India’s economy likely remained robust in the July–September quarter, supported by strong consumer demand and accelerated production and exports ahead of U.S. tariff hikes. However, economists expect growth to ease in the coming quarters. Exporters reportedly rushed shipments before the U.S. doubled tariffs on select Indian goods in late August due to New Delhi’s purchases of Russian oil. Domestically, Prime Minister Narendra Modi has focused on tax reductions and labour reforms while holding off on U.S. pressure to lower tariffs across major sectors, including agriculture.

A Reuters poll estimates GDP grew 7.3 per cent year-on-year in Q2, slightly below the previous quarter’s 7.8 per cent but still keeping India as the fastest-growing major economy. Gross value added (GVA), viewed as a more stable gauge, is expected to rise 7.15 per cent. Official Q2 data will be released Friday at 1030 GMT. Private consumption and public investment are likely to have driven growth, though private capital expenditure may soften amid global uncertainty, said Kaushik Das of Deutsche Bank. He projects 7.7 per cent growth in Q2, slowing to 6.5 per cent in Q3 and 6.3 per cent in Q4.

A buildup of inventories ahead of the festival season and export activity front-loaded before tariff increases may have also contributed, according to Aditi Nayar of ICRA. Still, economists caution that growth could cool in the latter half of the year due to a high base and tariff effects. The government’s latest economic report says India should be able to navigate trade uncertainties and maintain momentum through fiscal 2025/26, supported by strong demand, steady public expenditure, and easing inflation. The IMF forecasts growth of 6.6 per cent this fiscal year and 6.2 per cent in the next.

Although real growth has been strong, low inflation has dampened nominal growth, affecting tax revenues, credit uptake, and corporate earnings, JP Morgan economists noted. Softer inflation has created room for monetary easing, and India Ratings’ Devendra Pant said the RBI may opt for a rate cut to lift nominal growth. The central bank is expected to lower the policy rate by 25 basis points to 5.25 per cent on December 5, according to a Reuters survey.