New Delhi [India], September 1 : Despite global headwinds ranging from tariff volatility to geopolitical tensions, NSE's Macro Review report notes that India's GDP momentum could ease over in next few quarters as higher tariffs begin to weigh on exports. At the same time, a possible rationalisation of GST rates ahead of the festive season, combined with ongoing personal income-tax changes, is expected to support consumption-driven sectors.
It cautions that fresh tariff actions and their ripple effects on exports and private investment could pose risks. The uncertainty around US tariffs, in particular, may temper corporate risk-taking.
The report expects India to stay on track to deliver its anticipated 6.5 per cent growth for the fiscal year. Domestically, possible GST rate rationalisation, cumulative 100 basis points cut in policy rates so far this year, and "Festive season impetus, favourable monsoon and sustained government thrust through capital expenditure are expected to underpin consumption and partially cushion the drag from adverse global cues," it stated.
The report noted that rural demand could get a lift from strong agricultural prospects, while urban consumption may benefit from stable inflation, higher disposable incomes, and recent income tax changes.
As per the report, on the supply side, gross value added (GVA) grew by 7.6 per cent, "powered by strong momentum in services (an eight-quarter high) and manufacturing (a five-quarter high), while agriculture benefited from a favourable low base. However, contraction in the mining sector and subdued growth in the electricity sector, driven by weather-related disruptions, tempered the overall upside."
India's real GDP growth for the first quarter of FY26 grew to 7.8 per cent year-on-year (YoY), the fastest in five quarters. The performance outpaced consensus estimates of 6.6 per cent and the Reserve Bank of India's 6.5 per cent projection, reaffirming the country's position as the world's fastest-growing major economy.
"The rebound was broad-based, propelled by resilient private consumption, buoyant Government spending, and steady investment demand," the report stated. A decline in inflation during the quarter also played a role, as the subdued GDP deflator lifted real growth. However, nominal GDP growth slowed to 8.8 per cent year-on-year, marking a three-quarter low and the second-weakest pace in the last 18 quarters.
Still, risks remain, particularly from renewed tariffs that could weigh on exports and private investments. A potential trade agreement with the United States, however, could open up new opportunities for growth.
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