6% Growth Predicted For India’s IT Sector In 2026: How Realistic Is It?

Authored by Charles Dennis

NASSCOM has predicted that India’s technology sector will grow by 6.1% year-on-year by the end of the fiscal year. Indeed, in recent weeks, India’s IT sector has struggled amid growing concerns about AI-driven disruption, yet the industry body’s estimate suggests renewed momentum.

The projection would value India’s technology sector at more than $300 billion by the end of March and add roughly 135,000 new jobs, according to NASSCOM. While modest by the sector’s historic double-digit standards, the forecast signals resilience at a time of mounting global uncertainty.

The question is, can the country meet such optimistic estimates?

With global technology markets showing signs of strain, particularly across software and IT services that form the backbone of India’s export model, the outlook deserves closer scrutiny for India’s IT sector growth 2026.

So, is NASSCOM’s 6% growth prediction in 2026 plausible, or is it just another unrealistic target intended to build hype and attract attention?

Why 6% Growth Could Be Achievable

The rollout of AI is at the crux of what comes next for India’s technology sector. The India AI Impact Summit 2026 last week made clear India’s aspirations as a leader in AI. Prime Minister Narendra Modi said he expected the event to display a “shared roadmap for global AI governance and collaboration”.

As global markets invest heavily in AI integration and automation, India is positioning itself as a key partner in this process. IT firms such as Tata Consultancy Services and Infosys are seeking to capture the wave of AI-related investment that has been seen in the United States.

As multinationals focus on large-scale AI deployment, India has the capacity to provide these services efficiently and at scale. The country has a skilled engineering workforce, producing 1.5 million engineers each year according to Forbes, which is primed to seize this opportunity. These factors support the outlook for India IT sector growth 2026.

Beyond international partnerships, India is also investing heavily in domestic tech infrastructure, from digital payments, e-governance to startups. This has created a domestic buffer that helps protect the sector amid a destabilising international environment.

India’s public has demonstrated a remarkable openness to this new technology, with The Linux Foundation reporting 87% of Indian enterprises using AI solutions. This stands in sharp contrast to Europe where AI has been met with greater hesitancy and concern. India’s IT services industry still earns most of its revenue from foreign contracts, but it is positioning itself to take advantage of domestic markets.

Although AI is at the centre of India’s tech growth, there is another important element in this equation. The “China Plus One” strategy, under which multinationals are diversifying supply chains away from China, is positioning India as an alternative market for IT services and electronics. This increase in manufacturing and outsourced services is further supporting India IT sector growth 2026.

Taken together, these factors are creating an optimistic environment for India’s IT sector, making the 6% prediction appear well within reach. However, analysts have cautioned that this projected growth may not be entirely secure.

The Risks That Could Derail India’s IT Growth

Although India’s domestic IT market is expanding, the sector still relies heavily on revenue from the United States and Europe, tying its performance closely to US interest rate cycles and corporate technology budgets. A slowdown in US enterprise spending or a pause in digital transformation projects would therefore have a significant impact on India’s IT sector growth 2026.

There is precedent for such vulnerability. During both the 2008 financial crisis and the Eurozone debt crisis, growth rates dropped sharply as foreign deals and investment contracted. This external exposure remains a structural constraint and continues to loom over projections of sustained expansion.

The more complex risk, however, is AI itself as a double-edged sword of opportunity and disruption. India’s IT sector traditionally expanded through large labour pools and long-term outsourcing contracts. Yet, AI is increasingly automating testing, coding and backend functions, reducing the need for large engineering teams. While this improves productivity, it also weakens the labour-intensive model that underpinned India’s tech dominance.

This shift is already reflected in NASSCOM’s projection of 135,000 new jobs this fiscal year, a decline from the hiring surges seen in the pre-pandemic boom years. At the same time, AI-skilled engineers are commanding higher salaries. Clients may seek cost savings through automation, but rising talent costs and tightening margins could make sustained 6% growth more difficult to maintain.

India’s IT model also depends on cross-border data flow and global AI deployment which could soon become fraught. The tightening of data sharing across the globe is increasing, especially in the EU, which is already increasing compliance costs for the sector. However, India’s own Digital Personal Data Protection Act 2025 has recently added additional challenges. This is expected to create operational friction which could slow down IT growth, a factor which could challenge this 6% growth estimate.

These factors show that while India’s IT sector has strong growth drivers, structural vulnerabilities, AI disruption and rising compliance challenges could temper its momentum and make the 6% target harder to reach for India IT sector growth 2026.