India-US trade breakthrough could lift FY26 growth to 7%, says CEA

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India’s growth for FY26 could move towards the 6.8-7 percent range if ongoing trade negotiations with the United States lead to a breakthrough, chief economic adviser (CEA) V Anantha Nageswaran said on November 7, adding the tariff deal “hopefully would be done soon”.

Speaking at CNBC-TV18’s Global Leadership Summit 2025, the CEA said he is now “more comfortable looking at north of 6.8 percent GDP growth for FY26”, attributing his confidence to robust private capex and rising foreign direct investment (FDI).

“Until now, 2024-25 was a very good year for private capex. Withstanding global uncertainty, so far the private capex looks good. This year, so far, with five months’ data, net FDI is meaningfully higher than the last two years,” he said during a session on India’s Growth Story.

“If by some chance (there is) a resolution on the trade front, then the upward bias of 6.8-7 percent GDP growth for FY26 will become the mainstream forecast.”

Strong start to FY26

The economy grew at 7.8 percent in the first quarter fiscal, up from 6.5 percent in the year-ago period. Nageswaran said he would will “wait for Q2 GDP numbers to move a notch upwards” before revising the main forecast.

The Economic Survey projected growth in the 6.3–6.8 percent range for FY26, supported by the rollout of GST 2.0 reforms.

Onshoring

Emphasising the importance of global integration, Nageswaran said, “Don’t think we will succeed by onshoring everything. The right set of regulatory framework, removing inverted duty structures, are important success stories. There has to be a complementary goal of plugging ourselves into the global supply chain.”

He stressed on a strategic shift away from pure domestic indigenisation. “The success of the Production Linked Incentive scheme has to encourage us to move from domestic indigenisation to strategic resilience to becoming strategically indispensable,” the CEA said.

He also pointed to the role of regulatory reforms and PLI schemes in sustaining growth momentum. On consumption, he said the ongoing boost is largely supply-driven. “With respect to consumption boost, it is actually a supply-side boost,” he said.

AI and future of jobs

The CEA, who has often spoken about AI’s impact on the economy, especially on employment, said artificial intelligence would reshape India’s labour market.

“Due to AI, new jobs will be created, some of them will be higher paying. It will happen over a period. AI supplementing, AI augmenting jobs will determine net benefit to the Indian economy eventually. Time lags can be sensitive in democracy,” he said.