India’s strong macroeconomic indicators have paved the way for robust growth outlooks for fiscal year 2026-27, but the delay in India-US trade deal may lead to revisions of some barometers.
According to global brokerage Goldman Sachs, India’s mass consumption trend, especially in the rural and lower income segments of urban spaces, is in a nascent recovery stage. In case of growth headwinds due to a further delay of the trade deal, the government needs to reserve policy ammunition to deal with the ongoing uncertainty.
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India’s mass consumption trend: Growth drivers, outlook
Goldman Sachs remains bullish on bottom-end mass consumption, citing multiple tailwinds driving growth in both rural and low-income urban segments. ”A good crop cycle led to transfer payments at the state level going towards women in lower income households, and the GST cuts were beneficial for the bottom segment,” said Sengupta.
The upper end of the consumer segment is divided into two parts — the middle and the top — which analysts call as affluent India. The affluent segment has grown at a rapid rapid pace post the COVID-19 pandemic and is now slowing down a bit, according to Sengupta. ”However, the middle segment is where there are some concerns due to job creation and the advent of AI.”
Central government fiscal consolidation moderated in FY26, shifting towards consumption support via income tax and consumption tax cuts. This resulted in strong 7.6% year-on-year real GDP growth in calendar year 2025, though nominal GDP growth was at a six-year low (excluding the pandemic) due to record-low inflation.
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Will India-US trade deal delay impact growth outlook?
The Goldman Sachs economist claimed that if the US trade deal is delayed beyond the first quarter of FY27, then there will be some downside risk to the growth estimates. ”We are looking at 6.7% growth for 2026 and 6.8% YoY growth for FY27. There will be some downside to the numbers as sectors like textile, gems and jewellery will face trade losses,” said Sengupta. ”If the trade deal doesn’t come through and there are further headwinds to growth, then we think that the RBI can ease further and the fiscal space can also be used in terms of supporting sectors like textiles, gems and jewelry and and so on,” he added.
Overall, India’s current account balances and the external balances remain ”quite healthy,” he said. The growth is mainly supported by the services exports which continue to remain strong and remittances until now. ”So we are looking at about 1% of GDP current account deficit. If you don’t have the deal, probably you have a downside of around 20 basis points or or a bit more,” the economist added.
If US tariff-related trade uncertainty persists beyond the March quarter, and weighs more heavily on growth, Goldman Sachs expects room for an additional 25 bps repo rate cut in 2026.
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