India’s economy continues to demonstrate remarkable resilience despite escalating geopolitical tensions in West Asia. Supported by strong growth, a robust Purchasing Managers’ Index (PMI), rising exports, and stable domestic demand, the country remains well-positioned to withstand global shocks and sustain long-term economic expansion.
As global uncertainties intensify and growth prospects weaken across many economies, India stands out as a stable and expanding economic force. The country’s GDP growth is projected at approximately 7.6% for FY 2025–26 and is expected to remain above 7% in FY 2026–27, placing India among the fastest-growing major economies in the world.
A key driver of this resilience is the series of structural and policy reforms implemented over the past decade. These measures have strengthened macroeconomic fundamentals, improved the ease of doing business, enhanced digital infrastructure, and boosted investor confidence. Despite the impacts of the COVID-19 pandemic and ongoing geopolitical disruptions, India has consistently maintained growth above 7% over the past three years, reflecting not only cyclical recovery but also deep-rooted structural strength.
Global Purchasing Managers’ Index (PMI)
January 2026 / February 2026
India: Manufacturing 55.4 / 56.9 | Services 58.5 / 58.1
USA: Manufacturing 53.4 / 51.6 | Services 52.7 / 51.7
China: Manufacturing 50.3 / 52.1 | Services 52.3 / 56.7
Germany: Manufacturing 49.1 / 50.9 | Services 52.4 / 53.5
India’s economic momentum is further reinforced by strong sectoral performance. As of February 2026, the PMI stands at 56.9 for manufacturing and 58.1 for services—outperforming major economies such as the United States, China, and Germany. These figures indicate sustained expansion in both industrial output and the services sector.
While China is showing signs of recovery, particularly in services, and Germany is gradually stabilising, the United States is experiencing comparatively slower growth. In contrast, India continues to lead with broad-based and resilient economic expansion.
On the external front, India’s export sector has remained robust despite global trade disruptions. Exports grew by approximately 6% between April and February of FY 2025–26, reaching USD 791 billion, compared to USD 748 billion during the same period last year. Key contributors to this growth include engineering goods, electronics, chemicals, gems and jewellery, and agricultural products.
Domestic demand has also played a crucial role in sustaining growth. Retail inflation remains moderate, while consumption has reached multi-year highs, supported by stable energy prices and effective supply management. The absence of major inflation shocks—particularly in fuel prices—has helped maintain consumer confidence and purchasing power, providing a strong buffer against external pressures.
Energy security has emerged as a vital pillar of India’s economic resilience. The country has proactively developed strategic petroleum reserves and maintains substantial commercial stocks, ensuring an energy buffer of 50–60 days—significantly higher than the global average. Additionally, India has diversified its crude oil import sources, including Russia, the United States, Canada, Brazil, and Mexico. This diversification reduces dependence on any single region and enhances supply stability during geopolitical crises.
However, the ongoing conflict in West Asia, particularly around the Strait of Hormuz, poses significant risks to the global economy. The region is a major supplier of crude oil, liquefied natural gas (LNG), petrochemicals, fertilisers, and metals such as aluminium. Any disruption could have widespread effects across industries including energy, automotive, construction, electronics, and agriculture.
The Strait of Hormuz alone accounts for nearly 20% of global oil trade and a substantial share of LNG shipments. Disruptions in this critical maritime route have already led to fluctuations in international energy prices. Rising fuel costs, in turn, increase transportation and production expenses, affecting sectors such as logistics, aviation, and manufacturing.
Global supply chains are also under increasing strain. Maritime disruptions in the Gulf region have caused delays in container shipments and raw material deliveries across Asia, Europe, and North America. Airlines are rerouting flights to avoid conflict zones, leading to higher air cargo costs and longer transit times, particularly for high-value goods such as electronics and pharmaceuticals. Meanwhile, the tourism sector—accounting for about 11% of global GDP—is experiencing a slowdown due to safety concerns and travel disruptions.
Despite these challenges, India remains relatively well-positioned to manage the turbulence. Its diversified trade relationships, strong domestic demand, and prudent macroeconomic policies provide a cushion against external shocks. However, a prolonged US–Iran conflict could still pose risks by increasing logistics costs, adding volatility to commodity prices, and placing pressure on key sectors such as transportation, manufacturing, and consumer goods.
To mitigate these risks, India must ensure strict oversight of supply chains, particularly in the energy sector. Preventing intermediaries from hoarding essential fuels such as petrol, diesel, and LPG will be critical to maintaining market stability and public confidence. A coordinated strategy involving real-time supply monitoring, effective stock management, and efficient distribution systems will be essential to ensure uninterrupted access to critical resources.
Another important focus area is the Micro, Small, and Medium Enterprises (MSME) sector, which forms the backbone of India’s economy. MSMEs are especially vulnerable to global shocks due to limited financial buffers and exposure to supply chain disruptions. Providing timely access to working capital, strengthening credit support mechanisms, and promoting technology adoption can help these enterprises build resilience while continuing to support employment and economic growth.
Recent government initiatives aimed at boosting industrial development—such as the Bharat Industrial Development Scheme (BHAVYA)—mark a transformative step for India’s manufacturing sector. The plug-and-play model is designed to streamline approvals, reduce operational delays, and create a seamless business environment from project initiation to completion. This approach enhances ease of doing business and attracts both domestic and foreign investment, strengthening India’s position as a global manufacturing hub.
Looking ahead, India’s economic outlook remains positive. Strengthening supply chain resilience, expanding trade diversification, investing in infrastructure, and maintaining macroeconomic stability will be crucial for sustaining growth momentum. At the same time, proactive diplomacy and strategic engagement with global partners will help mitigate geopolitical risks and ensure energy and trade security.
In conclusion, while the global economy faces uncertainty amid rising geopolitical tensions, India continues to follow a steady and resilient growth path. Its strong fundamentals, reform-driven growth model, and strategic policy framework position it well to withstand external shocks and emerge stronger. As global challenges persist, India’s economic resilience not only safeguards its own progress but also contributes to broader global stability.
