2025 For Indian Economy: Optimism Or Uncertainty? Or Both? FICCI Deciphers

India’s economic outlook for 2025 stands at the intersection of cautious optimism and external headwinds, according to the latest Economic Outlook Survey by the Federation of Indian Chambers of Commerce and Industry (FICCI).

Indian Economy

The outlook for India’s economy in 2025 reflects a balance of caution and optimism. On the positive side, economists expect a pickup in consumer spending, particularly in rural areas, driven by an expected recovery in agriculture. This could bolster sentiment and consumption, especially for low-ticket and discretionary items. Additionally, food inflation, which has been a significant strain on household budgets, is expected to ease, providing much-needed relief to urban families.

The government’s focus on capital expenditure, particularly in infrastructure sectors like roads, housing, and logistics, is expected to act as a key growth driver for India’s economy. “Investments in infrastructure and allied sectors, including railways, will play a crucial role in sustaining economic momentum in 2025-26,” said one of the economists involved in the FICCI survey.

Geopolitical uncertainties, trade tensions, and global supply chain disruptions, exacerbated by the possibility of ongoing tariff wars, continue to cloud the outlook. Despite this, economists expect India’s services sector, particularly in hospitality, healthcare, and real estate, to continue expanding and create fresh capacity.

Merchandise exports are expected to face challenges, constrained by weak global demand and uncertain trade policies, particularly in the wake of changing U.S. tariffs and trade negotiations. “While services exports may perform better, uncertainties stemming from U.S. trade policies and volatility in financial markets could pose additional risks,” the report noted.

Mixed Signals

On the global stage, the outlook for 2025 is marked by cautious optimism with potential growth tempered by significant risks. According to OECD’s latest assessment, global growth is projected to rise marginally to 3.3 per cent, up from 3.2 per cent in 2024. However, this remains below the pre-pandemic average of 3.4 percent, indicating that recovery may be uneven across regions.

Economists expect softening price levels and the easing of monetary policy in major economies to provide a boost to interest-sensitive sectors and services. At the same time, advancements in key areas such as semiconductors, electronics, and artificial intelligence are expected to drive investments. “The rise of green energy transitions and technological advancements will catalyze investments in key sectors,” noted a participant in the survey.

However, downside risks persist, particularly geopolitical tensions and trade policy uncertainties that could disrupt global trade and economic growth. The ongoing U.S.-China trade conflict and tariff wars could further fragment the global economy, adding to the volatility. Furthermore, the conflict in the Middle East could continue to impact energy markets, with elevated public debt levels remaining a threat to fiscal sustainability in many advanced and emerging economies.