India’s economy expanded at 8.2 percent in the July-September quarter, the fastest pace in six quarters, as manufacturing and services sectors powered growth despite facing steep U.S. tariffs. The National Statistics Office data released Friday exceeded most economist forecasts of around 7.3 percent, marking the second consecutive quarter of stronger-than-expected performance.
The growth, up from 7.8 percent in the previous quarter and 5.6 percent a year earlier, helped India maintain its position as the world’s fastest-growing major economy. Prime Minister Narendra Modi called the numbers “very encouraging,” crediting pro-growth policies and reforms, while Chief Economic Adviser V. Anantha Nageswaran said full-year growth would reach at least 7 percent, surpassing earlier projections of 6.3 to 6.8 percent.
Manufacturing and Consumption Drive Expansion
Manufacturing output surged 9.1 percent, a sharp rebound from 2.2 percent growth in the same quarter last year, while the services sector grew 9.2 percent, led by a 10.2 percent expansion in financial, real estate and professional services. Private consumption, which accounts for roughly 57 percent of GDP, rose 7.9 percent, boosted by GST rate cuts that took effect September 22.
The government consolidated GST rates from four slabs to two—5 percent and 18 percent—making everyday items cheaper and spurring discretionary spending. Factories ramped up production ahead of the festive season to meet anticipated demand from the tax reductions.
Growth Withstands U.S. Tariff Impact
The strong performance came despite the United States imposing 50 percent tariffs on most Indian exports beginning August 27, among the steepest measures under the Trump administration. The tariffs, linked to India’s energy trade with Russia, affected nearly $12.5 billion worth of exports.
Nageswaran said the economy would cross the $4 trillion mark this fiscal year, up from $3.9 trillion in March 2025. The State Bank of India raised its full-year forecast to 7.6 percent, while analysts from ICRA projected 7.4 percent growth.
Attention now turns to the Reserve Bank of India’s monetary policy meeting December 3-5, with economists widely expecting a 25 basis point rate cut as inflation fell to a record low 0.25 percent in October.
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