Economic Survey 2026: India–US Trade Deal Seen as Key to Reducing Tariff Pressure

The Economic Survey of 2026 highlighted several issues affecting India’s economic well-being, with external challenges emerging as a key concern. Among these, trade-related headwinds, especially high tariffs imposed by major global partners, continue to weigh on India’s export performance and global trade position.

Tariffs Remain a Major External Challenge

India is currently facing tariffs of up to 50% on exports to the United States, making it one of the most heavily taxed trading partners of the US. These tariffs have affected multiple sectors, leading to a sharp decline in exports from industries such as gems and jewellery, marine products, auto components and other manufactured goods.

The Survey noted that these trade barriers have added uncertainty to India’s external sector at a time when global growth remains uneven and fragile.

Progress on Trade Agreements

On a positive note, India recently concluded a Free Trade Agreement (FTA) with the European Union, which is expected to strengthen trade ties between two major economic partners. The agreement is likely to open new export opportunities and provide Indian businesses with better access to European markets.

After the EU deal, attention has now shifted to the proposed India–US trade agreement, which is widely seen as a critical step in supporting India’s global trade revival.

India–US Trade Talks Continue

India and the United States have been negotiating a bilateral trade agreement since March last year, and six rounds of discussions have already taken place. However, progress has been slow, mainly due to the steep tariffs imposed by the US on Indian goods.

The Survey indicated that negotiations with the US are expected to conclude during the year, which could help reduce uncertainty on the external front. A successful agreement may also ease tariff pressures and improve export prospects.

Global Uncertainty and Economic Impact

The Survey pointed out that slower growth in key trading partners, tariff-related disruptions and volatile capital flows could continue to affect India’s exports and investor sentiment from time to time. However, it also clarified that these challenges currently represent external uncertainties rather than immediate macroeconomic stress for India.

Read more: India Imposes 30% Tariff on US Pulses, But How Much Does It Really Import?

Conclusion

The Economic Survey 2026 made it clear that while India faces significant external headwinds due to tariffs and global trade disruptions, progress on trade agreements offers a path forward. With the EU trade deal already in place and negotiations with the US expected to conclude this year, India may be better positioned to reduce uncertainty and strengthen its role in global trade.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.