GDP Growth 2025: India’s Economy Accelerates to 8.2%

India’s economic engine delivered an extraordinary surprise in the second quarter of FY 2025-26, with India’s GDP Growth 2025 clocking a robust 8.2%, far surpassing projections by economists and even the Reserve Bank of India. The impressive six-quarter high reinforces India’s position as the world’s fastest-growing major economy, even as global conditions turn more unpredictable.

The latest figures are expected to push full-year GDP growth above 7%, strengthening confidence in India’s resilience at a time when several economies are grappling with slowing consumption, geopolitical uncertainty, and weakening trade flows.

What makes this performance particularly striking is its timing. The numbers arrive just weeks after US President Donald Trump imposed an aggressive 50% tariff on a wide set of Indian exports in late August—an action that risked weighing on India’s external sector. Yet, domestic momentum appears to have more than compensated for early trade shocks.

GDP: Domestic Drivers Power Ahead Despite External Turbulence

Economists attribute India’s stronger-than-expected results to the country’s consumption-led growth model, supported by the government’s sweeping GST rate revisions and recent income tax cuts. These measures, they say, have provided a financial cushion for households and businesses alike, allowing the economy to stay on course even as external winds blow harder.

But what explains the sharper-than-expected jump in real GDP? And why are economists paying close attention to the narrowing gap between nominal and real growth? The top seven numbers from India’s Q2 GDP data offer answers.

India’s Q2 FY 2025-26 GDP Growth: Top 7 Numbers

1. Real GDP growth strengthens to 8.2%

India’s real GDP expanded 8.2% in Q2 FY 2025-26, up sharply from 5.6% in the same quarter last year and edging past the 7.8% growth registered in Q1. Nominal GDP grew 8.7%, highlighting a narrower gap between real and nominal numbers, driven mainly by moderate inflation.

2. H1 growth averages 8%

Across April–September, real GDP growth stood at a healthy 8%, compared with 6.1% in the first half of last year—an indication of broad-based economic expansion.

3. Secondary and tertiary sectors lead the charge

Growth was particularly strong in the Secondary Sector (8.1%) and Tertiary Sector (9.2%), both of which contributed significantly to overall momentum.

4. Manufacturing and construction outperform

Manufacturing surged 9.1%, supported by rising capacity utilisation and stronger demand. Construction maintained a solid 7.2%, benefiting from infrastructure spending and housing demand.

5. Financial, real estate & professional services thrive

The Services sector continued its strong showing with 10.2% growth in Financial, Real Estate & Professional Services—a sign of buoyant credit demand, investment flows, and business activity.

6. Agriculture grows moderately

With a growth rate of 3.5%, agriculture offered steady but moderate support. Utility services such as electricity and water expanded by 4.4%, reflecting stable industrial demand.

7. Private consumption rebounds

Real Private Final Consumption Expenditure (PFCE) rose 7.9%, up from 6.4% a year earlier—reinforcing that a revival in household demand continues to underpin India’s economic trajectory.

GDP: Will Trump’s 50% Tariffs Slow India’s Growth Story?

So far, the impact of Trump’s steep tariffs appears muted. Economists believe this is partly due to front-loading of exports ahead of the tariff rollout and the fact that only September—one month of the quarter—saw the full brunt of the 50% levy.

However, the picture may change in the coming quarters if tariffs remain in force and if the India-US trade deal does not materialise soon.

Economic analysts offer mixed but measured views:

Exports may weaken if tariffs persist

Dipti Deshpande notes that export pressures may intensify in the second half:

“Higher US tariffs are likely to moderate global demand going forward. Export diversification to non-US markets will be crucial,” she says.

Rupee depreciation may soften the blow

Ramen Banerjee points out that exporters have already begun expanding into new geographies, reducing reliance on US-bound shipments. He adds:

“With the rupee weakening by 3.5% against the dollar, Indian goods become more price-competitive. This will offset part of the tariff impact.”

Net exports likely to remain a drag

DK Srivastava of EY expects net exports to continue subtracting from GDP:

“The negative contribution could increase unless US tariff rates are rolled back soon. But if the India-US trade arrangement progresses or the Russia-Ukraine conflict eases, some pressures on supply chains may reduce.”