India grew faster than widely expected in July-September 2025 as a surge in consumption and manufacturing offset impact of US tariffs on the world’s fourth largest economy.
India’s GDP growth rate stood at 8.2% in Q2 FY26 as against 7.8% in Q1 FY26 and 5.4% in the year-ago period, according to government data released on Friday. Economists polled by Reuters had estimated the GDP print at 7.3%, while an SBI Research report pegged the figure at 7.5%. Bloomberg had estimated the figure at 7.4%.
- Consumption rose 7.9% YoY in Q2 FY26 vs 7.0% in Q1 FY26
- Manufacturing output rose 9.1% YoY in Q2 FY26 vs 7.7% in Q1 FY26
- Construction activity grew 7.2% YoY in Q2 FY26 vs 7.6% in Q1 FY26
- Government spending down 2.7% YoY vs 7.4% up in Q1 FY26
On 23 August, the United States imposed 50% tariffs on India’s exports due to its import barriers and purchase of Russian oil, which President Donald Trump said was fueling Moscow’s war in Ukraine. On 22 September, GST 2.0 came into effect to reduce tax on hundreds of items—from soaps to small cars—to spur domestic production.
The impact of both the moves has yet to show meaningfully in India’s quarterly GDP growth rate figures.
Earlier, India’s inflation rate slumped to a record low of 0.25% in October 2025, raising chances of a rate cut by the Reserve Bank of India in its next monetary-policy review in December.