India's GDP Surges Despite Trump's Tariff Threats
US President Donald Trump imposed an additional 10 percent tariff on all countries in April. Despite this, India recorded the fastest growth in the five quarters during April-June. India’s GDP has seen a tremendous bounce amidst Trump Tariff. India’s GDP has increased by 7.8% in the first quarter of FY 2025-26, beating the estimates. The world remained shocked. It has recorded the fastest GDP growth after five quarters. The growth rate was 6.5 percent in the same quarter last year. In the first quarter of FY 2025-26, Real GDP is estimated at ₹ 47.89 lakh crore, compared to ₹ 44.42 lakh crore in the first quarter of FY 2024-25, which shows a growth rate of 7.8%. This growth in the economy has come at a time when American president Donald Trump has been threatening to put tariffs on India since April 2025.
Nominal GDP has a growth of 8.8% in the first quarter of FY 2025-26. Agriculture and allied sector growth rate (GVA) was 3.7 percent, 1.5 percent in the first quarter of 2024-25. Manufacturing growth rate was 7.7 percent against 7.6 percent. Growth of trade, transport, communication services increased from 5.4 percent to 8.6 percent. Financial, real estate growth rate increased from 6.6 percent to 9.5 percent. The growth of mining was negative, compared to 6.6 percent last year -3.1 percent. The growth of utility services like electricity, gas also declined from 10.2 percent to 0.5 percent.
The mining sector has a growth of -3.1% and 0.5% in electricity, gas, water supply, and other utility services sector. The actual private final consumption expenditure (PFCE) has recorded a growth rate of 7.0% during the first quarter of FY 2025-26, compared to 8.3% growth rate in the same period of the previous financial year. Primary, Secondary, and Tertiary Sector grows 2.8%, 7%, and 9.3%, respectively. The central government’s capital expenditure increased by 52%, which led to the promotion of development. Economists believe that consumption may be supported by rationalizing GST, cuts in interest rates by RBI, and quarters coming from favorable monsoon. However, global trade remains a risk. The World Bank and International Monetary Fund (IMF) have estimated India’s growth to be 6.3% and 6.4% in FY 2025-26.
For maintaining the sustainability of high growth rate in GDP, India needs to motivate companies to transfer production to India by strengthening global supply chains and taking advantage of geopolitical stresses. Motivating people to use indigenous goods and services can lead to increased demand in the domestic market and boost production. Promoting overall economic activity by improving business, hotel, transport, communication, financial, real estate, and professional services is crucial. Both the government and private sector should emphasize investment in infrastructure, such as capital expenses.
According to the IMF, India’s economy will become the third largest economy in the coming years, leaving behind Germany. The latest report states that despite the US heavy tariff, India’s economy may overtake the US in terms of PPP by 2028. GDP growth figures have been better than estimated. In such a situation, it can be said that the country’s economy is going beyond the speed of the bullet train.
