India's GDP Surges Despite Trump's Tariff Threats
India's GDP has witnessed a significant 7.8% growth in the first quarter of FY 2025-26, outpacing global expectations and defying the economic challenges posed by US President Donald Trump's tariff threats.
India GdpTrump TariffEconomic GrowthInfrastructure InvestmentGlobal Supply ChainsReal EstateAug 31, 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.
Frequently Asked Questions
What was the growth rate of India's GDP in the first quarter of FY 2025-26?
India's GDP grew by 7.8% in the first quarter of FY 2025-26.
How did the manufacturing sector perform in the first quarter of FY 2025-26?
The manufacturing sector grew by 7.7% in the first quarter of FY 2025-26.
What measures are suggested to maintain high GDP growth in India?
To maintain high GDP growth, India should motivate companies to transfer production to India, strengthen global supply chains, and promote the use of indigenous goods and services. Additionally, investment in infrastructure is crucial.
What is the projected growth rate of India's economy according to the World Bank and IMF?
The World Bank and IMF have estimated India’s growth to be 6.3% and 6.4% in FY 2025-26.
What is the IMF's prediction for India's economic position in the coming years?
According to the IMF, India’s economy will become the third largest economy in the coming years, surpassing Germany. The latest report also suggests that India’s economy may overtake the US in terms of PPP by 2028.
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