Goldman Sachs lifts India’s CY26 growth forecast to 6.9% after US tariff cut

Goldman Sachs has upgraded India’s calendar 12 months 2026 (CY26) actual GDP development forecast to six.9 %, citing improved commerce dynamics after the conclusion of the US-India commerce deal that lowers American reciprocal tariffs on Indian items.

In a observe titled “India: US-India conclude commerce deal: President Trump lowers ‘reciprocal’ tariffs on India to 18 %,” the funding financial institution mentioned Donald Trump introduced a discount in reciprocal tariffs on Indian exports to 18 %, down from 25 %, with fast impact.

Goldman Sachs mentioned that when totally applied, the deal would carry India’s tariff price broadly according to most Asian friends, the place tariffs usually vary between 15–19 %.

Progress, funding and exterior stability upside

Assessing the macro affect, Goldman Sachs estimated an incremental increase of round 0.2 proportion factors to GDP development (annualised), based mostly on India’s items export publicity of about 4 % of GDP to US closing demand and an assumed export demand elasticity of roughly 0.7.

“The conclusion of the deal reduces trade-policy uncertainty and will enhance personal funding intentions,” the report mentioned, including {that a} restoration in personal capital expenditure within the latter half of CY26 might present additional upside to development.
Reflecting these components, the financial institution raised its CY26 development forecast by 20 foundation factors to six.9 % 12 months over 12 months.

CAD seen narrowing, rupee strain easing

From an exterior sector perspective, Goldman Sachs famous that decrease tariffs on Indian exports to the US might assist slim the present account deficit by round 0.25 % of GDP, taking it to roughly 0.8 % of GDP in CY26.

The easing of commerce tensions may additionally assist monetary circumstances. A pickup in capital flows, the report mentioned, might assist ease strain on the Indian rupee, enhancing general macro stability.

General, Goldman Sachs mentioned the tariff discount marks a constructive shift in India’s exterior atmosphere, strengthening the outlook for exports, funding, and development momentum going into 2026.