The Financial Times and The Times of India reported on November 28 that India's economy has shown strong performance despite the pressure of U.S. tariffs. In the second quarter (July-September) of the fiscal year 2025-26, GDP grew by 8.2% year-on-year, marking the highest growth rate in six quarters. According to the data, this round of economic growth was mainly driven by the rapid expansion of manufacturing, construction, and services, as well as strong private consumption during holidays. Data shows that the manufacturing sector grew by 9.1%, the construction sector by 7.2%, and the tertiary industry by 9.2%. Among them, the financial, real estate, and professional services sectors saw an increase of up to 10.2%. At the same time, personal final consumption expenditure (PFCE), which measures the total consumption of households and non-profit institutions on goods and services, increased by 7.9% in this quarter, higher than 6.4% in the same period of the 2024-25 fiscal year. Analysts believe that part of the reason for India's current economic growth may be due to an abnormally weak GDP deflator (the ratio of nominal GDP to real GDP, which comprehensively reflects the overall price changes in a country or region), as well as the Modi government's ongoing efforts to reduce taxes and optimize the business environment. However, some analysts have warned that such high growth rates "are difficult to sustain." If the U.S. continues to impose punitive tariffs on India, it could put pressure on India's external economy, posing significant short-term risks to India's economic outlook. In response, Indian officials stated that India expects to sign a trade agreement with the U.S. before the end of 2025.
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