India well-poised for rapid growth despite risks from West Asia war and El Nino: ITC

Consumer packaged goods major ITC has said that India's economy remains well-positioned for sustained medium-term growth despite near-term challenges stemming from geopolitical tensions in West Asia and weather-related risks, projecting real GDP growth of 6.9 per cent in FY27.

India’s economy expanded 7.7% in fiscal year 2025-26, up from 7.1% a year earlier. Growth in the January-March quarter stood at 7.8%, compared with 8% in the preceding quarter. The fourth-quarter figure exceeded the median estimate of 7.3% in a Bloomberg survey of economists and matched the pace recorded in the previous quarter.

ITC also highlighted the government's continued focus on developing next-generation physical and digital public infrastructure, improving manufacturing competitiveness, advancing taxation and financial sector reforms, and enhancing ease of doing business as critical enablers of sustainable growth and stronger global competitiveness.


"The Indian economy is well-poised for rapid growth in the medium term," the company said.

Moreover, continued government focus on next-generation infrastructure, manufacturing competitiveness, tax and financial sector reforms, and ease of doing business would help sustain growth momentum and bolster India's competitiveness in global markets.

"At the same time, agriculture-related schemes and digital initiatives are expected to strengthen rural prosperity and resilience, thereby fostering a broader virtuous cycle of consumption-investment-employment," it said.

Moreover, recently negotiated bilateral trade agreements with the US, the UK, the European Union, New Zealand and Oman "augur well for India's overall growth outlook", it said.

The country's growth outlook continues to be "supported by favourable agricultural prospects, steady services activity, Government's continued thrust on capital expenditure and supportive monetary and financial conditions," it said.

ITC said rural consumption is likely to remain robust, aided by resilient rural wages and declining unemployment levels, while urban demand is expected to improve on the back of measures aimed at increasing disposable incomes and consumption, along with a recovery in consumer credit.

"Healthy corporate and bank balance sheets, low interest rates and capacity utilisation of approximately 75% provide a supportive foundation for a revival in private sector capital expenditure," it said.

ITC flags concerns

However, the FMCG major cautioned that the ongoing conflict in West Asia has heightened concerns regarding India's energy security and imported inflation.

"A prolonged disruption, coupled with emerging El Nino conditions that could weaken monsoons and intensify heatwaves, poses risks to growth, inflation and the current account," it said.

ITC added that these developments could also have second-order effects on consumer sentiment and demand conditions and would remain key factors to monitor in the near term.

"Notwithstanding the near-term challenges, the Indian economy is well-poised for rapid growth in the medium term, supported by structural drivers such as a favourable demographic profile, rising affluence, rapid urbanisation, accelerated digital adoption and improved infrastructure & connectivity," it said.

The company also emphasised that policy measures aimed at supporting sustainable livelihoods, rationalising taxation and fostering inclusive growth would remain critical to sustaining and accelerating India's growth trajectory.

"Structural support directed towards these sectors will enable significant multiplier effects for job creation and strengthening domestic value chains," it said.

Recently, Goldman Sachs has raised its real GDP growth forecast for India to 6.8% for calendar year 2026, up 30 basis points from its earlier estimate, citing lower oil prices, easing supply disruptions and resilient domestic activity after the US-Iran peace deal.