India’s GDP growth seen at 7.7% in Q3 on strong manufacturing push

New Delhi: India’s GDP growth remains strong and is expected to reach 7.7 per cent year-on-year in the October-November period (Q3), with GVA growth estimated at 8.1 per cent, a report by BofA Global Research said on Thursday.

BofA maintains its full-year FY27 GDP growth forecast at 7.4 per cent, with modest upside risks, projecting 7.5 per cent growth for FY28.

The growth reflects resilient economic momentum despite global supply-side headwinds from the West Asia disruption, uneven monsoons, and weakness in the farm sector.

Strong industrial and manufacturing activity, along with sustained consumer demand and credit growth, is expected to support overall growth.

Manufacturing is expected to grow around 12 per cent, supported by stronger industrial activity, with IIP growth rising to 7.3 per cent in Q3 from 6.2 per cent in Q2, the report showed.

Auto sales, power demand, and freight activity remain strong, while bank credit growth continues at around 20 per cent.

“We expect the H1 FY27 GDP growth to now average at 7.7 per cent YoY, modestly lower than 8.1 per cent YoY in H2 FY26. We continue to project GDP growth for the full year at 7.4 per cent YoY for FY27 but see modest upside risks to our GDP growth projections,” said the report.

The nominal GDP growth estimate for Q2 FY27 is around 13.9 per cent YoY, which will be the highest nominal growth print in almost four years.

“We expect the growth momentum to hold in the next fiscal year and keep our forecast unchanged for FY28 at 7.5 per cent YoY.

The growth momentum in India appears quite resilient, however, the downside risks to activity appear largely global in nature.

While oil prices have receded recently, the geopolitical backdrop remains uncertain, and if oil prices stay elevated going into 2027, then downside risks to growth may start climbing again.

Elevated oil prices, geopolitical uncertainty, potential El Nino-related rural weakness, and further RBI rate hikes could pose downside risks to growth, said the report.