Indian Economy Records Strong Growth Despite Global Headwinds
India's economy registered a robust growth of 7.8% in the April-June quarter (Q1) of the fiscal year 2025-26, surpassing market expectations and reinforcing its status as the world's fastest-growing major economy. This impressive performance was attributed to factors such as increased government spending, healthy manufacturing sector growth, and improved consumer sentiment. Gross Fixed Capital Formation (GFCF) also recorded a 7.8% growth rate.
US Tariffs Cast Shadow on Export Outlook
Despite the strong GDP figures, concerns have mounted following the implementation of a steep 50% tariff by the United States on Indian products, effective August 27, 2025. This punitive tariff, a combination of an earlier 25% reciprocal tariff and an additional 25% penalty related to India's purchases of Russian oil, is expected to significantly impact India's export competitiveness. Labour-intensive sectors such as textiles, leather, jewellery, and auto are anticipated to be among the hardest hit. Analysts and credit rating agencies, including ICRA, fear that this tariff-induced uncertainty could lead to a tapering off of growth in subsequent quarters.
Government Pledges Support to Mitigate Tariff Impact
In response to the US tariffs, Commerce and Industry Minister Piyush Goyal announced that the Indian government is developing new measures to strengthen exports. These measures will focus on both domestic market outreach and diversifying trade to new international markets, particularly towards the Middle East. Chief Economic Advisor V Anantha Nageswaran expressed confidence that the Indian economy would still grow between 6.3% and 6.8% in FY26, anticipating that the high tariffs would be "short-lived" as bilateral talks for their removal are underway.
Indian Rupee Hits All-Time Low; Stock Market Declines
The Indian Rupee depreciated to an all-time low of 88.2960 against the US Dollar on August 29, primarily driven by concerns over the newly imposed US tariffs. The Indian stock market also reacted negatively to the tariff news, with both the Sensex and Nifty closing lower on August 29. The Sensex dropped 270.92 points to close at 79,809.65, while the Nifty 50 settled at 24,426.85, down by 74.05 points. Foreign Institutional Investors (FIIs) increased their short positions, contributing to the negative sentiment.
Reliance Industries Unveils Ambitious Growth Plans at AGM
In significant corporate news, Reliance Industries Chairman Mukesh Ambani addressed the company's 48th Annual General Meeting (AGM). He announced that Jio has surpassed 500 million customers and confirmed plans for a Jio Initial Public Offering (IPO) in the first half of 2026. Ambani also stated that Reliance aims to double its EBITDA by the end of 2027 and will form a new unit named "Reliance Intelligence" to drive its artificial intelligence ambitions. Additionally, Isha Ambani, non-executive director of Reliance Retail, highlighted the company's target of achieving a revenue CAGR of over 20% in the next three years.