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Goldman Sachs Boosts India's 2026 GDP Forecast to 6.9% After US Tariff Cut

Goldman Sachs has upgraded India's 2026 GDP growth forecast to 6.9% following a new US-India trade deal that lowers American tariffs on Indian goods. The deal, announced by President Trump, reduces reciprocal tariffs from 25% to 18%, effective immediately. The investment bank estimates the lower tariffs will provide an incremental boost of about 0.2 percentage points to GDP and reduce trade-policy uncertainty, improving private investment. Additionally, the move is expected to narrow India's current account deficit and ease pressure on the Indian rupee.

Key Points: India GDP Forecast Raised to 6.9% After US Tariff Deal

  • US lowers tariffs on Indian goods to 18%
  • Deal provides 0.2pp GDP boost
  • Reduces trade-policy uncertainty
  • Improves private investment intentions
  • Current account deficit expected to narrow
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Goldman Sachs upgrades India's CY26 GDP growth to 6.9% after US cuts tariffs

Goldman Sachs upgrades India's 2026 growth outlook to 6.9% following a US-India trade deal that lowers tariffs, boosting exports and investment.

"we raise our CY26 real GDP growth forecast by 20bp to 6.9% yoy - Goldman Sachs report"

New Delhi, February 3

Goldman Sachs has flagged a positive macroeconomic outlook for India following the conclusion of the US-India trade deal that lowers American reciprocal tariffs on Indian goods to 18%.

In its report titled "India: US-India conclude trade deal: President Trump lowers 'reciprocal' tariffs on India to 18%", Goldman Sachs noted that President Trump announced on social media a reduction in the reciprocal tariffs on Indian goods imports to 18% down from the earlier 25%, 'effective immediately'.

The report added that "on implementation, the deal would lower India's tariff rate and bring it in line with most other Asian countries of around 15-19%"

Assessing the growth impact, Goldman Sachs said, "we estimate an incremental boost of around 0.2pp of GDP (annualized), if the new lower tariffs are enforced"

The estimate is based on India's goods exports exposure of roughly 4% of GDP to US final demand and a goods export demand elasticity of ~0.7.

On investment sentiment, the report stated that the conclusion of the deal would "reduce trade-policy uncertainty and improve private investment intentions," while adding that "there could be further upside to real GDP growth from a recovery in private capex in the latter half of CY26"

Reflecting these factors, Goldman Sachs said, "overall, we raise our CY26 real GDP growth forecast by 20bp to 6.9% yoy"

From an external balance perspective, the report highlighted that "with the 'reciprocal' tariffs on India's exports to the US now lowered, we estimate current account deficit to narrow by around 0.25% of GDP in CY26 to 0.8% of GDP"

Goldman Sachs also pointed out that easing trade tensions could support financial conditions, noting that a recovery in capital flows "would ease some pressure on the INR".

- ANI

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Reader Comments

P
Priya S
Good step, but let's see if this actually benefits small and medium enterprises (SMEs) or just the big corporates. The government needs to ensure the gains are widespread and help local manufacturers upgrade to meet global standards.
R
Rohit P
Finally some positive news on the trade front! Reduced uncertainty should encourage companies to invest more. Hoping this leads to a stronger rupee and keeps fuel prices in check. 🤞
S
Sarah B
As someone working in the textile export sector, this is a huge relief. The previous 25% tariff was squeezing our margins badly. This deal will help us retain our workforce and maybe even expand.
V
Vikram M
While the upgrade to 6.9% is welcome, we must be cautious. These are forecasts, and global headwinds remain. The real test is whether this translates to higher rural incomes and consumption, not just numbers on a spreadsheet.
M
Michael C
Interesting analysis from Goldman. The key point is about reduced "trade-policy uncertainty." For long-term investors, stability is often more important than the specific rate. This could make India a more attractive destination for foreign capital.

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