UNITED NATIONS – The Indian economy is expected to grow by 6.4 per cent this year and 6.6 per cent in 2027, according to a UN report.
Economies in South and Southwest Asia grew by 5.4% in 2025, compared to 5.2% in 2024, largely driven by strong growth in India, the United Nations Economic and Social Commission for Asia and the Pacific said in the report issued on Monday.
India’s growth rose to 7.4% in 2025, “supported by strong consumption, especially from the rural economy coupled with reductions in tax rates on goods and services, and front-loading of exports ahead of US tariffs,” the report, titled Asia-Pacific Economic and Social Survey 2026, said.
In India, economic activities declined in the second half of 2025 with exports to the United States falling by 25 percent after the imposition of 50 percent tariffs in August 2025. The services sector remained a major driver of growth.
The report expected India to record a growth rate of 6.4 percent in 2026 and 6.6 percent next year. The country’s inflation rate is expected to reach 4.4 percent this year and 4.3 percent in 2027.
The report said that foreign direct investment flows to developing economies in Asia and the Pacific declined amid trade tensions and geopolitical uncertainty. After a 0.6% increase in 2024, foreign direct investment into the region fell by 2% in 2025, even as global flows increased by 14%.
“In the Asia-Pacific region, the countries that attracted the largest share of greenfield FDI in the first three quarters were India, Australia, the Republic of Korea and Kazakhstan with announced investments of US$50 billion, US$30 billion, US$25 billion and US$21 billion, respectively.”
It also said that personal remittances, sent by workers from Asia and the Pacific working outside their home countries, continued to rise, mitigating the impact of weak local working conditions.
Remittances have helped sustain consumption for many families, but they face headwinds.
In India and the Philippines, about 40 percent of remittances are used for basic spending, including medical expenses, of recipient families.
“However, as the world’s largest recipient of remittances worth US$137 billion in 2024, India may face a significant loss as the US has imposed a 1% tax on all remittances since January 2026,” the report added.
The report also pointed to estimates by the International Renewable Energy Agency that there are about 16.6 million green jobs globally, with annual job creation of about 0.8 million between 2012 and 2024, an annual growth of 7%.
Of these 16.6 million jobs, 7.3 million were in China, 1.3 million in India, and 2.5 million in the rest of Asia – 44%, 8%, and 15% of the global total, respectively.
“Governments can benefit from the energy transition to an environmentally sustainable economy to foster new domestic industries and build supportive constituencies,” the report said.
The report noted that public investment and targeted industrial policies could accelerate the emergence of beneficiaries such as renewable energy manufacturers, grid developers, storage providers, and green industrial clusters.
The report cited India’s production-linked incentives scheme, saying it shows how macroeconomic policy can promote green industrial development through incentives for domestic manufacturing of solar PV, batteries and green hydrogen, reducing dependence on imports while creating new industrial beneficiaries with a vested interest in sustaining the transition.
“Across developing economies in Asia-Pacific, targeted industrial policies are being used to scale up clean technology manufacturing and accelerate the energy transition. Initiatives include India’s production-linked incentive scheme for high-efficiency solar modules, and China’s strategic support for electric vehicle battery manufacturing.”
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