India's Economy Shows Resilience Amid Global Uncertainty, Driven by Strong Domestic Demand and Services Exports

India?s economy continues to demonstrate resilience despite rising global uncertainty arising from the West Asia conflict and disruptions across energy and logistics channels. Prior to escalated geopolitical tensions, economic activity was robust through the first two months of CY 2026, supported by broad-based strength across both supply and demand indicators.

The Purchasing Managers? Index (PMI) for manufacturing rose to a four-month high of 56.9 in February 2026 while the services PMI stood at 58.1. This indicates sustained expansion across both sectors. Industrial activity was supported by strong performance in domestic demand-driven segments such as steel and cement, with steel production growing by 7.2% and cement output by 9.3% in February 2026. This reflects continued infrastructure momentum and public capital expenditure support.

Considering the demand side, retail automobile sales expanded by 25.2% YoY in February 2026, with strong growth across two-wheelers, commercial vehicles and tractors, while digital payments volume increased by 26.6%, indicating resilient consumption demand. India?s growth momentum remains broad-based, although external shocks pose near-term downside risks due to the support of sustained capital expenditure, the Bharat Audyogik Vikas Yojna (BHAVYA) and strong domestic demand conditions.

India?s external sector remains supported by resilient services exports, strong foreign exchange reserves, and diversified trade linkages, even as rising crude oil prices and West Asia disruptions increase near-term risks. During April?February FY26, total exports of goods and services grew by 5.8% YoY to 790.9 billion USD. Merchandise exports grew modestly by 1.8% while non-petroleum, non-gems and jewellery exports increased by 5.7%, led by strong growth in electronic goods exports. Services exports remained the key strength of the external sector, rising by 10.2% to 387.9 billion USD and generating a net services surplus of 201 billion USD, covering 64.7% of the merchandise trade deficit. Total imports rose by 7.4% to 900.5 billion USD, resulting in a total trade deficit of 109.7 billion USD. India?s foreign exchange reserves remained comfortable at 709.8 billion USD as of 13 March 2026, providing over 11 months of import cover and covering around 95% of external debt outstanding, strengthening resilience against global volatility.

Powered by Capital Market - Live News