India’s economy is expected to grow at 6.5% in FY26 despite global geopolitical tensions and trade policy uncertainty, according to S Mahendra Dev, Chairman of the Economic Advisory Council to the Prime Minister (EAC-PM).In an interview with PTI, Dev said the outlook is supported by a combination of domestic tailwinds such as low inflation, a benign interest rate environment following RBI’s three consecutive rate cuts, and expectations of a good monsoon.“There are significant global headwinds like the twin shocks of geopolitical tensions and trade policy uncertainties. However, the Indian economy is resilient and continues to be the fastest growing country among large economies,” he said.High-frequency indicators for April and May suggest domestic growth remains robust, Dev noted, adding, “A 6.5% GDP growth for FY26 is feasible despite global uncertainties. India’s medium-term growth prospects seem to be robust with sound fiscal management.”While the International Monetary Fund (IMF) and World Bank have cut India’s FY26 growth forecasts to 6.2% and 6.3% respectively, Dev said domestic momentum remains strong due to rising public capex, healthy consumption patterns and improving rural demand.He highlighted that India’s recent disinflation trends — CPI headline inflation in June stood at 2.10%, the lowest since January 2019, while food inflation was at -1.06% — would also support the growth cycle. RBI has projected average inflation at 3.7% for FY26, assuming a normal monsoon.“Projections show continued moderation in the prices of many commodities, including crude oil. Of course, we have to be watchful about geopolitical uncertainties and tariff-related tensions,” Dev told PTI.On capital flows, Dev addressed concerns about net outward FDI, explaining that while exits and repatriation are part of a mature investment ecosystem, India continues to attract strong gross FDI inflows — which rose 14% in FY25.“Higher gross FDI indicates that India continues to remain an attractive investment destination. Unless you enable exit, the country can’t attract investment,” he said.He also flagged a rise in non-resident deposits and external commercial borrowings in FY25 compared to FY24.Discussing investment dynamics, the EAC-PM chairman said the government’s capex push will crowd in private investment, citing evidence from rural infrastructure projects like national highways and rural roads boosting business activity.“There are some green shoots on private capex. Many state governments are also attracting domestic and foreign private investment. Corporate balance sheets are in good shape, and the banking sector is profitable,” Dev said.He acknowledged that some firms may be holding back on capacity expansion due to global uncertainty and overcapacity in countries like China. But improving domestic demand could unlock further investment.“India Inc has to make new investments instead of keeping the cash,” he said, adding that further progress on ease of doing business at the state level and clarity on trade tariffs would provide an added boost.“Hopefully, private capex will be more once domestic demand increases further and global uncertainties are reduced,” Dev said.