India’s growth momentum remains strong despite global challenges: FinMin report

New Delhi, July 29 (AHN) India's growth momentum remains on a firm footing on the back of resilient domestic demand, despite the global challenges triggered by the West Asia crisis, according to the Finance Ministry’s monthly economic review for July released on Wednesday.

The report highlighted stronger industrial activity, citing revised Index of Core Industries data that showed 5 per cent year-on-year growth in June 2026, led by iron ore, electricity, cement, and steel.

It underscored several manufacturing and policy initiatives undertaken during the month, including Semicon 2.0, the new Mobile Phone Manufacturing Scheme, progress in critical minerals and shipbuilding, regulatory easing for Special Economic Zone (SEZ) manufacturers, and the launch of India's first hydrogen fuel cell-powered train.

These initiatives are strengthening domestic manufacturing capabilities, improving supply chain resilience and reducing dependence on concentrated import sources across strategic sectors, the report stated.

However, it noted that some high-frequency indicators, including e-way bill generation and the manufacturing Purchasing Managers' Index (PMI), showed moderation, while the services sector grew stronger, driven by robust domestic and external demand.

The report observed that India will need to continuously adapt to evolving global challenges, with domestic reforms and prudent macroeconomic management to stay on the high growth path and sustain investor confidence.

"Swifter policy responses and their implementation are vital to encourage foreign and domestic investment in the Indian economy. Recent years have been a time for hunkering down and battening down the hatches. Coming years will be no exception," the review stated.

It also highlighted that geopolitical tensions in West Asia have resurfaced, pushing up global energy prices and increasing uncertainty over the global growth and inflation outlook. While the rise in crude oil prices has remained below the spike witnessed during the initial phase of the conflict, renewed tensions continue to cloud the global economic environment.

The report warns that surging West Asia tensions and firmer global crude oil prices could pressure the fiscal deficit target, which is budgeted at 4.3 per cent of GDP and exert pressure on the current account balance.

Citing the International Monetary Fund's July 2026 World Economic Outlook update, the review points out that global growth is projected to slow to 3.0 per cent in 2026 from 3.2 per cent in 2025. It also flagged renewed conflict in the Middle East and challenges to global trade as key downside risks.