India's economy grows 7.1% in 2025-26 as Modi government targets infrastructure decade
India recorded GDP growth of 7.1% for the fiscal year ending March 2026, the highest among major economies, as the Modi government's infrastructure spending programme and manufacturing expansion continued to attract record foreign investment.
World — March 7, 2026
India's economy grew by 7.1% in the fiscal year ending March 2026, according to preliminary government estimates, extending the country's position as the world's fastest-growing major economy and reinforcing Prime Minister Narendra Modi's narrative of India as the defining economic success story of the coming decade.
The growth figure was driven primarily by continued strong capital investment in infrastructure — roads, railways, ports, and urban development — which the central government has funded through a sustained increase in public capital expenditure. Total infrastructure investment in the 2025-26 fiscal year exceeded ₹12 trillion ($145 billion), roughly 3.5% of GDP.
Foreign direct investment reached a record $112 billion in 2025-26, as companies in electronics, semiconductors, pharmaceuticals, and renewable energy established or expanded Indian manufacturing operations. Apple supplier Foxconn announced a $4 billion expansion of its Tamil Nadu facilities, while Samsung confirmed a new semiconductor packaging plant near Bengaluru.
The Reserve Bank of India held its policy rate at 6.25%, resisting pressure from some quarters to cut rates to stimulate consumption, citing food inflation which remained elevated at 6.8% annually. Governor Shaktikanta Das said the board was 'watchful' of global oil price developments following the Iran conflict.
Modi, speaking at an event in Mumbai celebrating 100 days of his third-term cabinet, said India was 'on the cusp of becoming the world's third-largest economy,' a milestone that official projections suggested could be reached by 2028 if current growth trajectories continued.
Critics noted that headline growth figures masked significant inequality. Rural unemployment remained elevated in several states, and the formal employment creation rate did not keep pace with a workforce that adds approximately 12 million new workers annually.
India's strengthened economic position has translated into greater diplomatic assertiveness. New Delhi refused to join Western condemnation of the US-Israeli Iran campaign, maintaining a studied neutrality while privately urging de-escalation through back channels.
