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

Goldman Sachs has upgraded India’s calendar year 2026 (CY26) real GDP growth forecast to 6.9 percent, citing improved trade dynamics after the conclusion of the US-India trade deal that lowers American reciprocal tariffs on Indian goods.

In a note titled “India: US-India conclude trade deal: President Trump lowers ‘reciprocal’ tariffs on India to 18 percent,” the investment bank said Donald Trump announced a reduction in reciprocal tariffs on Indian exports to 18 percent, down from 25 percent, with immediate effect.

Goldman Sachs said that once fully implemented, the deal would bring India’s tariff rate broadly in line with most Asian peers, where tariffs typically range between 15–19 percent.

Growth, investment and external balance upside

Assessing the macro impact, Goldman Sachs estimated an incremental boost of around 0.2 percentage points to GDP growth (annualised), based on India’s goods export exposure of about 4 percent of GDP to US final demand and an assumed export demand elasticity of roughly 0.7.

“The conclusion of the deal reduces trade-policy uncertainty and should improve private investment intentions,” the report said, adding that a recovery in private capital expenditure in the latter half of CY26 could provide further upside to growth.
Reflecting these factors, the bank raised its CY26 growth forecast by 20 basis points to 6.9 percent year over year.

CAD seen narrowing, rupee pressure easing

From an external sector perspective, Goldman Sachs noted that lower tariffs on Indian exports to the US could help narrow the current account deficit by around 0.25 percent of GDP, taking it to roughly 0.8 percent of GDP in CY26.

The easing of trade tensions may also support financial conditions. A pickup in capital flows, the report said, could help ease pressure on the Indian rupee, improving overall macro stability.

Overall, Goldman Sachs said the tariff reduction marks a constructive shift in India’s external environment, strengthening the outlook for exports, investment, and growth momentum going into 2026.