India Q3 GDP growth seen at 7.5% as manufacturing, exports surge: HSBC
Synopsis
HSBC Global Investment Research sees India's Q3 GDP expanding around 7.5%, backed by an 8% industrial output surge, a 21% non-oil export jump, and 70% of tracked indicators in positive territory — the broadest positive sweep since March. The picture is strong, but HSBC flags inflation and informal-sector stress as the risks to watch.
Key Takeaways
HSBC Global Investment Research projects India's Q3 GDP growth at around 7.5 per cent .
Industrial production grew 8 per cent in August ; non-oil exports rose 21 per cent .
Public capital expenditure expanded approximately 25 per cent during April–August ; credit growth stood at 19 per cent in September.
Around 70 per cent of indicators in HSBC's database showed positive growth in August, up from 52 per cent in the March–July period.
Goods exports grew 20 per cent year-on-year in volume and 26 per cent in value terms in August, led by electronics and engineering goods.
Risks include rising inflation, weather disruptions, and higher borrowing costs weighing on lower-income households and the informal sector.
India's economy is holding firm, with HSBC Global Investment Research projecting GDP growth of around 7.5 per cent in the third quarter, driven by a broad-based upturn in manufacturing, exports, investment, and credit. The assessment, released on Thursday, 1 October, points to a string of robust economic indicators that suggest the expansion remains resilient despite global headwinds.
Key Economic Indicators
The HSBC report highlighted several high-frequency signals underpinning its optimism. Industrial production expanded 8 per cent in August, while non-oil exports surged 21 per cent. Public capital expenditure during the April–August period rose by approximately 25 per cent, and credit growth came in at 19 per cent in September. Notably, around 70 per cent of the indicators tracked in the bank's database showed positive momentum in August — up sharply from 52 per cent during the March–July period.
Manufacturing and Export Momentum
Manufacturing has emerged as a particular bright spot. September's flash PMI signalled a sharp rise in new orders, reinforcing the sector's upward trajectory. Non-oil exports, led by electronics and engineering goods, have become a key growth engine: goods exports grew 20 per cent year-on-year in volume terms and 26 per cent in value terms in August alone. The report also noted that exports to the UK rose sharply following the implementation of the bilateral trade agreement, with similar potential gains anticipated from a deal with the European Union.
What Is Driving Investment
Investment activity has been bolstered by government-led infrastructure spending alongside private sector commitments in data centres, semiconductors, and renewable energy. Consumption has remained stable, helped by fuel tax cuts and a gradual pass-through of higher input costs. The report described the resilience as 'broad-based', even as disruptions from elevated energy prices and adverse weather conditions persisted. 'Overall, we are not too worried on growth,' the report concluded.
Risks on the Horizon
HSBC cautioned that growth could moderate as the tailwinds from accommodative monetary policy and GST reductions begin to fade. Rising inflation, weather-related supply disruptions, and higher borrowing costs are seen as potential drags on lower-income households and the informal sector — segments that are typically more vulnerable to tightening financial conditions. These risks, however, are assessed as manageable in the near term.
Outlook
The bank remains broadly optimistic, citing strong export momentum and the prospective upside from trade agreements with the UK and the EU. If current trends hold, India is on course to remain one of the fastest-growing major economies globally in the third quarter of 2026.
Point of View
But the composition of that growth deserves scrutiny. Public capex is doing heavy lifting — a 25% April–August surge is commendable, but it also means the expansion remains partly government-dependent. Private consumption's stability is credited partly to fuel tax cuts, which are a policy choice that cannot be sustained indefinitely. The real test of structural strength is whether the export surge — impressive at 20–26% in August — can outlast the current global demand cycle. HSBC's own caveat about informal-sector stress is the line that mainstream coverage tends to skip; it is also the one that affects the largest share of India's workforce.
NationPress
1 Oct 2026
Frequently Asked Questions
What is India's projected GDP growth for Q3 2026?
HSBC Global Investment Research has projected India's GDP growth at around 7.5 per cent in the third quarter of 2026, based on strong industrial output, export momentum, and credit growth data.
What economic indicators support India's strong growth outlook?
Key indicators include 8 per cent industrial production growth in August, 21 per cent non-oil export growth, approximately 25 per cent growth in public capital expenditure during April–August, and 19 per cent credit growth in September. Around 70 per cent of tracked indicators showed positive momentum in August.
What are the main risks to India's economic growth?
HSBC flagged rising inflation, weather-related disruptions, and higher borrowing costs as potential risks, particularly for lower-income households and the informal sector. Growth could also moderate as the effects of accommodative monetary policy and GST reductions fade.
Which sectors are driving India's export growth?
Non-oil exports — especially electronics and engineering goods — have emerged as key growth drivers. Goods exports grew 20 per cent year-on-year in volume and 26 per cent in value terms in August. Exports to the UK also rose sharply after the bilateral trade agreement came into effect.
What is driving investment activity in India?
Investment is being supported by government-led public infrastructure spending as well as private sector investments in data centres, semiconductors, and renewable energy, according to the HSBC report.
