India’s economy is projected to expand at a robust 7.4 % in the financial year 2025–26, according to the first advance GDP estimates released by the government, even as steep tariffs imposed by the United States on certain Indian exports have raised concerns about external demand.

Key Highlights

• India’s GDP is projected to grow 7.4 percent despite headwinds from higher US tariffs.
• Strong domestic demand and investment activity are expected to offset external trade pressures.

The estimated growth rate marks a notable increase from the 6.5 % recorded in FY25, driven by strong domestic demand, elevated investment activity, and resilience across key sectors such as manufacturing and services. The figures also indicate a continued recovery in consumer spending and industrial output, helping offset global headwinds including trade tensions and tariff pressures.

Despite the imposition of up to 50 % tariffs by the U.S. on certain goods, the impact on overall economic momentum appears limited, in part because exports to the United States account for a relatively modest share of India’s GDP. Analysts point out that strong performance in the domestic economy — including private consumption, investment, and government spending — has helped sustain growth expectations.

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Nominal GDP — which reflects inflation and price changes — is also expected to rise, supporting broader macroeconomic stability as the country prepares its Union Budget for 2026–27. Growth momentum, policymakers say, will be critical in maintaining investor confidence and supporting job creation amid ongoing global uncertainties.

Overall, the advance estimates suggest that India’s economy remains on a strong trajectory, defying concerns about tariff impacts and demonstrating resilience in the face of international trade challenges.