MAY 20259Although US tariff increases pose a significant risk to growth predictions, global credit rating firm Crisil estimated a 6.5 percent GDP growth for India in fiscal 2026, with risks leaning towards the downside. Crisil anticipates the RBI's monetary easing will provide some counterbalance to the external challenges."Interest rate cuts, income tax relief and easing inflation are expected to provide tailwinds to consumption this fiscal, while the expected normal monsoon will support agricultural incomes," the report mentioned.Furthermore, the expected decrease in worldwide crude oil prices due to a possible global slowdown are projected to offer further assistance to domestic growth, it mentioned.Increases in US tariffs pose a significant risk to Crisil's GDP growth prediction for fiscal 2026, since uncertainty regarding how long these tariffs will last and their frequent changes may hinder investment.In FY25, enhanced growth in the production of capital, infrastructure, and construction goods during the second half indicates a slow recovery in construction/capital expenditure activities in the latter portion of the fiscal year."The latest RBI Consumer Confidence Survey indicates an improvement in March, in both rural and urban areas. All these factors corroborate the recovery in domestic demand. Healthy rabi output and easing inflation in the fourth quarter also bode well for consumption demand," the report mentioned.Industrial expansion, indicated by the Index of Industrial Production (IIP), decelerated to 2.9 percent in February from 5.2 percent in January (adjusted upward from 5.0 percent), influenced by reduced output growth in the mining and manufacturing industries, whereas electricity saw an increase."On average, IIP growth stood at 4.0 per cent in the fourth quarter as of February, broadly in line with the 4.1 percent recorded in the December quarter," said Crisil.With data now available for eleven months of FY25, the inherent momentum within the sub-sectors of IIP can be emphasized. The IIP manufacturing showed improved performance on average during the latter half of fiscal 2025. This increased growth in areas such as petroleum products, machinery, and textiles occurred in the second half. The proposed trade agreement with India will create new markets for American products and generate new opportunities for workers, farmers, and entrepreneurs in both nations, the USTR announced on Tuesday.US Trade Representative (USTR) Jamieson Greer stated that there is a "significant" absence of reciprocity in the trade connection with India.The USTR additionally commended Vice President J D Vance and Prime Minister Narendra Modi's statement emphasizing the significance of the India-US COMPACT (Catalyzing Opportunities for Military Partnership, Accelerated Commerce & Technology) initiative and underscoring the advancements in the discussions for a Bilateral Trade Agreement (BTA), which both countries initiated on February 13."These ongoing talks will help achieve balance and reciprocity by opening new markets for American goods and addressing unfair practices that harm American workers. India's constructive engagement so far has been welcomed and I look forward to creating new opportunities for workers, farmers, and entrepreneurs in both countries," he said.The two nations intend to complete the initial phase of the agreement by the autumn (September-October) of this year. According to the USTR statement, India and the US have completed the terms of reference that delineate the roadmap for the negotiations of the suggested BTA."I am pleased to confirm that USTR and India's Ministry of Commerce and Industry have finalised the Terms of Reference to lay down a roadmap for the negotiations on reciprocal trade," Ambassador Greer said.The USTR states that the United States aims to enhance market access, lower tariffs and non-tariff barriers, and negotiate a strong array of further commitments to secure lasting advantages.The United States has consistently acknowledged notable trade obstacles with India, leading to a USD 45.7 billion goods trade deficit with India in 2024, marking a 5.1 percent (USD 2.2 billion) rise from 2023, according to the statement.In 2024, the total trade in goods between the US and India was projected to be USD 129.2 billion. As stated by the US, India's average applied tariff stands at 17 percent, which is one of the highest among the world's biggest economies, whereas America's average applied tariff is at 3.3 percent.India imposes an average tariff rate of 39 percent on agricultural goods, whereas the USA's rate is only 5 percent. CRISIL FORECASTS 6.5 PERCENT GDP GROWTH FOR INDIA IN FY 2026 AMID US TARIFFSTRADE PACT WITH INDIA TO OPEN NEW MARKETS FOR AMERICAN GOODS: USTRTOP STORIES
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