India’s economic growth has likely moderated in Q1 FY26, reflecting uneven momentum across sectors. We project real GDP growth at ~6.5% in Q1-FY26 (vs 7.4% in Q4-FY25), as industrial output slowed sharply while agriculture and services remained resilient. Growth was supported by front-loaded government spending and firm rural demand, though urban consumption was uneven and private investment remained subdued. External trade was volatile, despite frontloading of exports ahead of US tariffs, overall momentum stayed lacklustre. The US’s 50% tariff on Indian exports could have direct impact of ~25–35 bps of GDP in FY26, assuming a partial rollback in Q4. External headwinds have reinforced reform momentum, with the government proposing GST rationalisation to simplify rates, enhance competitiveness, and boost growth. However, this, combined with front-loaded spending, has raised fiscal slippage risks, necessitating expenditure rationalisation in H2. India’s sovereign rating was upgraded by S&P to BBB, underscoring fiscal discipline. With CPI inflation at an eight-year low of 1.6% in July and continuing economic growth risks, we expect the RBI to cut the repo rate by 25-bps in Q3 FY26.