Goldman Sachs Lifts India’s CY26 GDP Growth to 6.9% After US–India Trade Deal

A reduction in US tariffs on Indian exports has prompted Goldman Sachs to reassess India’s macroeconomic trajectory, citing lower trade friction and improved investment sentiment following the conclusion of a bilateral trade agreement, as per ANI report. 

Tariff Cut and Alignment with Asian Peers 

In a note titled India: US-India conclude trade deal: President Trump lowers ‘reciprocal’ tariffs on India to 18%, Goldman Sachs said US President Donald Trump announced an immediate reduction in reciprocal tariffs on Indian goods to 18% from 25%.  

The report noted 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%”, placing India within the prevailing regional tariff range. 

Growth Impact and Investment Sentiment 

Goldman Sachs estimated that the tariff reduction could add momentum to economic growth, stating that “we estimate an incremental boost of around 0.2pp of GDP (annualized), if the new lower tariffs are enforced”.  

The calculation is based on India’s goods export exposure of roughly 4% of GDP to US final demand and a goods export demand elasticity of around 0.7.  

The report also said the deal would “reduce trade-policy uncertainty and improve private investment intentions”, 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, the firm said, “overall, we raise our CY26 real GDP growth forecast by 20bp to 6.9% yoy”. 

External Balance and Currency Implications 

From an external sector perspective, Goldman Sachs said the lower tariffs could improve trade dynamics, noting 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”.  

The report also highlighted that easing trade tensions may support financial conditions, with a recovery in capital flows expected to “ease some pressure on the INR”. 

Read More: India Secures Trade Advantage as US Slashes Tariffs to 18%, Outpacing China, Bangladesh! 

Conclusion 

Goldman Sachs’ upward revision to India’s growth outlook reflects expectations of reduced trade friction, stronger investment conditions and an improving external balance following the US–India tariff agreement. 

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