India’s Surprising Growth Amid Tariff Pressures Raises Questions

BANGKOK, Dec. 3, 2025 — India’s economy posted an unexpected surge in growth in the July–September quarter, defying heavy U.S. tariffs and sparking debate among economists about the accuracy of official data.

Growth Numbers Defy Expectations

India’s gross domestic product expanded 8.2% in the third quarter, up from 7.8% in the previous period. The figure beat forecasts of 7.3% from a Reuters poll, surprising analysts who had expected tariffs to weigh more heavily on exports. The trade deficit nonetheless widened by nearly 1 trillion rupees ($11 billion) year-on-year.

Economists Question Data Reliability

Analysts warn that the headline numbers may be inflated due to calculation quirks. HSBC economists noted that manufacturing output was not properly deflated during a period of falling commodity prices, while the service sector deflator contained too many manufacturing elements. These distortions may have exaggerated real growth. Other indicators — such as record-low inflation at 0.25% in October, muted bond yields, and weak credit growth — suggest the economy may not be as overheated as GDP figures imply.

Domestic Demand Provides Cushion

Despite concerns, corrected estimates still point to growth around 7%. Supportive factors include:

• Consumption tax reforms ahead of the festive season, boosting household spending.
• A strong monsoon and low inflation, sustaining rural demand.
• Labor reforms that could strengthen long-term productivity.

Strategic Implications

India’s resilience has geopolitical consequences. The country may feel less pressure to scale back purchases of Russian crude oil, a key factor behind Washington’s tariff stance. Stronger growth could also embolden New Delhi in trade talks with the U.S., particularly on sensitive agricultural issues.