India’s growth likely cooled to 7.2% as external demand weakens

India’s economy likely expanded 7.2% in the January-March quarter, down from 7.8% in the previous period, as softer external demand and weaker industrial activity offset still-solid government spending and agriculture. A poll of 45 economists, taken between May 22 and June 1, put estimates in a wide 6.1% to 7.7% range and pointed to gross value added rising 7.3% for the quarter.

The slowdown would still leave India as the world’s fastest-growing major economy, but the pattern is becoming more uneven. Higher U.S. tariffs on Indian goods and the conflict involving Iran have added to global uncertainty and helped push crude prices sharply higher. That external drag is landing at a time when domestic private investment remains weak, a concern because investment is supposed to generate higher-quality jobs for millions of new workers entering the labor force each year. In that gap, government capital expenditure is carrying more of the burden. Services are expected to remain a bright spot, supported by credit growth and tax collections, while manufacturing looks more subdued.

The official GDP release is due Friday, June 5, and it will be the second quarterly print under the revised national accounts series after the Ministry of Statistics and Programme Implementation changed the base year to 2022-23 from 2011-12 and updated major estimation methods. The National Statistics Office has said annual GDP and fourth-quarter GDP estimates will be released on June 7, or the previous working day if June 7 is a holiday. Those revisions matter because they can change how markets and policymakers read the economy’s underlying strength.

Recent hard data point to a mixed backdrop. India’s updated Index of Industrial Production series showed April industrial output growth of 4.9%, the first release under the new base year, suggesting softer factory momentum heading into the GDP print. On trade, merchandise exports in FY26 were $441.7 billion, up just 0.9% from FY25, underscoring the strain from weak global demand and geopolitical disruption. At the same time, total exports in April 2026 were estimated at $80.80 billion, while imports reached $88.61 billion.

The Reserve Bank of India’s Survey of Professional Forecasters still sees 6.5% GDP growth in 2025-26, with private final consumption expenditure and gross fixed capital formation also projected to rise 6.5%. That leaves India with enough domestic demand to keep growing, but not enough yet to fully insulate it from a softer external environment.