India's Growth Pulse February, 2026

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

February 2026
9th Issue
15 min read

Contributors

Manasa Sriram

Lead Editor

Ankit Jha

Editor

Khushi Mahajan

Author

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Executive Summary

The February 2026 edition of India’s Growth Pulse tracks India’s economic performance through January 2026, highlighting continued macroeconomic stability supported by steady growth, resilient industrial activity, contained inflation, strong tax collections and expanding clean-energy capacity. The report also spotlights the India-European Union Free Trade Agreement, positioning it as a major strategic economic alignment that expands market access, supports export diversification and strengthens India’s long-term competitiveness. While the macro picture remains broadly resilient, the edition notes mixed external sector trends, faster import growth and seasonal moderation in labour market indicators.

Key Developments

India’s GDP growth was projected at 7.4% for FY2025-26, supported by services, manufacturing, construction and resilient domestic demand.
Industrial output grew 4.8% in January 2026, with manufacturing, basic metals, automobiles and cement-linked sectors supporting expansion.
Manufacturing PMI rose to 55.4 and Services PMI increased to 58.5, signalling continued expansion in both industrial and services activity.
Retail inflation stood at 2.75% under the revised CPI series, remaining within the RBI’s tolerance band.
Merchandise exports grew to $80.45 billion, while faster import growth widened the trade deficit.
Foreign exchange reserves strengthened to $723.8 billion, enhancing India’s external buffer.
Gross GST collections rose 6.2% year-on-year to ₹1.93 lakh crore and net direct tax collections grew 8.8%.
Labour indicators showed mild seasonal softening, with unemployment rising to 5.0%.
Rabi sowing expanded to 676.84 lakh hectares, supporting rural momentum.
India added 5,181 MW of non-fossil capacity in January 2026, taking total non-fossil capacity to 271.97 GW.
The policy spotlight analysed the India-EU FTA, including tariff liberalisation, services access, investment linkages and implications for manufacturing and exports.

Key Takeaways

January 2026 data points to a stable macroeconomic environment with growth, inflation and fiscal indicators broadly aligned.
The India-EU FTA represents a strategic trade milestone with potential to improve export competitiveness and attract investment.
Implementation will be critical, especially for sensitive sectors such as agriculture, dairy, MSMEs and carbon-intensive exports affected by the EU’s CBAM framework.
Clean-energy capacity expansion and stronger steel trade dynamics reinforce India’s broader manufacturing and infrastructure momentum.