Muscat: India's economy remains resilient amid tensions in West Asia, driven by strong growth, a robust PMI, rising exports, and stable domestic demand. Supported by reforms, diversified energy sources, and policy measures, India is well-positioned to withstand global shocks and sustain long-term economic expansion.
India's economic trajectory continues to demonstrate strong resilience despite increasing geopolitical tensions in West Asia. As global uncertainties rise and growth prospects for many economies decline, India remains a stable and growing economy. With GDP growth forecasted at around 7.6% for FY 2025–26 and expected to stay above 7% in FY 2026–27, India ranks among the fastest-growing major economies worldwide.
A key factor in this resilience is the series of structural and policy reforms implemented by the government over the past decade. These reforms have reinforced macroeconomic fundamentals, made it easier to do business, improved digital infrastructure, and increased investor confidence. Even after the COVID-19 pandemic and ongoing geopolitical disruptions, India has consistently achieved a growth rate above 7% over the last three years. This shows not only cyclical recovery but also a deeper structural strength within the economy.
Global Purchasing Managers Index
Jan 2026 Feb 2026
Manufacturing Services Manufacturing Services
Country
India 55.4, 58.5 56.9, 58.1
USA 53.4, 52.7 51.6, 51.7
China 50.3, 52.3 52.1, 56.7
Germany 49.1, 52.4 50.9, 53.5
India's economic momentum is further strengthened by strong performance indicators across sectors. The Purchasing Managers' Index (PMI), a key measure of economic activity, stands at 56.9 for manufacturing and 58.1 for services as of February 2026, surpassing major global economies such as the United States, China, and Germany.
This indicates sustained growth in both industrial output and services.
While China shows signs of recovery, especially in services, and Germany moves toward stabilization, the US experiences comparatively slower growth. Overall, India continues to lead with broad-based and resilient economic expansion.
On the external front, India's export sector has demonstrated notable resilience despite global trade disruptions. Exports increased by about 6% between April and February FY 2025–26, reaching USD 791 billion, up from USD 748 billion in the same period last year. Key sectors contributing to this growth include engineering goods, electronics, chemicals, gems and jewelery, and agricultural products.
Domestic demand has also been vital in supporting growth. Retail inflation stays moderate, while consumption hits multi-year highs, driven by stable energy prices and good supply management. The lack of major inflation shocks, especially in fuel prices, helps keep consumer confidence and spending power steady. This domestic resilience offers a key buffer against external shocks.
Energy security has become a vital pillar of India's resilience. The country has proactively built strategic petroleum reserves and maintains substantial commercial stocks, providing an energy reserve of 50–60 days, which is significantly higher than the global average. Additionally, India has diversified its crude oil import sources, sourcing supplies from countries such as Russia, the United States, Canada, Brazil, and Mexico.
This diversification reduces reliance on any single region and improves supply stability during geopolitical crises.
However, the ongoing conflict in West Asia, particularly around the Strait of Hormuz, presents 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 here could trigger ripple effects across various industries, including energy, automotive, construction, electronics, and agriculture.
The Strait of Hormuz alone accounts for nearly 20% of global oil trade and a significant portion of LNG shipments. Disruptions in this vital maritime route have already caused fluctuations in international energy prices. Rising fuel costs lead to higher transportation and production expenses, impacting sectors such as logistics, aviation, and manufacturing.
Global supply chains are also facing increased pressure. 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, especially for high-value goods like electronics and pharmaceuticals. The tourism sector, which makes up about 11% of global GDP, is also slowing down due to safety concerns and travel disruptions.
Despite these challenges, India remains relatively well-positioned to handle the turbulence. Its diverse trade relationships, strong domestic demand, and careful macroeconomic policies act as a cushion against external shocks.
However, a prolonged US–Iran conflict could still bring risks by increasing logistics costs, adding volatility to commodity prices, and putting pressure on critical sectors such as transportation, manufacturing, and consumer goods.
To reduce these risks, India must implement strict oversight of supply chains, especially in the energy sector. Preventing intermediaries from hoarding essential fuels like petrol, diesel, and LPG is crucial for maintaining market stability and public confidence. A coordinated strategy that includes real-time supply monitoring, strategic stock management, and efficient distribution will be vital for ensuring continuous access to critical commodities.
Another crucial focus area is the Micro, Small, and Medium Enterprises (MSME) sector, which forms the backbone of India's economy. MSMEs are particularly 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 encouraging technology adoption can help these enterprises build resilience and continue supporting employment creation and economic growth.
Recently, the government's push for industrial development through initiatives like the Bharat Industrial Development Scheme (BHAVYA) marks a transformative step for India's manufacturing sector. The plug-and-play model aims to simplify approvals, reduce operational delays, and create a smooth business environment from project start to finish. This approach not only improves ease of doing business but also attracts both domestic and foreign investments, thereby strengthening India's role as a global manufacturing hub.
Looking ahead, India's economic outlook remains optimistic. Moving forward, strengthening supply chain resilience, deepening 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, although the global economy faces a crossroads amid rising geopolitical tensions, India's economy continues on a steady and resilient path. Its robust fundamentals, reform-oriented growth model, and strategic policy measures position it well to withstand external shocks and emerge stronger. As the world faces uncertainty, India's economic resilience not only protects its own growth but also contributes to global stability.
