New Delhi: Union finance minister Nirmala Sitharaman on Friday expressed hope that the proposed India-US trade deal is concluded at the earliest in the interest of both bilateral and global trade.
Union commerce and industry minister Piyush Goyal has also wished for a mutually beneficial agreement to be signed soon, she said during a conversation with foreign policy expert Michael Kugelman at American think tank Atlantic Council, on the sidelines of the annual meetings of the World Bank Group and the International Monetary Fund in Bangkok.
On Thursday, Goyal said the first phase of the India-US trade deal has been finalized and is now being legally drafted. He expressed confidence that the deal would be concluded and operationalized soon, but only once India secures an export advantage over its competitors in the US market.
Separately, US ambassador to India, Sergio Gor, on Thursday said the trade deal negotiations were moving at an “incredible pace”, and that the “big items are done”.
In February, both countries agreed to a framework for the deal, which reduced the punitive tariff imposed on most Indian goods from 50% to 18% in August 2025.
The US remained India's largest goods export destination in the first half of the current fiscal year through March 2027, with shipments rising 11% from a year before to $50.8 billion.
While trade talks have been ongoing, a new US law authorizing President Donald Trump to impose tariffs of up to 100% on countries buying Russian oil has added to India’s discomfort. New Delhi has said it will take all necessary steps to ensure energy security for the country's 1.4 billion people.
India’s growth trajectory
India, Sitharaman underscored, has maintained its growth momentum “against all the odds”, remaining the world’s fastest-growing major economy since 2021-22.
Both the World Bank and the IMF raised their FY27 growth projections for India this month by 50-60 basis points to 7.1% and 7%, respectively, after the country recorded a stronger-than-expected expansion of 7.8% in the June quarter.
“Public spending on capital expenditure has helped us build infrastructure in the country, and that has a greater multiplier effect,” she said.
She also said the government’s focus on inclusivity and “making sure everyone has access to resources and access to skilling” while sticking to fiscal prudence has helped the economy, the minister said.
“We are conscious that we have a responsibility with public money and therefore, have a very clear understanding that we can't be splurging money, even as we have to take care of those who are vulnerable in the economy,” she said.
The Central government began sharply raising its capital spending after 2020 to nurse the pandemic-hit economy back to health quickly. It maintained such spending to partly offset subdued private investment.
While private investment has started to pick up again, lifting gross fixed capital formation growth to a three-year high of 11% in the June quarter, public spending remains a key growth driver as the war in West Asia has stoked fresh uncertainties.
The Centre has budgeted its FY27 capital expenditure at ₹12.22 trillion, up sharply from ₹3.36 trillion in FY20. Its effective capital expenditure, after factoring in grants to states for capital asset creation, is budgeted to exceed ₹17 trillion in FY27, about 32% of the total budget.
“So, when you spend public money on building infrastructure, the multiplier that it creates is different from what it would be if you were to put that money in the hands of the people directly,” she said.
“So, that way, I think the multiplier has actually worked out and kept us going very well during these difficult times,” the minister added.
Reforms at multilateral bodies
Sitharaman called for the multilateral organizations, such as the World Bank and the IMF, to be more “nimble-footed”, reiterating that “they have to live up to 21st-century expectations because these are Bretton Woods institutions”.
“Countries which were in the middle-income group are suddenly dropping into desperate balance-of-payments struggles and need the IMF's help,” she said. “The response can't come years afterwards. They approach you in desperation for help, and for nearly three or four years, no solution is given,” she said, adding that “these kinds of things are getting corrected now”.
On top of that, new issues, such as those pertaining to cross-border and technology-driven payments, stablecoins or central bank-driven currencies, have surfaced, requiring swift interventions, she suggested.
Countries, including Sri Lanka, Argentina, Egypt, Ghana and Zambia, have faced crises due to deterioration in their external balances in recent years.