India-US Trade Deal Delay: Economic Threat Looms, RBI Rate Cuts Possible

• A delay in the India-US trade deal beyond Q1FY27 could increase pressure on India's growth outlook and necessitate additional RBI rate cuts, according to Goldman Sachs.
• Initial signs of consumption recovery are visible in rural and lower-income segments due to good harvests, government transfers, and GST cuts.
• The central government's focus on tax cuts and consumption support led to 7.6% real GDP growth in 2025, but nominal GDP hit a six-year low due to record-low inflation.
• Goldman Sachs projects 6.7% growth in 2026 and 6.8% in FY27, but a trade deal delay could lead to a downside in growth.
• Sectors like textiles, gems & jewelry, and other export-heavy industries could be significantly impacted by US tariff regulations if the deal is delayed.

Why It Matters: A prolonged delay in the India-US trade deal could negatively impact India's growth, CAD, and RBI policy.