Goods and services tax cuts in September ahead of the festive season gave a short-term boost to spending. Two-wheeler registrations and car sales both hit monthly records, while GST collections climbed nearly 4.6% from a year earlier to around Rs 2 trillion in October, the highest in five months. But economists question how long that momentum will last.

“The GST cuts and festive demand unsurprisingly showed up in resurgent sales, but cumulative performance across August to October, that discounts pent-up demand, points to a more measured pickup,” said Aurodeep Nandi, India economist at Nomura Group.

A trade deal with the US could lift sentiment by removing uncertainty, but a prolonged stalemate may weigh heavily on the outlook.

“We must not underplay the risks from tariffs which has begun to show up and can worsen if a trade deal isn’t arrived at in near future,” said Nim. “The ramifications for jobs and incomes in the low skilled sectors can be profound,” he added, pointing to rising stress in exports.

While officials in New Delhi have repeatedly said in recent weeks that a trade deal with Washington is close, the International Monetary Fund has cut its projection for India’s growth next financial year.

The Washington-based lender expects the economy to expand 6.2% in the year starting April, down from its July forecast of 6.4%, due to high US tariffs. Indian officials, however, viewed the IMF’s growth impact estimate as overstated, pointing to the country’s ability to tap other export markets.

India’s market shares are rising in the UAE, China, Hong Kong and other Asian economies that buy marine products, “suggesting that diversification will increasingly buffer India against external shocks,” said Soumya Kanti Ghosh, chief economist at State Bank of India and a member of the prime minister’s advisory panel.

The Modi government is also planning to push through a dozen major bills in the upcoming parliament session to boost investment, following the recent implementation of long-awaited labor reforms expected to lift manufacturing and employment.