Growth agenda for 2026: Seven focal areas of action that could sustain India’s momentum

As 2025 draws to a close, India finds itself in a position that few large economies can credibly claim. Among major economies, it remains the fastest growing, underpinned by stronger institutions, improving credibility and a clear national direction.

Economic performance exceeded expectations across fronts. Domestic demand was resilient, supported by steady income growth and improved consumer sentiment. Service exports expanded strongly, reinforcing India’s role in global value chains linked to technology and knowledge services. Manufacturing activity showed a gradual but unmistakable revival, aided by better capacity utilization, improved logistics and rising investment intent. Private investment gathered momentum. Reflecting this broad-based strength, CII has raised its growth projection for 2025-26 to 7.3–7.5% from 6.8–7.0%. This reflects not just cyclical strength, but rising confidence in India’s medium-term growth trajectory.

Macroeconomic stability provided a crucial anchor. Inflation was comfortably below target for much of the year, supported by improved food supply management, better logistics and tax rationalization. Monetary policy responded in a calibrated manner, balancing growth with financial stability. As India enters 2026, its macroeconomic position is one of the strongest in recent years, even as we adjust to a phase where real and nominal growth rates converge.

Beyond the numbers, 2025 will be remembered as a year of decisive reform delivery. The rollout of GST 2.0 stands out. Simplified rate structures, reduced litigation, faster refunds and stronger compliance systems have lowered transaction costs for businesses. Predictability has improved and working capital stress has eased; and for consumers, rationalized taxes raised affordability.

India’s income tax reforms also merit a special mention. Steps aimed at simplifying compliance, improving certainty, reducing litigation and raising disposable incomes helped reinforce consumption and taxpayer confidence. Greater use of faceless assessments, faster grievance redressal and improved data analytics enhanced transparency and trust in the tax system.

The implementation of India’s four labour codes marked another transformational step. By consolidating 29 central labour laws into a modern framework, these strengthened worker protection while providing enterprises with clarity and flexibility. Over time, this will support formalization, raise productivity and enable sustained job creation.

Trade policy also saw renewed momentum. India concluded trade agreements with the UK, Oman and New Zealand, while negotiations progressed with the EU and others. Taken together, these efforts reflect a strategic shift to outward orientation and trade-led growth, which is essential for India’s long-term competitiveness.

Looking ahead, 2026 must be a year of consolidation and ambition. The next phase of India’s growth will depend on how effectively the government and industry act on a medium-term agenda.

First, sustaining high-quality public capital expenditure must be central to India’s strategy. A renewed National Infrastructure Pipeline focused on outcomes, efficiency and speed is essential, with an emphasis on logistics, renewable energy, urban infrastructure, industrial corridors and digital connectivity. We need an enhanced shelf of bankable projects.

Second, India must mobilize patient, long-term capital. The creation of an India Development and Strategic Fund could play a catalytic role by supporting infrastructure, our energy transition, technology upgrades by small businesses and human capital investments, while strengthening India’s strategic economic presence overseas.

Third, regulatory modernization must move decisively towards a digitization-first architecture. A Unified Enterprise Identity, an Entity Locker for enterprises, API-based compliance, a national compliance grid and digital legal repositories can dramatically reduce compliance costs and eliminate duplication. This will improve the ease of doing business at scale.

Fourth, focus on innovation and research. Government support through the RDI Fund matters, but industry must lead. Private sector research and development spending is far below global norms. Companies should invest aggressively in applied research, artificial intelligence, clean energy, advanced materials and next-gen manufacturing to boost productivity and competitiveness.

Fifth, trade competitiveness will require a predictable and globally-aligned tariff philosophy along with export diversification. Progress on trade agreements will reinforce India’s position as a trusted global partner.

Sixth, financial-sector reforms must underpin long-term investment needs. Stronger development finance institutions, evolving banking structures, deeper capital markets and a globally competitive GIFT City ecosystem will be critical to financing India’s next growth phase.

Seventh, corporate governance is vital for India’s economic credibility. In today’s business ecosystem shaped by technology, data and sustainability, governance frameworks must evolve, balancing board effectiveness, transparency, risk management and long-term value creation. This does not require any policy or regulatory prescription, but industry-led voluntary action.

While government action is critical, industry too has a responsibility. We must invest with confidence, scale up capacity, adopt advanced technologies and commit to skilling at scale. Sustainability must be integral to business strategy and transparency must guide corporate decisions. If the government leads with clarity and courage, and Indian industry responds with investment, innovation and responsibility, India can convert its reform momentum into enduring national confidence. I can commit that the CII will do its part.

Note: This article was first published in Mint