India`s Growth Pulse May 2026

India’s Growth Pulse: Tracking India’s Economic Momentum

May 2026
12th Issue
15 min read

Contributors

Manasa Sriram

Editor, India Growth Pulse

Ashish

Policy Spotlight Author

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Executive Summary

The May 2026 edition of India’s Growth Pulse tracks India’s economic performance through April 2026 and shows an economy expanding with confidence while navigating external pressure points. GDP growth was estimated to rise to 7.7% in FY2025-26, supported by manufacturing, construction, services, public investment and resilient domestic demand. Industrial output, PMI indicators, GST collections and exports remained strong, while the trade deficit narrowed and foreign exchange reserves rose to $703.3 billion. The edition also examines the impact of the US/Israel-Iran conflict on India and places a policy spotlight on the approval of two semiconductor projects under the India Semiconductor Mission, positioning them as important steps in deepening India’s manufacturing and technology capabilities.

Key Developments

India’s real GDP growth was estimated at 7.7% in FY2025-26, up from 7.1% in FY2024-25.
Industrial output expanded 4.9% year-on-year, Manufacturing PMI improved to 54.7 and Services PMI rose to 58.8.
Gross GST collections reached a record ₹2.43 lakh crore in April 2026, growing 8.7% year-on-year.
Total exports rose 13.6% year-on-year to $80.80 billion, while the trade deficit narrowed to $7.81 billion.
Foreign exchange reserves strengthened to $703.3 billion, providing a buffer against global volatility.
Retail inflation remained contained at 3.48%, though food inflation rose to 4.20% and the rupee depreciated to ₹95.01 per US dollar.
India added 4,567 MW of renewable and non-fossil capacity in April 2026, led by solar additions.
Coal continued to account for 70.72% of electricity generation, highlighting the need for a pragmatic energy transition.
Steel and cement output remained strong, reflecting demand from infrastructure, construction and manufacturing.
The policy spotlight covered two new semiconductor projects worth nearly ₹3,936 crore under the India Semiconductor Mission, expected to create skilled employment and strengthen domestic capability.

Key Takeaways

April 2026 reflected strong growth momentum backed by domestic demand, tax formalisation, exports and infrastructure activity.
India’s external resilience improved despite West Asia-linked energy, freight and currency pressures.
Semiconductor project approvals signal a move from consumption scale to manufacturing depth.
The next phase of growth will depend on managing external risks, strengthening energy security, expanding productive employment and improving technology absorption.