India Ducks Trump Tariff to post 8.2% GDP Growth

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Manufacturing, exports and labour participation power strong FY26 first-half growth as CPI, WPI fall sharply

By S JHA

Mumbai, November 28, 2025 — India’s economic momentum remained robust in the first half of FY 2025–26, with real GDP estimated to grow 8.2% in Q2 and 8% during April–September (H1), according to a latest Press Information Bureau (PIB) note. The growth comes alongside an extraordinary easing of inflation, with Consumer Price Index (CPI) inflation falling to just 0.25% in October 2025, the lowest level in the current CPI series.

Nominal GDP recorded an 8.7% growth in Q2, reflecting broad-based sectoral expansion. The primary sector grew 3.1%, while the secondary and tertiary sectors expanded sharply by 8.1% and 9.2% respectively. In the first half of FY26, the secondary sector grew 7.6% and services surged 9.3%, driving overall momentum.

Inflation, WPI and Food Prices Drop Sharply

Retail inflation fell dramatically on the back of easing food prices. Food inflation stood at (-)5.02%, driven by lower prices of vegetables, fruits, oils, cereals and eggs. Rural inflation dropped to (–) 0.25%, while urban inflation remained subdued at 0.88%.

Wholesale inflation also softened further, with WPI inflation at (-) 1.21% in October 2025, while the WPI Food Index fell to (-)5.04%. The decline signals strengthening purchasing power and improving market sentiment.

The moderation in prices aligns with the RBI’s decision to maintain the repo rate at 5.50% with a neutral stance, reinforcing confidence in price stability and growth.

Industrial Output and Manufacturing Lead Growth

Industrial activity remained strong. The Index of Industrial Production (IIP) grew 4.0% year-on-year in September 2025, led by manufacturing growth of 4.8%.

Top contributors included:

Basic Metals: 12.3% growth
Electrical Equipment: 28.7% growth
Motor Vehicles & Trailers: 14.6% growth

The government credits flagship schemes such as Production Linked Incentive (PLI), Make in India, Skill India, GST reforms and the National Manufacturing Mission for strengthening India’s industrial base. The PLI scheme alone has attracted ₹1.76 lakh crore in investments with an outlay of ₹1.97 lakh crore across 14 strategic sectors.

Labour Market, Exports Show Resilience

The Labour Force Participation Rate (LFPR) rose to a six-month high of 55.4% in October 2025. Female participation climbed to 34.2%, while the unemployment rate remained stable at 5.2%. EPFO added 21.04 lakh net members in July 2025, reflecting rising formal employment.

India’s cumulative exports rose 4.84% during April–October 2025, underscoring resilience in global trade.

Already the world’s fourth-largest economy, India is on track to become the third largest by 2030, with GDP projected at USD 7.3 trillion, supported by domestic demand, investment revival and deepening global integration.

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