New Delhi

Ongoing negotiations for a bilateral trade agreement between India and the United States are expected to conclude during the course of the year, a development that could help reduce uncertainty on the external front, the Economic Survey 2025-26 said.

The Survey noted that for India, current global conditions translate more into external uncertainties rather than immediate macroeconomic stress. However, slower growth in key trading partners, tariff-induced disruptions to global trade, and volatility in capital flows could intermittently weigh on exports and investor sentiment.

“At the same time, ongoing trade negotiations with the United States are expected to conclude during the year, which could help reduce uncertainty on the external front,” it said.

India and the US have been negotiating a bilateral trade agreement since March last year, with six rounds of talks held so far. Progress has been slow after the US administration imposed steep tariffs on Indian goods from August last year.

A delegation from the Office of the United States Trade Representative (USTR), led by Deputy USTR Ambassador Rick Switzer, visited New Delhi in December 2025 for trade talks. This was the second visit by US officials since the imposition of a 25 per cent tariff and an additional 25 per cent penalty on Indian exports, linked to India’s purchase of Russian crude oil.

As a result, Indian goods currently face an effective export tariff rate of 50 per cent in the US market, among the highest imposed on any country.

“There has been progress in negotiations of the trade deal between the two countries,” the Survey said, while acknowledging that the global economic landscape is becoming increasingly unpredictable due to tariff increases, supply chain realignments and rising regulatory barriers.

For Indian industries, especially export-oriented sectors, the Survey said the current wave of US tariff measures and stricter non-tariff barriers pose significant challenges. However, it added that Indian exporters in some labour-intensive and small-scale sectors are demonstrating resilience by diversifying shipments to alternative markets.

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While India’s exports to the US declined during April–November 2025, exports to other countries registered positive growth, reflecting a gradual shift in trade destinations, the Survey said.