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    BUSINESS & TRADE                                                      AUGUST 28, 2026      |  The Indian Eye 34

                                     How and Why Indian

                 economy is showing resilience

                                         amid global gloom

                India is showing signs of resilience, powered by domestic demand, manufacturing,

                            government capital expenditure and improving corporate earnings.

            OUR BUREAU                                                                                            FY27  began  stronger  than  expected,
                                                                                                                  with revenues of MSCI India compa-
            New Delhi / Mumbai
                                                                                                                  nies rising 19 per cent year-on-year and
                  t  a  time  when  the  global  eco-                                                             profit after tax increasing 16 per cent.
                  nomic outlook remains cloud-                                                                        The strength was not confined to
            Aed by geopolitical tensions,                                                                         large  companies.  Nifty  Midcap  100
            commodity price shocks and weak ex-                                                                   companies, excluding energy, record-
            ternal demand, the Indian economy is                                                                  ed 42 per cent growth in profit after
            offering a more positive picture. The                                                                 tax, while Nifty Smallcap 100 compa-
            latest indicators suggest that growth                                                                 nies registered 39 per cent growth.
            is broadening, corporate earnings are                                                                     This suggests that India’s eco-
            improving and domestic demand con-                                                                    nomic story is becoming increasingly
            tinues to provide an important cush-                                                                  domestic-demand  driven.  That  does
            ion against global uncertainty.                                                                       not make the country immune to
                India’s GDP is estimated to grow                                                                  global shocks, but it gives the econo-
            by 7-7.2 per cent in the first quarter                                                                my a degree of protection that many
            of FY27, compared with 6.8 per cent   The Mobile Phone Manufacturing Scheme, with an allocation of Rs 62,500 crore over five   more externally dependent econo-
            in the same quarter last year, accord-  years from FY27 to FY31, is designed not only to expand production but also to promote Indian   mies lack.
            ing to a Bank of Baroda report. The                                                                       Companies, however, are not
            expected  acceleration  is  significant          intellectual property, design and brands (File photo)  ignoring  the  risks.  Corporate  man-
            because  it  comes  against  a  difficult                                                             agements have remained cautious,
            external backdrop, including the con-  port points to improving government   wards greater domestic value addition   emphasising  profitable  expansion,
            tinuing West Asia crisis and volatility   capex alongside healthy credit and   and globally competitive Indian brands.  calibrated pricing and margin disci-
            in energy and commodity markets.  deposit growth as important factors   The Mobile Phone Manufac-     pline rather than chasing growth at
                The growth story is increasing-  supporting economic expansion.  turing Scheme, with an allocation of   any  cost.  Most  companies  have  re-
            ly  being  driven  by  sectors  that  have   The picture is not uniformly pos-  Rs 62,500 crore over five years from   tained their full-year guidance while
            a  strong  connection  with domestic   itive. Agriculture is expected to grow   FY27 to FY31, is designed not only   keeping an eye on geopolitical and
            investment and consumption. Manu-  by only 3.5 per cent in Q1FY27, down   to expand production but also to   monsoon-related uncertainties.
            facturing, electricity and construction   from 4.4 per cent a year earlier, with   promote Indian intellectual property,   But the underlying domestic en-
            are expected to outperform their lev-  delayed monsoon conditions and ex-  design and brands. The government   gines appear stronger than they were
            els of a year ago, helped by sustained   treme heat posing risks.   expects cumulative mobile phone   in  previous  periods  of  global  stress.
            government capital expenditure and    The bigger challenge, however,  production to double from around   Government investment is support-
            healthy growth in the financial sector.  comes from outside India’s borders.  Rs 20 lakh crore to Rs 40 lakh crore   ing infrastructure and manufacturing.
                Industrial growth is projected at   The continuing West Asia crisis   during the scheme period, while em-  Credit  is  growing.  Corporate  profit-
            6.8  per  cent,  with  manufacturing  ex-  has pushed up prices of key commod-  ployment in mobile phone and elec-  ability is improving. Services remain
            pected to expand 7.8 per cent. Elec-  ities. International crude prices rose   tronics manufacturing has already   strong.  Domestic  consumption  con-
            tricity and construction are forecast   44.7 per cent and urea prices 73.5 per   crossed 25 lakh.     tinues to cushion external weakness.
            to grow by 7 per cent and 6 per cent   cent  during  Q1FY27,  according  to   This marks an important shift in   The immediate challenge will
            respectively. Services, meanwhile, are   the Bank of Baroda report. Such in-  India’s  industrial  ambitions.  The  ob-  be to convert this resilience into sus-
            expected to expand by 8 per cent, led   creases can feed into India’s import   jective is no longer simply to make   tained, high-quality growth — one
            by  financial,  real  estate  and  profes-  bill, inflation and corporate costs.  products in India, but increasingly to   that creates jobs, raises productivity,
            sional services.                      Yet  the  manufacturing  sector   create Indian companies, technolo-  strengthens domestic supply chains
                This composition of growth is im-  has so far demonstrated consider-  gies, designs and supply chains capa-  and enables Indian companies to
            portant. India’s relative strength is not   able resilience. The report notes that   ble of competing globally.  compete globally.
            simply the result of one booming sec-  manufacturing continues to face un-  The financial markets are also re-  For  now,  however,  the  contrast
            tor. It reflects the increasing contribu-  certainty and cost pressures but is be-  flecting some of this optimism.  is striking: while much of the world
            tion of manufacturing, infrastructure,  ing supported by the capex push and   According to JP Morgan, India’s   is worrying about slowing growth and
            services and domestic investment.  steady investment activity.      earnings outlook has improved, with   rising uncertainty, India enters the
                Government capital expenditure    Another encouraging sign is the   MSCI India earnings growth estimat-  second half of 2026 with an economy
            remains one of the key pillars of this   government’s attempt to move Indian   ed at 11 per cent in CY26 and 13 per   that continues to show considerable
            momentum. The Bank of Baroda re-  manufacturing beyond assembly to-  cent  in  CY27.  The  first  quarter  of   momentum.

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