New Delhi: India’s economy has registered a strong growth of 7.8% in the first quarter (April-June 2025) of FY 2025-26. This growth was mainly driven by strong performance of manufacturing (7.7%), construction (7.6%) and services sector (9.3%), while the agriculture sector has also improved and registered a growth of 3.7%.
According to government data, private consumption expenditure (PFCE) has registered a growth of 7% and gross fixed capital formation (GFCF) has registered a growth of 7.8%. However, sectors like mining (-3.1%) and utility services (0.5%) witnessed sluggishness.
Reacting to the GDP data, Chief Economic Advisor Dr. V. Anantha Nageswaran said that the high frequency indicators of July 2025 carry forward the economic momentum of Q1. He said that domestic demand will be further strengthened in the coming months due to the festive season and possible changes in GST rates.
He also said that agricultural production is expected to increase due to better monsoon and higher Kharif sowing, which will keep food inflation under control. Along with this, the raising of India’s sovereign rating to BBB by S&P is a proof of India’s strong economic foundation.
However, he also admitted that uncertainties regarding trade duty (tariff) may affect exports and capital formation. But he called it more of an opportunity than a crisis and said that this is the time to explore new markets and make India’s products more competitive.
Steps to increase exports
India-UK Free Trade Agreement (FTA) has been finalized.
Active trade talks are going on with the European Union, New Zealand, Chile and Peru.
Cotton import duty exemption has been extended till 31 December 2025 to support textile exports.
GST refunds have increased by 67% in July 2025, which will strengthen the cash position of businesses.
The Export Promotion Mission announced in Budget 2025-26 will provide support to export credit, cross border factoring and MSMEs.
The Finance Ministry said on Twitter that the rapid growth rate of Q1 reflects India’s strong economic fundamentals. The share of private consumption expenditure (PFCE) in GDP is the highest in the first quarter in the last 15 years.
FICCI Director General Jyoti Vij said that this 7.8% GDP growth reflects the resilience of the Indian economy amid global uncertainties. Domestic demand and new business opportunities will help industries overcome global challenges.
Key Points (Q1, FY26 GDP Highlights):
Real GDP growth: 7.8% (Q1 FY26) vs 6.5% (Q1 FY25)
Nominal GDP growth: 8.8%
Agriculture sector: 3.7% growth (Q1 FY26) vs 1.5% (Q1 FY25)
Manufacturing and construction: 7.7% and 7.6% growth respectively
Services sector: 9.3% growth (Q1 FY26) vs 6.8% (Q1 FY25)
Government spending (GFCE): 9.7% growth (nominal)
Private spending (PFCE): 7% real growth
Capital formation (GFCF): 7.8% growth
India once again remains the world’s fastest growing large economy in the April-June 2025 quarter.
