HSBC's Chief India Economist Pranjul Bhandari said on Tuesday, 9 June that India is actively cushioning itself against global economic turbulence by signing multiple trade deals with advanced economies, positioning the country to capitalise on the worldwide China+1 diversification strategy. Speaking from Singapore, Bhandari noted that India has sustained an average GDP growth of 6–6.5% over the past 12 years, providing a stable base to build on.

Trade Deals as a Growth Lever

Bhandari argued that the recent wave of trade agreements signals a meaningful strategic shift. “Once we have signed several trade deals with advanced economies, we may start seeing a lot more FDI coming into India. And, on the back of that, we manufacture more and export more,” she said.

She described the current global realignment as “a great opportunity” for India, as the world actively searches for new trade partners and alternative production hubs beyond China. The signing of several deals in recent months, she added, “gives me a sign that we are focused on it and we are taking it seriously.”

Double Supply Shock Clouds FY27 Outlook

Despite the structural optimism, Bhandari flagged a difficult near-term outlook for FY27, citing two simultaneous supply shocks. She described the current period as “a year of supply shock, energy shock,” with an additional El Niño climate shock expected to set in within the next couple of months.

“If you’re going to have a double shock — energy shock and also El Niño climate shock — then it’s very hard in a year like this to grow at a very rapid pace. And that’s not just for India. I think it’s about all the countries around the world,” Bhandari said, adding that all nations will have to bear the cost of navigating two concurrent supply disruptions.

HSBC's India Growth Forecast: 6% for FY27

HSBC has set its India GDP growth forecast at 6% for FY27, a moderation from the longer-term average, directly attributable to the energy and food price pressures now in play. Bhandari cautioned that the full impact has yet to appear in official data. “My sense is starting September quarter, for about two to three quarters, growth could see a fair amount of moderation, because of the energy and food shock that we are in the midst of,” she noted.

This comes amid broader global uncertainty, with major economies recalibrating supply chains and trade relationships in response to geopolitical shifts. India’s potential growth, Bhandari stressed, hinges on its ability to expand in a “sustainable” manner rather than chasing short-term headline numbers.

What to Watch

The trajectory of India’s FDI inflows following recent trade agreements will be a key indicator of whether the China+1 opportunity is translating into on-ground investment. Markets and policymakers will also monitor the monsoon season closely, given the anticipated El Niño impact on food prices and rural demand. Growth data from the September 2025 quarter onwards is expected to provide the clearest signal of how deeply the dual shocks are biting.