New Delhi: India's economy continues to exhibit robust performance and resilience against global economic turbulence, as highlighted by recent reports and statements from key officials. Finance Minister Nirmala Sitharaman stated that India is well-poised to absorb shocks and sustain its growth momentum, citing an average annual growth rate of 8% between 2021-22 and 2024-25, making it the world's fastest-growing major economy. The GDP expanded by a strong 7.8% in the April-June quarter of fiscal year 2025-26. This positive outlook was echoed by Russian President Vladimir Putin, who praised India's impressive economic growth under Prime Minister Narendra Modi's leadership.
A significant development impacting the domestic market is the recent implementation of GST rate cuts. These reductions are anticipated to ease inflation, with the Consumer Price Index (CPI) inflation projected to soften to 3.5% in the current fiscal year from 4.6% previously. The Finance Ministry's report suggests these cuts will also boost growth prospects. The benefits of these GST revisions are already being passed on to consumers, with price reductions observed across various daily essentials, food items, consumer electronics, and automobiles. For instance, entry-level hatchbacks have seen price cuts of approximately INR 40,000, and premium luxury SUVs up to INR 3 million.
Despite the domestic tailwinds, India faces external challenges, particularly concerning trade relations with the United States. Crisil Intelligence has warned that high tariffs imposed by the US on Indian goods pose a major risk to India's growth, potentially impacting both exports and investments. Ongoing trade talks between India and the US are complex, with reports indicating that the US is pressing India to halt its purchases of Russian oil to secure a trade deal. While US tariffs on branded drugs are a concern, Indian pharmaceutical firms are expected to largely evade the immediate impact, as their exports predominantly consist of generics.
In terms of infrastructure, Prime Minister Narendra Modi unveiled development projects worth over ā¹60,000 crore in Odisha, spanning telecommunications, railways, and higher education. Additionally, the government has approved a ā¹70,000 crore push for the shipbuilding industry, aiming to attract substantial investment. India's foreign exchange reserves, however, experienced a slight dip, standing at $702.57 billion as of September 19.
Sector-specific performance remains mixed. India's smartphone exports surged by 39% in August 2025, driven by a doubling of shipments to the United States. The food processing sector has witnessed remarkable growth, expanding 20-fold over the last decade. India is also emerging as a leading hub for third-party logistics (3PL) expansion in the Asia-Pacific region and is set to lead the global green hydrogen push. On the corporate front, HDFC Bank's Dubai International Financial Centre (DIFC) branch was barred by the local regulator from onboarding new clients.
Meanwhile, India-China business relations continue to be strained despite high-level discussions. Challenges persist with China holding rare earth magnet import applications and India maintaining restrictions, significantly impacting Indian auto and electronics companies.