Deloitte’s upward revision to a 6.8% growth projection for India in FY25 centers on robust domestic demand and a macroeconomic backdrop that has become more supportive of expansion. The consulting firm points to structural reforms, an accommodative monetary stance and relatively low inflation as key enablers that have kept consumption and investment activity buoyant across sectors.

The forecast reinforces a narrative that India’s economy is increasingly driven from within. Household spending, government capital expenditure and a recovery in private investment have combined to sustain momentum even as global growth has slowed. Low inflation has preserved real incomes and given the Reserve Bank of India room to maintain easier financial conditions, which Deloitte notes as instrumental in underpinning demand.

Despite the positive baseline, Deloitte flags a suite of external risks that could dent the outlook. Trade tensions and delays in securing international agreements raise the prospect of reduced exports and disrupted supply chains. Elevated U.S. interest rates and persistent global inflationary pressures could tighten global financial conditions, prompt capital outflows from emerging markets and increase the cost of external borrowing for Indian corporates and the sovereign. Restrictions on critical minerals, whether through export controls or geopolitical fragmentation, pose a particular vulnerability for India’s manufacturing ambitions, given the role of these inputs in electronics, electric vehicles and renewable energy supply chains.

Market implications from Deloitte’s forecast are likely to be nuanced. A persistently stronger domestic growth profile can support corporate earnings and equity market valuations, while keeping government bond yields stable if inflation remains contained. However, announcements of elevated external risks could trigger short-term volatility in the rupee and sovereign bond markets if global risk premia rise. Policymakers will therefore face the dual task of sustaining domestic demand while insulating the economy from external shocks.

From a policy perspective, Deloitte’s assessment underscores the importance of continuing structural reforms to lift productivity and investment, and of maintaining prudent macro management to preserve low inflation and accommodative real interest rates. Deepening supply-chain linkages with diversified partners, accelerating domestic capacity in critical minerals and components, and concluding trade agreements that reduce friction would help reduce the economy’s exposure to adverse global shocks.

Over the longer term, sustaining growth above 6% will depend on translating current demand strength into higher private investment and productivity gains. If structural reforms, infrastructure spending and human capital investments are scaled up, the short-term momentum Deloitte identifies could become the foundation for a faster, more resilient growth trajectory. If global headwinds intensify, however, the same external pressures could significantly test India’s capacity to maintain that course.