New Delhi: The Asian Development Bank (ADB) on Tuesday projected India's economic growth at 6.5% each for this fiscal year and the next. The latest forecast for FY26 is unchanged from ADB's Asian Development Outlook (ADO) in July when the multilateral lender pared India's growth to 6.5% from 7% estimated in April due to the impact of newly-imposed US tariffs on Indian goods. The FY27 estimate marks a cut from 6.7% estimated in July.

ADB noted India's strong 7.8% growth in Q1FY26 but warned that the high US tariffs will impede growth, especially in the second half of FY26 and in FY27. Even so, the bank said resilient domestic demand and robust service exports will help cushion the impact. For South Asia, the bank has forecast 5.9% growth in 2025. India will be one of the region's fastest-growing economies after Bhutan.

US President Donald Trump has levied a 50% tariff on Indian goods, including a 25% penalty for importing Russian oil, among the highest alongside Brazil.

"Despite ongoing trade challenges, we remain optimistic about India's long-term growth," said Mio Oka, ADB country director for India. "The implementation of tariffs will weigh on growth, but overall impact on GDP is expected to be contained due to India's relatively lower exposure to the US markets, increased exports to alternative markets and a pickup in domestic demand."