India’s economy is estimated to have ended FY26 on a strong footing despite rising geopolitical tensions caused by the ongoing Iran conflict, with economists projecting robust GDP growth driven by domestic demand, agriculture, and services sector resilience.
According to an Economic Times poll, India’s GDP growth for the January-March quarter of FY26 is expected to be around 7.3%, reflecting stronger-than-expected economic momentum even as global uncertainty intensified because of the Middle East crisis.
Economists said India’s domestic consumption, government spending, infrastructure activity, and resilient services sector helped cushion the economy from external shocks linked to the Iran war and disruptions around the Strait of Hormuz.
However, analysts warned that prolonged geopolitical instability could create significant pressure in the coming months through higher crude oil prices, shipping disruptions, imported inflation, and stress on the Indian rupee.
India remains heavily dependent on energy imports from the Gulf region, making developments in West Asia particularly important for inflation, fuel prices, trade balances, and fiscal management.
The recent Iran conflict had earlier pushed Brent crude prices sharply higher, causing volatility in Indian financial markets and pressure on the rupee. The Indian currency recently touched record lows against the US dollar before partially recovering on hopes of a possible US-Iran peace understanding.
Reserve Bank of India Governor Sanjay Malhotra said the central bank is ready to do “whatever is required” to control excessive volatility in currency markets and maintain orderly price discovery. He stressed that India’s macroeconomic fundamentals remain strong despite external shocks.
Market experts said India has so far benefited from strong tax collections, resilient banking activity, public capital expenditure, and healthy agricultural output, which helped offset pressure from global uncertainty.
There are also concerns about the impact of the Iran conflict on remittances and employment, especially for Indian workers in Gulf countries. Reports suggest geopolitical tensions have already affected migration patterns, remittance flows, and export demand in certain sectors.
At the same time, Indian stock markets reacted positively on Monday after optimism grew around a possible US-Iran peace agreement. The Sensex and Nifty both gained more than 1%, while oil marketing companies and banking stocks witnessed strong buying interest.
Economists believe India’s near-term growth outlook will largely depend on crude oil stability, inflation control, monsoon performance, global trade conditions, and geopolitical developments in the Middle East.
Despite global headwinds, India continues to remain among the world’s fastest-growing major economies, with policymakers hoping that domestic demand and infrastructure-led growth will help sustain momentum through FY27.
