Indian economy likely to grow at 6.5% in FY26: CII

New Delhi: India's GDP is projected to grow at 6.5 per cent in the current fiscal and the country's economy is resilient enough to overcome the short-term impact of geopolitical issues, CII president Sanjiv Puri has said.

In an interview with PTI, he asserted that the country must pursue bilateral trade pacts with key trading partners to protect national interests in the backdrop of increasing trade barriers.

Highlighting that the private investment is picking up across various sectors like energy, transportation, metals, chemicals and hospitality, Puri said the current geopolitical uncertainties could lead to "some cautiousness" in investment.

On the economic growth projection for India, he said, "We are looking at 6.5 per cent. We believe this number can be achieved fundamentally, because the fact is, we are starting with a reasonably good foundation, robust economic foundation".

Elaborating on the reasons, he said, "In the recent past, interest rates have eased. Inflation is becoming benign. There is this personal income tax concession taking in from the first of April. Investments picked up in public and private space in the latter half of last year".

On the high tariffs proposed by US President Donald Trump on several key economies and the trend of rising protectionism globally, Puri acknowledged that "more and more barriers to trade are coming in right now", suggesting that India should do bilateral trade agreements which are mutually beneficial and in the national interest.

"Therefore, the countries that India is pursuing, and the big ones among them, being the US and EU, are important. We should do whatever we have to do from a national interest perspective, and I think, most important is these bilateral trade agreements".

He also recommended the creation of a three-tier tariff architecture for certain areas to enhance competitiveness.

The CII president also emphasised the need to focus on the domestic drivers of growth and competitiveness.

He observed that a lot of work needs to be done on agriculture, climate change and adaptation.

"These domestic drivers of growth and competitiveness are where we should really press the pedal hard so these can kind of offset some of the uncertainties. I think further interest rate easing is another expectation," Puri said.

The rural demand is picking up, while urban has been a little flat, although it also should start moving up in a couple of quarters, he added.