India’s trade deal with US could unlock new export and market alternatives: Finance ministry report

India-US are in talks for trade deal (AI picture)

A profitable bilateral trade settlement between India and the US could remodel present challenges into financial alternatives by increasing market entry and boosting exports, in accordance with the Finance Ministry’s Monthly Economic Review launched on Tuesday.The report comes amid ongoing negotiations between the 2 nations, with an interim trade settlement anticipated earlier than July 8. India is in search of full exemption from a 26 per cent reciprocal tariff imposed by the US on home items.The US had applied the extra tariff on Indian merchandise beginning April 2, however suspended it for 90 days, till July 9. However, the baseline 10 per cent American tariff stays in impact.Despite international uncertainty, the report claimed India’s place as a number one funding vacation spot. It acknowledged that overseas direct traders are prone to reply positively to reforms that strengthen medium-term progress prospects.The ministry emphasised the significance of insurance policies geared toward bettering the productiveness and abilities of the nation’s younger workforce- key elements in stimulating funding and financial progress.India continues to keep up its standing because the world’s fastest-growing main economic system, with comparatively restricted downward revisions in progress forecasts. According to the IMF’s World Economic Outlook (April 2025), India’s actual GDP progress for FY26 is projected at 6.2 per cent, 30 foundation factors decrease than the January estimate, amid rising international uncertainties and trade tensions.Various establishments forecast India’s FY26 progress within the vary of 6.3 to six.7 per cent, underpinned by robust home fundamentals, prudent macroeconomic insurance policies, increased authorities capital expenditure, and easing inflation.As of April 2025, the Indian economic system demonstrates resilience, pushed by sturdy non-public consumption, particularly a rural rebound, and regular progress in providers exports. “The services sector continues to post healthy expansion, offsetting softness in merchandise exports. The Indian rupee has remained relatively stable, and foreign exchange reserves continue to provide a cushion against external shocks,” the report acknowledged.Government-led capital expenditure stays a key pillar of financial exercise, serving to defend the economic system from exterior volatility. Direct tax incentives, fiscal measures, and the Reserve Bank of India’s financial coverage are anticipated to additional help consumption and funding. “These could accelerate the recovery and push growth towards the upper end of forecasts, ranging from 6.3 per cent to 6.8 per cent, as cited in the latest Economic Survey,” the report added.“This may be no moment for self-congratulation but, equally, it is a moment to remember one’s strengths and leverage them to make oneself not just attractive but also indispensable to investors,” it additional noticed.However, the ministry cautioned that personal sector capital expenditure could stay subdued on account of tighter international monetary circumstances and lingering uncertainty.On inflation, the outlook seems encouraging. The report pointed to low core inflation and softening meals costs. Future inflation dangers are anticipated to be contained on account of a powerful rabi harvest, expanded summer time crop protection, and adequate foodgrain reserves.Additionally, the India Meteorological Department’s forecast of above-normal monsoon rainfall and declining international crude oil costs are anticipated to additional ease inflationary pressures.