Goldman Sachs, in its latest analysis, has raised India’s 2026 real GDP growth forecast to 6.9%, up 20 basis points. This follows an India-US trade deal where US tariffs on Indian exports were cut to an effective 18% from 34%. Goldman Sachs projects this relief boosts growth by reducing effective tariffs by about 20 percentage points. Full component-level details are awaited for complete clarity.
The brokerage lowered India’s 2026 current account deficit (CAD) estimate by 0.25% of GDP to 0.8%, reflecting improved trade conditions from the agreement.
The Indian rupee eased pressure, performing best among emerging markets last week. However, Goldman Sachs anticipates limited further appreciation. They expect portfolio inflows from the deal will likely be offset by RBI unwinding its short forward book and increasing foreign exchange reserves.
Goldman Sachs maintains the rate-easing cycle has ended. They expect the Reserve Bank of India to keep the repo rate unchanged at 5.25% through 2026, signaling a stable interest rate outlook.
Key Indian sectors, notably textiles and gems and jewellery, are set to benefit, with US tariffs on their exports dropping from 50% to zero. India excluded genetically modified products, cereals, and dairy from concessions. However, 60-70% of US farm imports into India could face zero or lower tariffs. Goldman Sachs awaits specific details to gauge the deal’s full economic impact.