Global Trade Worries Escalate, But India Expects To Remain Steady In FY26, Says Report

India’s economic outlook for the 2025-26 fiscal year (FY26) remains optimistic, with GDP growth projected to reach at least 6.5 per cent, buoyed by subdued global crude oil prices. Citing a senior government official, Moneycontrol reported that the decline in oil prices, which have remained well below the $70 per barrel mark, could provide enough fiscal room to counter potential export disruptions triggered by new US tariffs.

“Oil prices have been hovering way below $70 billion per barrel and it is expected to stay around that level. So can still expect growth to be around 6.5 percent as outlined in the Economic Survey,” the official stated.

On April 7, global oil markets witnessed a sharp dip amid fears of reduced demand due to escalating tensions between the US and China. Brent crude fell nearly 4 per cent to $63.21 a barrel, following an 11 per cent drop the previous week. West Texas Intermediate also slid to $59.79 a barrel, the report noted.

Budget Projections Already Priced in Global Risks

Another government official explained that the FY26 budget already accounted for the unpredictable global trade environment resulting from the Trump administration’s tariff actions.

“A lot of people, at the time, were telling us that (nominal) growth projection could have been kept at 10.4 percent, but we went with 10.1 percent. We had factored in global uncertainties, including on the trade front, and we can at most go to 10 percent from 10.1 percent,” the official said.

Finance Minister Nirmala Sitharaman earlier announced a nominal GDP growth estimate of 10.1 per cent for FY26 — a step up from 9.7 per cent in FY25, but lower than the 10.4 per cent projected by many economists.

However, the recent tariff escalation — particularly the 26 per cent reciprocal duty levied on Indian goods by the US — is expected to create modest downward pressure. Economists forecast a possible 30-40 basis point reduction in real GDP growth for the year.

Also Read : EU Proposes 25 Per Cent Counter-Tariffs On US Goods As Global Trade Tensions Escalate: Report

Tariff Impact May Be Limited but Notable

Barclays anticipates a 30-basis point downside to its earlier GDP forecast of 6.8 per cent for 2025-26. Meanwhile, Goldman Sachs has taken a more cautious stance, lowering its projection to 6.1 per cent, citing a steeper fall in Indian exports as a result of the wide-ranging US trade actions.

The Economic Survey for 2024-25  projected real GDP growth between 6.3 per cent and 6.8 per cent in the ongoing fiscal year, acknowledging external risks while expressing confidence in domestic fundamentals. It noted the resilience of India’s economy, supported by a healthy external balance, stable consumption trends, and measured fiscal discipline.

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