Growth & Production
India's economic performance has been marked by impressive growth, especially in the industrial sector. In December, industrial production surged to a two-year
high of 7.8%, indicating robust activity across various sectors. This growth has positioned India as the fastest-growing major economy, defying global slowdown trends as noted by the IMF. The momentum in industrial production reflects the resilience and potential of the Indian economy in the face of international economic challenges.
Investment Dynamics
The investment landscape in India is undergoing significant shifts, with potential implications for future growth. The real estate market saw a stabilization in the fourth quarter of 2025, driven by office demand and funding prospects. Moreover, reports suggest that housing sales in cities like Bengaluru, Hyderabad, and Chennai witnessed a 15% jump in 2025. This positive trend underscores the growing confidence among investors and the increasing interest in the Indian real estate sector. Simultaneously, expert recommendations for long-term investments in stocks point toward strategic opportunities within the market.
Trade & Agreements
India's trade relations and international agreements are playing a crucial role in shaping its economic trajectory. The India-EU Free Trade Pact is expected to bolster the competitiveness of Indian exports in the European market. Experts recommend specific stocks for long-term investment, signaling positive growth prospects. The deal is set to reduce tariffs on over 90% of goods, with wine and chocolate being among the items that will see a zero-duty treatment for Indian consumers. Furthermore, plans to triple exports by 2035, underpinned by manufacturing-led reforms, highlight the country's ambitious economic agenda.
Budget Expectations
The upcoming budget is keenly awaited, with several expectations and proposals shaping the discourse. Budget 2026 is anticipated to bring in measures like tax clarity, faster dispute resolution, and potentially higher deductions, according to KPMG's recommendations. There are discussions surrounding the possibility of joint taxation for married couples and changes to the tax regime to make it more appealing. Experts are also seeking higher deductions, relief on the 30% tax slab, and adjustments related to capital gains. These expectations highlight the emphasis on creating an environment that encourages investment and boosts economic growth.
Sectoral Performance
Various sectors within the Indian economy have exhibited notable performances. Banking institutions like PNB and Yes Bank reported positive financial results, with profit increases indicating improved operational efficiencies. The rise in the oil and gas index reflects the sector's robust growth. Financial institutions are also witnessing increased profitability, with improvements in net profits year-over-year. The positive performance across these sectors underscores the diverse strengths of the Indian economy and its ability to withstand external pressures.
Key Considerations
Several other factors influence the Indian economy's performance and future outlook. Reforms are being considered across multiple sectors, including infrastructure spending and tax policies, as highlighted by Morgan Stanley. The government's focus on simplifying income tax provisions, effective from April 1, aims to streamline the taxation system. The Reserve Bank of India is introducing an Integrated Ombudsman Scheme 2026 to enhance grievance redressal mechanisms, improving consumer protection and confidence in financial institutions. These measures collectively indicate the Indian government's commitment to fostering a favorable environment for economic growth and stability.
