The article was first published in The Economic Times Edge Insights.com on February 12 2026. Please click here to read the article.
As 2026 begins, the global economy faces volatility and shifting geopolitical dynamics. India stands out by actively shaping its future, as reflected in the Union Budget 2026, which addresses global uncertainty and promotes long-term growth. With projected GDP growth around 7 per cent, India outperforms most major economies, driven by strong domestic demand, ongoing reforms, and international partnerships. Amid uneven global progress, India’s steady growth highlights its stabilising influence.
India’s macroeconomic fundamentals remain firmly anchored. Inflation is trending toward the Reserve Bank of India’s 4 per cent target, the fiscal deficit is contained at 4.3 per cent of GDP, and public finances are aligned to a clear medium‑term objective of lowering the debt‑to‑GDP ratio to 50 per cent by 2031. Together, these indicators signal fiscal prudence, policy consistency and long‑term credibility for investors.
More importantly, India’s policymaking reflects strategic clarity. Economic decisions are not merely defensive responses to global disruptions; they are designed to expand the country’s economic and geopolitical options.
This credibility is increasingly visible in India’s global engagement. Trade agreements with the European Union and the United States underscore India’s growing reputation as a reliable, forward looking partner. These arrangements go beyond tariff concessions, opening up avenues for technology collaboration, resilient supply chains and innovation-led growth. Initiatives such as the India Semiconductor Mission and Semicon India further reinforce this direction, building domestic capability in high value manufacturing.
Progress in resolving long-standing tariff issues with the United States signals a shift toward deeper structural partnership. Ongoing discussions about market access, dispute resolution, and supply chain alignment indicate a more mature economic relationship. Settling tariffs would boost bilateral trade and foster greater confidence in India–US economic ties amid global trade uncertainty.
India is steadily moving beyond participation to influence. Recent trade agreements with the UK, Oman, New Zealand, the EU and the US demonstrate India’s ability to work across economic blocs and political alignments.
Insights from the KPMG 2025 India CEO Outlook reflect this shift in sentiment domestically. Indian CEOs remain optimistic, viewing geopolitical disruptions and supply chain risks as manageable rather than structural. Confidence in domestic demand, regulatory reform and long‑term growth remains strong.
Unlike many economies forced into binary choices, India continues to maintain active partnerships with Western markets, the Global South and the Indo‑Pacific. This multi‑aligned approach makes India increasingly indispensable in a divided world. The country is moving from being a rule‑taker to a rule‑shaper, setting new benchmarks in trade, digital governance and sustainability.
This shift is evident in India’s integrated approach to trade policy, climate action and technology investment. Expanding trade corridors, record export performance and advances in renewable energy, manufacturing and digital infrastructure point to a nation in purposeful transition. India’s digital public infrastructure, now globally recognised, continues to enable inclusion at scale while attracting multinational companies to its market and talent base.
India’s demographic advantage is being actively translated into economic capability. Since 2014, more than 60 million individuals have been trained under the Skill India Mission. Over 400 technology focused courses spanning AI, cloud computing, cybersecurity and semiconductors have been launched to support next generation industries.
Policy measures are also catalysing private investment. The datacenter tax holiday announced in the 2026 Budget is accelerating digital infrastructure expansion and supporting India’s ambitions in cloud, AI and data driven services.
Technology is now central to India’s growth narrative. Over 6 million people are employed in tech and AI led sectors, with 89 per cent of startups in 2024 leveraging AI. Under the India AI Mission, artificial intelligence is expected to contribute nearly USD 1.7 trillion to the economy by 2035, supported by the deployment of over 38,000 GPUs and a growing framework for responsible AI adoption.
At the same time, India is strengthening its industrial base. Six semiconductor fabrication plants have been approved with significant research funding, targeting a position among the world’s top five semiconductor hubs by 2030. Production linked incentive schemes and logistics reforms are integrating India deeper into global value chains, translating into USD 22 billion in investments, USD 200 billion in new production and 1.26 million jobs by September 2025.
Greater clarity on tariffs with the United States would further strengthen India’s investment case particularly in advanced manufacturing, electronics, semiconductors and clean energy. Reduced uncertainty at the border encourages long‑term commitments and accelerates India’s integration into global and US led supply chains.
Sustainability remains a parallel priority. More than half of India’s installed power capacity now comes from non‑fossil fuel sources, reinforcing that growth and energy transition can advance together.
India’s rise is fuelled by advancements in manufacturing, digital technology, clean energy, and strategic economic diplomacy. The progress towards resolving tariff disputes with the United States illustrates this combination perfectly. Reaching a stable trade agreement would mark a move from occasional negotiations to a lasting partnership built on trust, scale, and shared competitiveness.
Over the next decade, India will need to turn its ambitions into results. Continued leadership will rely on strengthening global partnerships alongside domestic growth and adapting reforms to meet changing demands for capital, technology, and talent.
India’s achievements will hinge on increasing manufacturing and enhancing global value chains in a divided world, while stability will come from consistency, reliability, and cooperation. By integrating further with US and international markets, clarifying trade and tariff policies, and continuing steady reforms, India is poised to be not only a source of growth but also a key partner in shaping the future of the global economy.
