India's economy expanded 7.1% year-on-year in the October-December quarter of 2025, cementing its position as the fastest-growing major economy. Full-year growth for fiscal year 2025-26 is estimated at 6.8%, outpacing China's 4.6% and well above the global average of 3.1%. The data was released by the Ministry of Statistics and confirmed India as the world's fifth-largest economy by nominal GDP.
What Is Driving Growth
The services sector, which accounts for approximately 55% of GDP, grew 8.4%, driven by IT services exports, financial services, and a booming domestic travel industry. India's IT sector generated approximately $254 billion in revenue in fiscal 2025-26, with companies such as TCS, Infosys, and Wipro benefiting from global demand for AI and cloud computing services.
Manufacturing grew 5.9%, supported by the government's Production Linked Incentive (PLI) scheme, which offers subsidies to companies manufacturing in India. Apple supplier Foxconn expanded its Indian operations significantly, and domestic smartphone production reached 310 million units in 2025.
Infrastructure investment has been a priority, with government capital expenditure rising to 3.4% of GDP. New highways, railways (including bullet train corridors), and airport expansion projects have supported construction sector growth of 9.2%.
Digital Payments Revolution
India's Unified Payments Interface (UPI) processed 16.6 billion transactions worth $270 billion in December 2025 alone, making it the world's largest real-time payment system. The success of UPI has influenced India's approach to cryptocurrency, with the Reserve Bank of India developing a digital rupee (e-Rupee) that processed 7 million transactions in pilot programmes during 2025.
Challenges Ahead
Despite strong headline growth, challenges remain. Youth unemployment stood at 23% for those aged 15-29. The rupee weakened to approximately 86 per US dollar, and the current account deficit widened. Rural consumption growth has lagged urban areas, creating a two-speed economy.
For Indian economic data, visit the Ministry of Statistics India. For RBI policy decisions, see Reserve Bank of India.