New Delhi, Aug 29 : India's economy continued its strong momentum in the first quarter of 2025-26 (Q1 FY26), with GDP growing 7.8 per cent compared to 6.5 per cent in the same period last year, an industry body said on Friday.

The growth was led by the services sector, supported by healthy expansion in manufacturing and agriculture.

According to the PHD Chamber of Commerce and Industry (PHDCCI), the country's growth in Q1 FY26 reflects resilience despite global challenges.

In real terms, the economy grew by 7.8 per cent, while nominal GDP rose 8.8 per cent, highlighting India's steady progress towards its long-term goal of becoming a developed nation by 2047.

The services sector remained the biggest contributor, recording growth of 9.3 per cent.

Manufacturing also showed strong performance with 7.7 per cent growth, while agriculture, livestock, forestry and fishing rose by 3.7 per cent, aided by a good monsoon.

Gross Fixed Capital Formation, a key indicator of investment activity, grew by 7.8 per cent, underlining continued investment momentum.

Government consumption spending also supported growth, rising 7.4 per cent in the quarter.

PHDCCI President Hemant Jain said that India's stable growth reflects strong fundamentals, with inflation at an eight-year low, a revival in rural demand, and improving urban consumption.

Falling interest rates, increased government capital expenditure and resilient private investments have further strengthened the outlook.

The broader economic indicators also paint an optimistic picture. Manufacturing PMI has touched a 17.5-year high, while services PMI is at an 11-month high.

Employment creation has reached record levels, with 22 lakh new formal jobs, most of them for young people aged 18 to 25.

The infrastructure sector is also booming, with cement production up by nearly 9 per cent and steel consumption rising by 7.5 per cent.

India's position as an investment destination continues to strengthen, with foreign direct investment inflows of $81 billion between April and July 2025, a rise of nearly 14 per cent.

Private sector capital expenditure jumped by over 66 per cent during the same period -- reflecting strong business confidence.

With these achievements, India remains the fastest-growing major economy, the world's fifth largest economy, fifth largest stock market, and the third largest startup ecosystem.

Experts believe that ongoing structural reforms, improved ease of doing business, and strengthening supply chains will help sustain India's growth momentum in the coming years.

/IANS