Prime Minister’s Economic Advisory Council (EAC-PM) Chairman, Mahendra Dev expects India’s economy to grow 6.5% in FY26, supported by GST reforms, higher capex, tax cuts and monetary stimulus in the second half of the year. 

He said the government is also pushing new reforms on deregulation and ease of doing business through two high-level committees.

The Prime Minister’s Economic Advisory Council (EAC-PM) Chairman, Mahendra Dev, has outlined a four-part plan to help Indian industry manage the impact of US tariffs.

The first step focuses on support for labour-intensive sectors such as textiles, gems, and jewellery. This involves measures like lower interest rates, additional credit and extending the 90 days for non-performing asset (NPA) classification. While banks have suggested delaying some of these steps, the Commerce Ministry is currently working on the relief package for exporters.

The second part of the plan is to expand India’s export reach to new regions, including Latin America, Asia, Europe and Africa.

The third element is to accelerate free trade agreement (FTA) talks, with negotiations with the European Union expected to make progress by December.

The fourth and final step is to continue trade talks with the United States, given the importance of the long-term relationship and India’s strong services exports. Relations with China have also improved, which could help manage geopolitical pressures.

Dev told CNBC-TV18 that this approach would put India in a stronger position to deal with both global trade issues and political challenges.

He projects India's GDP growth at 6.5% in the fiscal year 2025-26 (FY26), with the second half of the year seeing stronger activity supported by goods and services tax (GST) reforms, higher capital expenditure, income tax cuts and monetary policy stimulus.

The government is preparing for a new wave of reforms beyond GST, he noted, adding that two committees, led by the current and former cabinet secretaries, are reviewing deregulation and ease of doing business. One committee is focused on central ministries, while another, headed by TV Somanathan, is examining state-level issues. The PMEAC is also part of the consultations.

He believes the private sector must now move beyond holding cash reserves and begin fresh capital spending. Despite uncertainty, he argued that delaying investments any further would limit growth opportunities.

Dev sees the Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) pausing after the recent 50 basis point (bps) rate cut to allow time for transmission. He believes the committee’s current stance shows a preference for growth over inflation, which is expected to remain subdued.

He also recommended that the RBI maintain its 4% inflation target, arguing that the framework has worked well and does not need changes.

Source: CNBC TV18

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