India targets foreign investment and asset sales as growth slows amid West Asia crisis

India’s economy posted a 7.7% annual growth rate for FY 2025‑26, with a 7.8% rise in the fourth quarter driven by a strong services sector. The RBI has revised its FY 2026‑27 growth forecast to 6.6%, citing higher energy and commodity prices, supply‑chain disruptions and a weak monsoon linked to the West Asia conflict.

The government introduced a series of reforms to sustain momentum: tax exemptions for foreign portfolio investors, expanded access to government securities, and measures to boost foreign direct investment. It also plans accelerated divestment and asset monetisation, including a proposed sale of its stake in IDBI Bank, and cut excise duties on petrol and diesel to ease consumer costs. These steps aim to attract long‑term capital, strengthen the rupee and lower borrowing costs while preserving fiscal targets.