India’s Q2 FY26 GDP Likely to Grow 7.5% Despite Tariff Pressures: Union Bank Report

India’s economy is expected to record 7.5% GDP growth in the second quarter of FY26, according to a new report from Union Bank of India. This would be a sharp improvement from the 5.6% growth seen in the same quarter last year.

The official GDP numbers for Q2 FY26 will be released on 28 November.

Union Bank said the expected growth remains strong even with the impact of the 50% U.S. tariffs. The report noted that many companies front-loaded exports ahead of the tariff changes, which helped support activity. Higher government spending also contributed to the overall GDP performance.

The bank expects Gross Value Added (GVA) to rise 7.3% in Q2, up from 5.8% last year, though still slightly lower than the 7.6% seen in Q1.
Nominal GDP growth, however, may slow to 8%, compared with 8.8% in Q1, due to lower inflation and a softer deflator.

Private-sector activity is expected to remain firm. GVA excluding agriculture and public administration is projected to grow 8%, similar to Q1, showing steady underlying momentum.

Union Bank warned that growth could slow in the second half of FY26 as base effects fade and inflation may rise in the fourth quarter. Delays in concluding the U.S.–India trade deal and the impact of earlier front-loaded exports may also weigh on activity.

The bank said GST rate cuts should support demand and help Q3 numbers. It has also raised its FY26 GDP growth forecast to 7.1%, but noted that nominal GDP could ease due to lower inflation.