India economy grows 8.2% in September quarter even as tariffs bite
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India’s economy grew faster than expected at an annual rate of 8.2% in the quarter ended September, partly affected by US 50% tariffs.
Growth accelerated from 7.8% in the previous quarter, when a lower deflator unexpectedly boosted real growth. The deflator measures how inflation affects the value of total output.
A Reuters poll of economists found that gross domestic product was 7.3% in the July-September period.
India’s nominal GDP, which does not take inflation or deflation into account, grew by 8.7% in the September quarter compared to 8.8% in the previous quarter.
The sharp improvement in the GDP growth rate was driven by the recovery in manufacturing and construction activities and domestic consumption. The government said financial and real estate professional services “maintained a significant growth rate” of 10.2% in the July-September period. a version.
Domestic consumption in the September quarter “pulled back” ahead of planned cuts in the goods and services tax, Axis Bank chief economist Neelkanth Mishra told CNBC’s “Inside India” program ahead of the release of GDP data.
A 50% customs duty on Indian goods exported to the US came into force in August. To cushion the impact, New Delhi announced sweeping GST tax cuts effective September 22 to boost domestic consumption.
Demand rose sharply in October, driven by record car and gold sales as GST cuts and an early cut in the individual income tax rate boosted disposable incomes. Despite this, India’s goods trade deficit has reached a new high due to weak exports and rising gold imports.
International Monetary Fund, in a report India’s real GDP is forecast to grow 6.6% in fiscal 2026, then fall to 6.2% in fiscal 2027, assuming a prolonged delay in the US-India trade deal, it said on Wednesday.
It is also estimated that India’s goods exports will decrease by 5.8% to $416 billion in fiscal 2026, while goods imports will increase by 2.4% to $746 billion.
“Despite external negativities, growth is expected to remain strong and supported by positive domestic conditions,” the IMF said in its statement, and its data also suggested that India will become a $5 trillion economy by fiscal 2029.
— CNBC’s Amitoj Singh contributed to this report.
