India posts fastest growth in six quarters, cushions against trade strains

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Nov 30, 2025 - 22:39

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India posts fastest growth in six quarters, cushions against trade strains

India's economy grew at its fastest pace in 18 months in the July-September period, lifted by robust consumer spending and front-loading of production ahead of local festivals and punitive U.S. tariffs.

Strong growth in the world's fifth largest economy could boost Prime Minister Narendra Modi's standing domestically and give him room to negotiate a trade deal with the U.S. after Washington imposed tariffs of up to 50% on Indian goods imports, hurting sectors such as textiles, gems and jewellery, and food items.

India's economy (INGDPQ=ECI), opens new tab grew at a faster-than-expected pace of 8.2% in the quarter ended September against a forecast of 7.3% in a Reuters poll and 7.8% expansion in the previous quarter, data released on Friday showed.

"The 8.2% GDP growth in Q2 of 2025/26 is very encouraging. It reflects the impact of pro-growth policies and reforms," Modi said on X, adding the government will continue to advance reforms.

The Indian government has cut consumer taxes on hundreds of items and implemented long-delayed labour reforms in the last three months as it tries to keep the domestic economy strong in the face of global uncertainties.

"Now we can say comfortably that the full year growth will be either 7% or to the north of 7%," the government's chief economic advisor V. Anantha Nageswaran said at a press conference after the data was released.
He had earlier projected growth of 6.3% to 6.8%.

STRONG CONSUMER SPENDING

Private consumer spending, which accounts for around 57% of GDP, rose 7.9% year-on-year in July-September, compared with a 7% rise a quarter ago, the data showed.

To counter subdued external demand and mitigate the effects of U.S. tariffs tied to its Russian oil purchases, India introduced tax cuts on mass consumption items which kicked in at the end of September.

"The blockbuster GDP growth has been led by front-loading of exports," said Garima Kapoor, economist, institutional equities, at Elara Securities in Mumbai.

"With today's print, full-year FY26 GDP growth will now see an upside and will be close to 7.5%, way above the (central bank's) and government's estimate," Kapoor said.