India Posts 8.2% GDP Growth as GST Cuts Lift Demand; Economists Warn of US Tariff Risks

India’s economy accelerated sharply in the July–September quarter of FY26, with real GDP rising an estimated 8.2%, according to data from the National Statistics Office. The pace of expansion was significantly higher than the 5.6% growth recorded during the same period last year, driven by a rebound in manufacturing and steady momentum in services.

Economists say domestic demand strengthened meaningfully, supported by GST rate cuts and festive-season spending. Private consumption picked up despite a contraction in government expenditure, while manufacturing output recovered after earlier softness. Agriculture and services continued to provide stable support to growth.

Bank of Baroda economist Aditi Gupta said the upbeat demand outlook is likely to sustain into the second half of the year, though she warned that higher US tariffs could weigh on India’s exports if trade negotiations stall. Even so, she expects resilience in services exports to cushion some of the impact and has revised her FY26 growth forecast upward to 7.4%–7.6%.

A report by SBICAPS attributed the strong performance to an above-normal monsoon, robust services activity, GST rationalisation and improved construction momentum. It noted that while a 25% US tariff could pressure goods exports, stable global demand, remittances and strong services trade would help offset risks. The brokerage expects India’s GDP growth to remain above 7% for FY26, though it sees nominal GDP facing pressure as inflation moderates.

Industry bodies also praised the latest GDP reading. PHDCCI president Rajeev Juneja said the data reflects effective policy measures under the government’s long-term growth vision, while ASSOCHAM president Nirmal Kumar Minda said the broad-based expansion underscores the strength of India’s economic fundamentals despite global uncertainty.

Trade experts, however, warned that prolonged US tariffs could strain labour-intensive export sectors. GTRI founder Ajay Srivastava said domestic demand alone cannot replace lost foreign markets and urged policymakers to secure a rebound in exports to avoid a two-speed economy.