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BUSINESS & TRADE JUNE 12, 2026 | The Indian Eye 38

India’s Growth Story Faces Global

Headwinds, but New Engines Offer Hope

Services exports, remittances and strategic reforms are emerging as key buffers

against mounting external challenges.

OUR BUREAU structure investments worth US$250
billion committed until 2047 through
New Delhi / Mumbai
initiatives announced at the India AI
ndia’s economic outlook remains Summit 2026. Such investments have
broadly positive, but the road the potential to strengthen India’s
Iahead is far from smooth. While position in emerging technologies
the country continues to benefit from and create new growth opportunities
a strong services sector, rising foreign across sectors.
investment opportunities and resil- “The Union Budget 2026-27 an-
ient remittance flows, policymakers nouncements pertaining to tax holi-
face the challenge of navigating an day and safe harbour for foreign com-
increasingly uncertain global envi- panies for developing data centres
ronment marked by geopolitical ten- in India, and infrastructural invest-
sions, trade disruptions and volatile ments to the tune of US$250 billion
export markets. committed till 2047 in the India AI
The Reserve Bank of India’s Summit 2026 augur well for attract-
(RBI) Annual Report 2025-26 of- ing FDI,” the RBI said.
fers a revealing picture of both the Foreign direct investment is in-
strengths and vulnerabilities of the creasingly seen as a solution not only
Indian economy. Its assessment sug- for bringing capital into the economy
gests that India’s external sector re- but also for facilitating technology
mains resilient, yet sustaining growth transfer, innovation and productivity
will require careful management of The RBI believes that the conclusion and implementation of ongoing bilateral and regional improvements.
emerging risks and a continued push trade agreements can improve export competitiveness (ANI file photo) Similarly, the liberalisation of
for structural reforms. foreign direct investment norms in
One of the most significant chal- dia’s economic model. have played a major role in support- the space sector represents another
lenges confronting the Indian econ- The central bank remains opti- ing household incomes and foreign attempt to attract global capital and
omy is uncertainty in global trade. mistic about future prospects in this exchange reserves. A broader remit- expertise. By allowing up to 100 per
The RBI notes that merchandise area. “Robust global IT spending, as tance base reduces dependence on cent FDI in satellite manufacturing
exports remain vulnerable to ongo- projected by Gartner, bodes well for any single region and provides great- and related components, India hopes
ing geopolitical conflicts and global India’s software services exports,” the er resilience against economic shocks to position itself as a significant play-
policy instability. As supply chains report states. This reflects a broader abroad. er in the rapidly expanding global
are reshaped and international trade shift in the Indian economy, where Yet relying on remittances alone space economy.
patterns become more unpredictable, digital services and technology-en- cannot be a long-term development Trade agreements are another
export-dependent sectors face the abled businesses are becoming key strategy. The larger challenge re- critical part of the solution. The RBI
prospect of slower growth and fluctu- drivers of growth. mains creating sufficient high-qual- believes that the conclusion and im-
ating demand. The challenge now is ensuring ity jobs within India to absorb the plementation of ongoing bilateral
This challenge is particularly im- that India can continue to maintain country’s expanding workforce while and regional trade agreements can
portant because merchandise exports its competitive edge in these sectors. maintaining income growth. improve export competitiveness, re-
continue to play a critical role in gen- Global competition in technology To address some of these chal- duce import dependence and expand
erating employment and foreign ex- services is intensifying, and sustain- lenges, policymakers are placing investment opportunities. Successful
change earnings. A prolonged period ing growth will require continuous greater emphasis on attracting for- execution of these agreements could
of global uncertainty could reduce de- investments in skills, innovation and eign investment and strengthening help Indian companies access larger
mand for Indian goods and put pres- digital infrastructure. domestic manufacturing capabilities. markets and strengthen integration
sure on the country’s external balance. Another important pillar sup- The RBI points to several initiatives with global value chains.
However, India’s services sector porting India’s external stability is that could support this objective. Ultimately, the RBI’s assessment
is increasingly acting as a stabilising remittance inflows from overseas In- Among them are the Union Bud- presents a picture of an economy at a
force. According to the RBI, net ser- dians. The RBI expects steady inward get 2026-27 measures offering tax crossroads. India’s traditional vulner-
vices exports grew by 15.3 per cent remittances from non-Gulf countries holidays and safe-harbour provisions abilities—external shocks, export un-
year-on-year during April-December to continue supporting the current for foreign companies developing certainty and geopolitical risks—have
2025. Software and business services account balance during 2026-27. data centres in India. These initia- not disappeared. Yet new strengths
alone accounted for 77.8 per cent of This trend reflects the growing tives are expected to make the coun- are emerging in the form of software
the country’s total services exports, geographical diversification of In- try more attractive for global technol- exports, business services, diversified
highlighting the growing importance dia’s diaspora earnings. Traditional- ogy investments. remittance inflows, technology in-
of knowledge-based industries in In- ly, remittances from Gulf countries The report also highlights infra- vestments and strategic reforms.

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