New Delhi: Even amid the ongoing geopolitical tensions in West Asia and the global oil shock, India continues to remain in a strong position. According to a latest SBI Research report, India’s GDP is expected to grow in the range of 6.8% to 7.1% in FY27, reflecting resilience despite global headwinds.
The report highlights that this oil shock is different from earlier episodes, as the United States is now energy self-sufficient and domestic households are benefiting from tax refunds, cushioning the impact. In contrast, India has entered the current global conflict “from a position of strength,” with FY26 growth projected at 7.6%, higher than many previous crisis periods.
However, the report cautions that climate-related risks such as a potential “super El Niño” could affect growth estimates. Inflation is expected to average around 4.5%, while the fiscal deficit is projected in the range of 4.5% to 4.6%. SBI Research also noted that India’s banking sector remains strong, though it emphasized the need for a comprehensive policy package to support the balance of payments and stabilize the rupee.
The report further stated that the ongoing conflict has created “multiple vortexes of headwinds” impacting agriculture, MSMEs, consumption, and global supply chains. Despite these challenges, it also sees emerging “green shoots” that could help India strengthen its position in global value chains.
With rising uncertainty in West Asia, financial hubs such as Dubai and Abu Dhabi are facing increased volatility, prompting global investors and NRIs to reassess concentrated exposure in the region. This, the report suggests, presents a significant opportunity for India’s GIFT City to emerge as a stable global financial hub.
Additionally, disruptions in Middle Eastern airspace due to regional tensions could position India and China as alternative transit hubs. However, capitalizing on this opportunity would require major investments in airport infrastructure, connectivity, and passenger experience.
On monetary policy, SBI Research said that central banks globally have paused after rate cuts in 2025 and are now reassessing their policy paths amid evolving geopolitical and domestic conditions. For the Reserve Bank of India, the report highlights a “growth-inflation paradox,” leaving limited room for immediate rate action. The current stance is expected to continue, with a “lower for longer” policy regime likely until clearer signals emerge from global conflict and climate developments.
Overall, the report underscores India’s economic resilience, projecting steady growth in the 6.8%–7.1% range in FY27 despite significant global uncertainty and geopolitical risks.