Ongoing trade tensions between India and the United States found mention in the Economic Survey 2026 tabled by Finance Minister Nirmala Sitharaman on Thursday, with the document stating that that negotiations between New Delhi and Washington are expected to be concluded this year.
The document also said that domestic economic growth accelerated despite President Donald Trump‘s move to slap 50% tariffs on Indian exports.
Noting that India had expected to be one of the “early winners” in the new tariff regime under the Trump administration, the Economic Survey document said that the US President’s move to slap an additional 25% tariff on Indian goods and services in August last year was a move that left New Delhi “surprised”.
“Although the President of the United States announced reciprocal tariffs of 25% on India in April, India was expected to strike an early agreement with the US administration and lower them,” reads an excerpt from the Economic Survey 2026.
“So, in August, when the American President announced an additional penal tariff of 25% on most of India’s merchandise exports to the United States on top of the reciprocal tariff of 25% announced in April, it surprised many since India was expected to be one of the early winners in the new tariff regime of the United States,” the document said.
With the Trump administration unexpectedly hiking tariffs on India’s exports to 50%, growth forecasts were revised downward.
However, “growth accelerated due to a slew of structural reforms and policy measures,” the Economic Survey 2026 asserted.
Tariff headwinds persist as India banks on reforms and trade talks
Noting that the ongoing fiscal year was “unusually challenging” for the Indian economy due to “heightened uncertainty in global trade and the imposition of high, penal tariffs” that created “stress for manufacturers, particularly exporters, and affected business confidence,” the document said that the government responded by pushing structural reforms.
New Delhi used the “crisis as an opportunity to push through key measures such as GST rationalisation, faster progress on deregulation, and further simplification of compliance requirements across sectors,” the Economic Survey said.
Meanwhile, trade talks between New Delhi and Washington are still underway and negotiations are expected to be completed this year, a development that could help reduce external uncertainties, the Economic Survey 2026 said, adding that for India, present global conditions translate into external uncertainties rather than immediate macroeconomic stress.
While slower economic growth in key trading partners, tariff-induced disruptions to trade, and volatility in capital flows could intermittently weigh on exports and investor sentiment, the Survey asserted that the expected completion of trade talks with the US could help reduce uncertainty on the external front.
Days earlier, India also sealed a long-delayed Free Trade Agreement (FTA) with the European Union (EU) which will see tariffs slashed on most goods and boost two-way trade between New Delhi and the European bloc reduce reliance on the US.
India’s economy, as per projections in the Economic Survey 2026, is expected grow between 6.8% and 7.2% in the fiscal year that starts in April.
The forecast represents a slowdown from the current fiscal year’s 7.4% projection, which beat the the 6.3%-6.8% forecast range from last year’s Economic Survey.