New Delhi: As India and the United States edge closer to finalising a trade agreement, the Indian finance ministry has expressed optimism about the potential impact of the deal, stating it could transform current challenges into growth opportunities.
In its latest Monthly Economic Review, the ministry said that a successful India-US trade pact would enhance market access for Indian goods, boost exports, and help neutralise recent trade headwinds. “A successful US-India trade agreement could flip current headwinds into tailwinds, opening up new market access and energising exports,” the report stated.
High Stakes Amid Tariff Uncertainty
The talks come at a time when India, like many countries, has faced uncertainty following former US President Donald Trump’s 26% reciprocal tariff announcement on imported goods. Though positioned as a fair trade policy, Trump’s tariffs have disrupted global markets and affected India’s export momentum.
However, the situation shifted after a 90-day pause was announced on the tariffs due to domestic considerations in the US. This pause has opened a window for India and the US to advance negotiations and potentially finalise a deal.
Trade Relations and Surplus
The US is currently India’s largest trading partner, with bilateral trade reaching $129 billion in 2024. India enjoys a trade surplus of $45.7 billion with the US. The two countries aim to expand bilateral trade to $500 billion by 2030, making the ongoing negotiations crucial for future growth.
Last week, Commerce and Industry Minister Piyush Goyal led a delegation to Washington to accelerate the discussions. While both sides are hopeful of reaching a deal by early July, Mr. Goyal emphasized that India will not be pressured by timelines.
“We will always put India first and ensure that a deal is finalised keeping that sentiment in mind. Favourable time constraints motivate quicker talks, but we won’t rush unless India’s interests are fully secured,” Goyal said last month.
Domestic Economy Resilient Amid Global Shocks
The finance ministry also highlighted India’s economic resilience, noting that capital spending, direct tax exemptions, and monetary policy support have played pivotal roles in insulating the economy from global shocks, such as geopolitical conflicts and sanctions.
The report forecasts GDP growth between 6.3% and 6.8% for the current fiscal year. Personal income tax relief has encouraged both savings and consumption, contributing to steady domestic demand.
With a stable rupee, robust forex reserves, and strong investor confidence, India continues to position itself as a leading global destination for foreign investment, the report added.
