India’s GDP to Grow at 6.9% in 2026 as US Trade Deal to Add 20 bps Says Goldman Sachs

India’s economy is expected to expand at 6.9% in 2026 as per Goldman Sachs, reflecting the impact of a recently signed trade agreement with the United States that is estimated to add 20 basis points to annual growth. 

Growth Projection and Trade Deal Impact 

The forecast of 6.9% real GDP growth for 2026 incorporates a modest boost from the US India trade deal, which lowered reciprocal tariffs on Indian exports from 25% to 18% says Goldman Sachs.  

Based on India’s goods‑export exposure of roughly 4% of GDP to US final demand, the tariff reduction is calculated to raise growth by 0.2 percentage points on an annualised basis.  

The agreement also removes a source of policy uncertainty that had previously been estimated to shave off 0.3 percentage points from growth. 

Inflation Outlook and Monetary Policy 

Headline inflation is projected to rise to 3.9% in 2026, close to the Reserve Bank of India’s 4% target.  

After a 125‑basis‑point rate cut in the previous year, the central bank is expected to have limited scope for further easing, with only a possible 25‑basis‑point reduction if trade‑related uncertainty persists. 

Consumption and Credit Growth 

Private consumption, which grew 7.4% year‑on‑year in 2025, is forecast to increase by about 70 basis points to 7.7% in 2026.  

The rise is supported by a strong winter harvest, continued welfare spending in election‑bound states, and improved credit growth following liquidity injections totalling  ₹6.3 trillion into the banking system. 

Read More: Moody’s Projects India’s GDP Growth at 6.4% in FY27; Fastest Among G20 Nations! 

External Sector and Capital Flows 

The current‑account deficit widened to 2.8% of GDP in the fourth quarter of 2025, driven by softer US exports and higher gold imports. For the full year, the deficit is estimated at 0.7% of GDP, aided by robust remittances and a services surplus that grew around 11% year‑on‑year. 

The deficit is projected to expand to $37 billion in 2026, offset partly by lower oil prices and strong services exports. Portfolio flows remained volatile, with equity outflows of roughly $19 billion and debt inflows of about $7.5 billion in 2025. 

Conclusion 

India’s 2026 growth forecast of 6.9% by Goldman Sachs incorporates a 0.2 percentage‑point boost from the US trade deal, a modest rise in inflation to 3.9%, and continued strength in consumption and services exports, while external deficits are expected to widen. 

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