New Delhi, Aug 30 (PTI) The five-quarter high GDP growth of 7.8 per cent in April-June is an outcome of a slew of reforms undertaken by the Modi-led government over the last decade, coupled with its fiscal prudence, India Inc said on Saturday.

Industry leaders expressed confidence that India's economy will be able to weather global headwinds emanating from US tariffs, on the back of strong domestic demand and is on a sustained growth trajectory.

Indian economy grew by 7.8 per cent in April-June -- the highest in the past five quarters. India remains the fastest-growing major economy, as China's GDP growth in the April-June period was 5.2 per cent.

"India's growth story reflects the underlying strengths of the Indian economy, strong fiscal boost through increased government expenditure, great performances by services and manufacturing, and of course, continued reforms. At 7.8 per cent GDP growth, not only would India be the fastest growing, but this would also be standout growth in the face of many global headwinds," CII President Rajiv Memani said.

"India's real GDP growth of 7.8 per cent in the first quarter of FY2025-26 is a remarkable achievement ... This outcome reinforces India's position as the fastest growing large economy in the world, at a time when global growth is facing significant headwinds," CII Director General Chandrajit Banerjee said.

Importantly, CII's analysis of new project announcements data shows encouraging signs of a revival in private capital expenditure, complementing the government's infrastructure push and creating the conditions for a new investment cycle. This will not only add to growth but also generate large-scale employment.

"CII remains confident that with industry and government working closely together, India will continue to deliver resilient, inclusive, and world-leading growth," Banerjee said.

FICCI President Harsha Vardhan Agarwal said the GDP growth number for the first quarter of the current fiscal at 7.8 per cent has come as a pleasant surprise, beating all expectations.

"The income tax relief provided in the budget, cut in the policy repo rate by 100 basis points, good progress seen in the monsoon and the forthcoming resetting of the GST rates will support domestic demand and provide us with the necessary buffers to counter the expected weakness in exports on account of the reciprocal and penal tariffs imposed by the US," he observed.

FICCI Senior Vice President Anant Goenka said the GDP numbers for the first quarter clearly indicate the strength of the Indian economy and the improving momentum, which is being supported by domestic demand.

"India is amongst the fastest growing major economies in the world and with our Government pressing the accelerator on reforms in close collaboration with states, we could see many new enablers of growth and demand being set in motion in the months ahead," he added.

PHDCCI President Hemant Jain said the economy is resilient today because the government has undertaken significant structural reforms in the last decade. "The reforms have been across sectors, be it in infrastructure, ease of doing business, GST or manufacturing, among others. As a result of all these reforms, we are sure that in the times to come, despite the ongoing geopolitical challenges and tariff headwinds, the Indian economy will be on a sustained growth trajectory," Jain said.

He expressed confidence that India's economy would achieve a growth rate of 7 per cent in the current financial year.

"India's GDP growth of 7.8 per cent in Q1 is very encouraging. It reflects strong domestic demand and resilient manufacturing. For the auto component industry, this momentum reinforces confidence to invest, localise, and expand exports, even as we navigate global headwinds. The fundamentals remain strong for building a globally competitive mobility ecosystem," said Vinnie Mehta, Director General, ACMA.

Assocham Secretary General Manish Singhal said reforms like income tax exemptions announced in the Budget, which played a huge role in boosting consumption, are showing up, and the next big reforms like GST will further boost growth prospects.

He observed that GDP growth of 7 per cent for the full financial year is well within reach on the back of reforms being undertaken by the government. PTI RSN MR

Fiscal reforms and income tax relief boosted domestic demand, supporting strong GDP growth despite external tariff headwinds. Government-led structural reforms and fiscal prudence are credited with driving a five quarter high quarterly GDP growth through strong domestic demand, services and manufacturing performance, and a revival in private capital expenditure. Industry sources identify budgetary income tax relief, an accommodative policy repo rate and an upcoming GST rate reset as key policy measures supporting demand, while noting reciprocal foreign tariffs as a risk to exports.