Goldman Sachs has raised its forecast for India’s 2026 economic expansion, citing the trade concessions announced under an interim U.S.-India trade framework. The bank adjusted its projection for real GDP growth in 2026 up by 20 basis points to 6.9% year-on-year, according to a note from its strategists.
The upgrade follows a joint statement outlining the structure of an Interim Agreement on "reciprocal and mutually beneficial trade," issued on Friday. The move came after U.S. tariff changes announced earlier this month, which the strategists say materially lower the levies facing many Indian exports.
President Trump earlier this month reduced so-called "reciprocal" tariffs on Indian exports to the U.S. from 25% to 18%. In addition, a White House executive order removed an extra 25% duty that had been linked to India’s purchases of Russian oil, a withdrawal that followed India’s agreement to scale back those purchases.
Goldman’s team estimates that, when accounting for the Russia-linked duty, the U.S. has lowered the effective tariff burden on most Indian imports from approximately 50% to about 18%. The bank highlights particularly large cuts for specific product groups: tariffs on gems and jewelry were reduced to zero from 50%, while textiles now face an 18% duty versus the earlier 50%.
"We note that after a front-loading of exports to the U.S. till August 2025, exports of textiles and gems and jewelry to the US declined sequentially in October 2025," strategists led by Santanu Sengupta said in a note. "Though component-level details are yet to be made available, after exclusions, we estimate the effective tariff rate imposed by the U.S. on Indian imports may be around 20pp lower than the 34% earlier," they added.
Under the terms of the agreement, India will also reduce or remove tariffs on a range of U.S. industrial goods and a broad set of agricultural products. The agricultural items specifically noted include dried distillers' grains, tree nuts, fresh and processed fruit, soybean oil, and wine and spirits. Genetically modified products, cereals, and dairy are excluded from the tariff concessions.
Goldman’s strategists estimate that the agricultural items now covered account for roughly 60-70% of India's farm imports from the U.S. and may face lower or zero tariffs as a result of the pact.
The agreement further contains India's stated intention to purchase $500 billion of selected U.S. goods over five years. The categories specified are U.S. energy products, aircraft and parts, precious metals, technology products, and coking coal. Goldman notes that over the past 12 months India imported about $33 billion worth of these items.
On the balance of payments, Goldman said it had reduced its projection for India’s current account deficit in 2026 by roughly 0.25% of GDP, bringing the estimate to 0.8% of GDP. The bank’s strategists commented that pressure on the rupee has eased since the tariff changes, though they see limited scope for additional appreciation.
Goldman also reiterated its outlook for monetary policy, maintaining the view that the Reserve Bank of India will keep the policy repo rate unchanged at 5.25% in 2026. The strategists cited a reduction in downside risks to growth as a factor supporting a steady policy stance.
Implications for markets and sectors
- Export-oriented sectors such as textiles and gems and jewelry are directly affected by the tariff cuts, with potential competitiveness gains in the U.S. market.
- U.S. industrial suppliers and exporters of energy products, aircraft and parts, technology hardware, and precious metals may see demand from India as purchase commitments under the pact are implemented.
- Agriculture-linked trade flows are altered by the tariff changes, with certain U.S. farm exports to India facing lower or zero duties while some categories remain excluded.