Market Radar India: Economy set for 7.4% growth

Robust GDP projections defy trade tensions while real estate and AI infrastructure attract record capital inflows

January 13, 2026Real Estate

Key Takeaways

India retains its title as the world's fastest-growing major economy with a projected 7.4% GDP rise despite punitive US tariffs and concerns that weaker nominal growth could impact fiscal targets.
Real estate investments hit a record USD 8.5 billion in 2025 as domestic capital doubled to outpace foreign funds, while office assets surged on demand from GCCs.
Tech giants have pledged approximately USD 67.5 billion to build AI infrastructure and data centres in the country, which addresses a critical gap between the nation's high data generation and low storage capacity.

The Macro View

GDP Growth Forecast

The Indian government projects economic growth will reach 7.4% for the financial year ending in March which reinforces the nation's position as the fastest-growing major economy.

This forecast arrives despite significant external pressure, specifically the 50% tariffs imposed by the US on key Indian exports. Domestic demand appears resilient with private consumption expected to expand by 7% and government spending estimated to rise by 5.2%.

However, the nominal GDP growth projection of just 8% has raised concerns amongst economists regarding tax revenue collections and potential expenditure compression to meet deficit targets.

While fast-moving consumer goods sales are tracking higher, data indicates that the frequency of shopping trips for daily essentials stagnated in 2025, suggesting uneven consumption patterns.

Sector Watch

Real Estate Investment Trends

The property sector has demonstrated remarkable strength by attracting a record USD 8.5 billion in institutional investments in 2025, marking a 30% year-on-year increase.

A significant shift towards self-reliance is also evident as domestic institutional investments doubled to USD 4.8 billion and now account for 57% of total inflows.

Commercial assets remain the primary driver as investments in office properties nearly doubled to USD 4.5 billion. Bangalore recorded a massive 277% rise in inflows driven by the expansion of Global Capability Centres (GCCs).

Looking ahead to 2026, annual office demand is projected to stabilise between 70 and 75 million square feet, with GCCs expected to contribute nearly half of this leasing activity.

Trend Spotlight

Data Centre Infrastructure

A substantial capital wave is targeting India's digital infrastructure with major US technology firms committing approximately USD 67.5 billion over the next five years for data centres and AI projects.

This surge addresses a critical infrastructure gap given that India generates nearly 20% of global data but currently holds only 3% of storage capacity.

Cities such as Hyderabad are emerging as key hubs due to favourable policies and power availability. The nation's total data centre capacity is poised to rise to 2 GW in the coming years which represents one of the largest single-sector investment trends in the country.