks. The near-term outlook, it concluded, remains one of steady, reform-driven growth rooted in discipline and adaptive diplomacy, tempered by vigilance against global volatility.
