India's economy expands 7.8% in Q1 despite regional tensions

India's economy continued its expansion trajectory in the June quarter, posting GDP growth of 7.8 percent year-on-year, official data showed. The result demonstrates the resilience of Asia's third-largest economy even as regional instability threatens global supply chains and investor sentiment across the subcontinent.

Gross value added, which measures the underlying productive capacity of the economy, expanded at a faster pace of 8.2 percent during the quarter. Manufacturing activity provided particular momentum, with the sector recording expansion of 9.2 percent, signalling robust demand in industrial production despite international uncertainties.

Investment activity accelerated sharply, with gross fixed capital formation rising 11.9 percent, suggesting that businesses and government remain confident in India's economic prospects. The acceleration in capex bodes well for job creation and long-term productive capacity, economists noted.

The first quarter performance places India on track to maintain growth momentum throughout fiscal 2026-27, though analysts cautioned that escalating geopolitical tensions and commodity price volatility could present downside risks to the economic outlook in coming quarters.