India’s economy is projected to grow 7.35% in Q2 FY27, supported by industrial activity, strong consumption indicators, higher exports and resilient domestic demand.
India’s economy is expected to maintain its growth momentum during the second quarter of the financial year 2026–27, with economic growth projected at 7.35%. The estimate was highlighted in the Ministry of Finance’s Monthly Economic Review for October 2026.
The report points to continued strength across several areas of economic activity, including industrial production, energy consumption, transportation and consumer demand. Robust Goods and Services Tax (GST) collections and improving automobile sales have also contributed to the positive outlook.
These indicators suggest that economic activity remains broad-based, with multiple sectors supporting the country's growth trajectory.
Higher industrial output and energy consumption have emerged as important contributors to India's economic momentum.
Industrial activity reflects the performance of manufacturing and other production-related sectors, while rising energy consumption indicates continued demand from businesses and households.
The Finance Ministry's review identified these developments as signs of sustained economic activity. Stronger production and energy demand can support business operations, investment and employment across different industries.
The report also highlighted healthy GST collections and rising automobile sales as indicators of resilient domestic demand.
GST collections provide an indication of economic transactions and business activity across the country. Consistent revenue performance can reflect continued demand for goods and services.
Meanwhile, automobile sales offer insights into consumer spending and market sentiment. Growth in vehicle purchases can also support connected industries, including automobile manufacturing, components, logistics and dealerships.
Together, these indicators point towards continued strength in India's domestic consumption environment.
Higher port traffic was another factor supporting the positive economic assessment. Port activity is closely connected with the movement of goods and international trade. An increase in traffic can reflect stronger cargo handling and transportation requirements across the logistics network.
The Finance Ministry included this indicator among the signs of India's ongoing economic momentum, alongside industrial production, energy consumption and tax collections.
India's external sector has also demonstrated resilience despite uncertainty in the global economic environment.
According to the October Monthly Economic Review, the combined value of merchandise and services exports increased by 11% year-on-year in September 2026.
Merchandise exports recorded particularly strong growth, rising 23.1% compared with the corresponding period a year earlier. This made goods exports the primary contributor to the overall increase in India's exports.
The performance indicates that Indian exporters continued to find opportunities in international markets despite challenging global conditions.
Electronics and engineering products played a significant role in the increase in merchandise exports during September. The contribution of these sectors highlights the growing importance of manufactured goods in India's export performance.
Electronics exports reflect the expansion of India's manufacturing capabilities, while engineering goods remain an important component of the country's overseas trade.
Their strong contribution supports India's efforts to strengthen its position in global supply chains and expand the reach of domestic manufacturers.
The Finance Ministry's October review presents a positive picture of India's economic performance, supported by activity across industry, energy, logistics, taxation, automobiles and international trade.
The projected 7.35% growth for Q2 FY27 reflects the strength of domestic economic indicators, while the increase in exports demonstrates the resilience of the external sector.
Sustaining this momentum will depend on continued industrial activity, consumer demand and the ability of Indian businesses to remain competitive in global markets.
Conclusion
India’s projected 7.35% economic growth in Q2 FY27 reflects the strength of its domestic economy and external trade performance. Rising industrial output, energy consumption, GST collections, automobile sales and exports are supporting this positive outlook. Continued momentum across these sectors will be important for sustaining economic growth and strengthening India’s position in the global economy.