India's Q2 FY26 GDP growth likely stayed firm on strong domestic demand
- IBEF
- November 28, 2025
India’s economy is expected to have remained resilient in the Q2 FY26, supported by firm consumer demand and a surge in production and exports ahead of the United States (US) tariff hike. Economists noted that exporters accelerated shipments before the tariff increase in late August 2025, which doubled duties on select Indian goods to 50% due to India’s purchases of Russian oil. Prime Minister Mr. Narendra Modi has sought to strengthen domestic growth through tax reforms and labour measures while resisting pressure from the US to reduce tariffs across sensitive sectors, including agriculture. A Reuters poll showed that gross domestic product (GDP) likely rose 7.3% in Q2 FY26, compared with 7.8% in Q1 FY26, keeping India the fastest-growing major economy. Gross value added, seen as a steadier gauge of activity, was estimated to expand 7.15%. The Ministry of Statistics will release the official data for Q2 FY26 on November 28, 2025.
Economists said private consumption and public investment would support growth, though private capital expenditure may slow due to global uncertainty. Deutsche Bank Chief Economist Mr. Kaushik Das projected 7.7% growth for Q2 FY26, moderating to 6.5% in Q3 FY26 and 6.3% in Q4 FY26. Inventory build-up for the festival season and export front-loading may have further strengthened activity, according to ICRA Chief Economist Ms. Aditi Nayar. However, the high base effect and tariff impacts may weigh on growth in H2 FY26. The government said strong demand, stable public spending, and easing inflation would support momentum through FY26. The International Monetary Fund (IMF) expects growth of 6.6% in FY26 and 6.2% in FY27. Analysts noted that subdued inflation has limited nominal growth, though it provides room for monetary easing, with the Reserve Bank of India expected to cut its policy rate by 25 basis points to 5.25% on December 5, 2025.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.
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