The International Monetary Fund (IMF) has urged India to "fire on all cylinders" to sustain its economic growth and boost trade. This call to action comes as the IMF projects India to be the fastest-growing major economy, with a growth rate of 6.6% for 2025. However, the organization also anticipates a slight moderation to 6.2% in 2026.

Krishna Srinivasan, Director of the Asia and Pacific Department at the IMF, emphasized that India needs to focus on domestic demand, reforms, investment, innovation, and trade integration to achieve high growth. He highlighted the importance of balancing self-reliance with global trade, suggesting liberalization of trade and labor laws to compete effectively.

The IMF's projection for India's growth in 2025 is an upward revision of 20 basis points from its earlier forecast. This adjustment is attributed to a strong first quarter that offset the impact of increased US tariffs on imports from India. Despite this positive outlook, the IMF has lowered its estimate for 2026-27 by 20 basis points to 6.2%. This downward revision considers a potential fading of the momentum observed in the first quarter.

The IMF also predicts global real GDP growth at 3.2% for 2025 and 3.1% in 2026. While the global growth forecast for 2025 is up from previous estimates, the IMF warns that a renewed U.S.-China trade war could significantly slow output.

The Indian economy has shown resilience, with its GDP peaking at a five-quarter high of 7.8% in the quarter ending in June, driven by sectors such as manufacturing, services, and construction. The IMF acknowledges India's strong economic fundamentals and the positive impact of Goods and Services Tax (GST) reforms in offsetting tariff impacts.

To sustain its growth momentum, India needs to address several challenges. These include managing the impact of trade tensions and diversifying its sources for critical minerals. The IMF suggests that countries can cut non-tariff barriers, broaden and modernize trade agreements to cover services and digital trade, and ease Foreign Direct Investment (FDI) restrictions.

The IMF's message is clear: India has the potential to achieve even greater economic success, but it needs to proactively implement reforms and strategies to navigate global challenges and capitalize on its strengths. By focusing on domestic demand, embracing trade liberalization, and fostering innovation, India can "fire on all cylinders" and secure its position as a leading global economy.