India’s growth momentum is still on solid ground due to strong domestic demand, even with the global issues caused by the West Asia crisis.

According to the Finance Ministry’s July monthly economic review, industrial activity was more robust, with revised Index of Core Industries data showing a 5% year-on-year increase in June 2026, driven by cement, steel, iron ore, and electricity.

Among other things, it emphasized numerous policy and manufacturing activities conducted over the month, such as the new Mobile Phone Manufacturing Scheme, Semicon 2. 0, advances in shipbuilding and critical minerals, regulatory relief for manufacturers of Special Economic Zone (SEZ), and the debut of India’s first hydrogen fuel cell-powered train.

According to the report, these programs are bolstering domestic production capabilities, increasing supply chain resistance, and reducing reliance on concentrated import sources in important sectors.

The report did, however, point out that some high-frequency indicators, such as e-way bill generation and the manufacturing Purchasing Managers’ Index (PMI), displayed moderation, while the services sector expanded more quickly as a result of strong domestic and international demand.

The paper stated that India must constantly adapt to changing global concerns, along with internal reforms and cautious macroeconomic management, in order to maintain a strong growth trajectory and retain investor trust.

Implementing and acting on policy responses more quickly is essential to attracting foreign and domestic capital into the Indian economy. The last few years have been a period of battening down the hatches and hunkering down. The report indicated that the upcoming years would follow suit.

Additionally, it stressed that West Asia’s geopolitical conflicts have reappeared, raising worldwide energy costs and increasing unpredictability surrounding the worldwide inflation and growth prospects. Although the increase in crude oil prices has not reached the peak seen during the conflict’s early stages, the global economic situation is still clouded by renewed tensions.

The report cautions that higher global crude oil prices and increased West Asian tensions may jeopardize the fiscal deficit objective, which is scheduled at 4. 3% of GDP, and put strain on the current account balance.

The study indicates that global growth is expected to decline to 3. 0 percent in 2026 from 3. 2 percent in 2025, according to the International Monetary Fund’s July 2026 World Economic Outlook update. It also emphasized that fresh Middle East conflict and difficulties to international trade are significant risks to the downside.