India’s RBI sees trade pacts boosting exports, growth outlook stable

India’s recently concluded trade agreements with the European Union and the United States are expected to strengthen export prospects and support domestic growth momentum, according to the Reserve Bank of India’s latest ‘State of the Economy’ assessment.

The central bank noted that the India–EU Free Trade Agreement will provide preferential market access to nearly 99 per cent of Indian exports, while India will reduce or eliminate tariffs on a large share of EU goods entering the domestic market. The agreement also incorporates measures aimed at addressing non-tariff barriers, thereby improving ease of market entry for Indian exporters.

The RBI said the India–EU FTA will grant preferential access to nearly 99 per cent of Indian exports while lowering tariffs on EU goods.
Pacts like the India-EU FTA are set to support labour-intensive exports as growth stays consumption- and investment-led, with inflation expected near target.
The Union Budget 2026-27 reaffirmed Government’s commitment to fiscal consolidation.

In the February 2026 issue of its monthly bulletin, the RBI observed that the recent trade deals are likely to enhance export competitiveness and deepen India’s integration into global value chains.

The central bank emphasised that labour-intensive and export-oriented sectors stand to benefit significantly from improved market access under the new trade architecture, potentially translating into stronger manufacturing activity and employment generation.

Analysing the Union Budget 2026–27, the article said that the budget “balanced growth imperatives with fiscal prudence. By adhering to a credible path of fiscal consolidation, maintaining a strong thrust on capital expenditure, and prioritising infrastructure, innovation, and human capital development, the Government has reinforced the foundations for long-term growth.” The containment of revenue expenditure and sustained focus on growth-enhancing investment underscore the continued commitment to quality spending.

Looking ahead, the RBI maintained that India’s near-term economic outlook remains favourable, supported by resilient consumption, sustained investment activity and ongoing productivity-enhancing reforms. Inflation is projected to remain benign and close to the target, enabling a balanced growth–inflation dynamic while providing policy space to sustain economic expansion.

Fibre2Fashion News Desk (RKS)