Archive · 17 Nov 2025
India's GDP Growth Expected to Slow to 7% in Q2 FY2026, Driven by Industrial Activity
India's economy is expected to grow a bit slower in the next few months, about 7%, compared to the previous period.
This is because the services sector and farming are not growing as fast.
However, factories and industries are expected to do better because people are buying more things for the festive season, and some companies are sending goods out of the country earlier than usual.
Even though construction is doing well, the government is not spending as much money as before, which also slows down the economy a little.
While some goods might be bought more often, other fancy items might just become more expensive.
India's GDP growth is projected to slow to 7% in Q2 FY2026, down from 7.8% in Q1.
The deceleration is mainly due to a slowdown in the services sector and agriculture, despite expected improvement in industrial activity.
Industrial GVA is forecast to reach a five-quarter high of 7.8%, driven by festive stocking, GST-cut-led demand, and early exports.
Manufacturing GVA could reach 9%, supported by strong merchandise exports, including electronics.
Government spending growth has slowed, and revenue expenditure has weakened, impacting overall economic pace.
- Who
- ICRA (rating agency), Indian economy, government, consumers
- What
- Projected slowdown in India's GDP growth for Q2 FY2026, with moderating GVA growth across sectors.
- When
- September quarter (Q2 FY2026)
- Where
- India
- Why
- Deceleration attributed to a slowdown in the services sector and softer agricultural output, partially offset by improved industrial activity driven by festive stocking, GST cuts, and early exports.
Factors Aiding Growth
Factors Slowing Growth
Sectoral Performance
Factors Aiding Growth
Industrial GVA is expected to reach a five-quarter high of 7.8%, driven by festive stocking, GST-cut-led demand, and front-loaded exports. Manufacturing GVA could reach 9%, boosted by merchandise exports, including electronics.
Factors Slowing Growth
Services GVA is projected to ease to 7.4% from 9.3%, and agriculture is set to expand at 3.5%. Government spending growth has slowed, and states saw a contraction in expenditure.
Consumer Behavior
Factors Aiding Growth
GST rationalisation is expected to provide a steady boost in volumes for consumer non-durables.
Factors Slowing Growth
Consumer durables may see a trend of premiumisation rather than a sustained spike in volumes seen during the festive season.
- Projected GDP Growth (Q2 FY2026)
- 7.0%
- Projected GVA Growth (Q2 FY2026)
- 7.1%
- Projected Industrial GVA Growth (Q2 FY2026)
- 7.8%
- Projected Manufacturing GVA Growth (Q2 FY2026)
- 9.0%
- Projected Services GVA Growth (Q2 FY2026)
- 7.4%
- Projected Agriculture GVA Growth (Q2 FY2026)
- 3.5%
- Government Spending Growth (Q2 FY2026)
- Slowed from 52% in Q1 to 30.7%
