Ongoing negotiations for a trade agreement with the US are expected to conclude during the year, a development that could help reduce uncertainty on the external front, according to Economic Survey 2025-26.
For India, it said, the global conditions translate into external uncertainties rather than immediate macroeconomic stress. Slower 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 said.
"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 are negotiating a bilateral trade agreement since March last year. So far, six rounds of negotiations have been held. Talks are going slow as the Trump-administration has imposed a steep 50 per cent tariffs on Indian goods from August last year.
A delegation from the office of the US Trade Representative, led by Deputy US Trade Representative Ambassador Rick Switzer, was here in December 2025 for trade talks. The visit of US officials marks their second trip since the imposition of a 25 per cent tariff and an additional 25 per cent penalty on Indian goods entering the American market due to the purchase of Russian crude oil.
India is currently subject to an effective export tariff rate of 50 per cent on goods exported to the US, and this rate is among the highest imposed on any country.
"There has been progress in negotiations of the trade deal between the two countries," the Survey said. It added that the global economic landscape is becoming increasingly unpredictable, driven by tariff increases, supply chain adjustments, and higher regulatory hurdles.
"For Indian industries, the current wave of US tariff implementations and stricter non-tariff barriers presents a significant challenge, particularly for export-oriented sectors," it said.
Further, it said there has been some specific impact of the tariffs, Indian exporters in some labour-intensive and small-scale sectors are showing resilience by shipping goods to alternative destinations.
India's exports to the US have declined during April-November 2025, but registered positive growth in other countries.