India Beats Trump Tariff Mania: Economic Survey Reveals What Helped Turning 'Crisis Into Growth Opportunity' In ‘Challenging’ 2025

New Delhi: The Union government has released the Economic Survey report for 2025-26. The 700-page report suggests that the government has beaten its own fiscal deficit target. Besides, the report indicates that there will be no major impact on Indian economy due to fresh tariffs imposed by the United States over buying of Russian oil, due to a few smart reforms and policy measures.

"Although the President of the United States announced reciprocal tariffs of 25% on India in April, India was expected to strike an early agreement with the US administration and lower them. So, in August, when the American President announced an additional penal tariff of 25% on most of India’s merchandise exports to the United States on top of the reciprocal tariff of 25% announced in April, it surprised many since India was expected to be one of the early winners in the new tariff regime of the United States. Growth forecasts were revised downward. But in reality, growth accelerated due to a slew of structural reforms and policy measures," the Economic Survey report states.

The report cites "multiple upheavals" the global economy has been subjected to recently including the imposition of tariffs by the USA on imports from its trade partners and stated that these concerns proved short-lived.

"The long promised reciprocal tariffs, announced in April 2025, initially sparked concerns about lower growth and higher inflation in the global economy which have proven to be transient in the short run. This was due to multiple reasons. Trade agreements between the US and certain trading partners have considerably lowered the US’s effective tariff rate. According to the IMF's World Economic Outlook (WEO), October 2025, US households and businesses increased their spending ahead of expected tariff hikes. In some instances, delays in tariff implementation allowed businesses to postpone raising prices and frontload their exports. As a result, global economic activity has remained relatively stable in the short term," the report stated.

"This is reflected in the IMF’s projections of growth and inflation for advanced economies (AEs) and emerging market and developing economies (EMDEs) made at various points in time between January 2025 and January 2026. Growth in EMDEs for the year 2025 is eventually higher than the levels projected in April 2025, while that in AEs is projected to be better than initially feared, primarily driven by strong growth in the US. For the year 2025, inflation in AEs is expected to have remained stubbornly higher by 40 basis points compared to initial projections, while that in EMDEs is expected to have declined further," the report added.

The report further stated that the “ongoing trade negotiations with the United States are expected to conclude during the year, which could help reduce uncertainty on the external front. While these risks remain manageable, they reinforce the importance of maintaining adequate buffers and policy credibility.”

The report also states that while domestic drivers have been the primary source of growth, services exports have led the growth rate to remain constant.

“While domestic drivers remained the primary source of growth in FY26, external demand, with a share of 21.6 per cent of GDP, also supported growth. In the first half of FY26, exports of goods and services grew by 5.9 per cent, exceeding the growth seen in the same period last year, and remaining above the pre-pandemic average, supported by trade diversification. Services exports have continued to provide a stable anchor for growth, partially offsetting the greater volatility in goods exports, amid tariff related uncertainties,” the report stated.

The report, while presenting a comprehensive review of India’s economic performance, also indicated that India's foreign exchange reserves are providing a "robust protection against external liabilities".

"India’s external sector has evolved amidst a global environment characterised by heightened trade policy uncertainty, geopolitical realignments, and a structural shift away from a hyper-globalisation phase. The reconfiguration of global trade and investment flows, increasingly influenced by considerations of national security, technological sovereignty, and strategic autonomy, has introduced both new constraints and opportunities for emerging economies. In this changing environment, India’s external performance demonstrates resilience to global shocks and highlights the structural characteristics associated with a rapidly growing economy that is integrating more deeply into global markets," the report states.

"External buffers have further strengthened, with foreign exchange reserves providing comfortable import cover and robust protection against external liabilities. India’s international investment position has steadily improved, and its external debt remains moderate, with a favourable maturity profile and high reserve coverage," the report added.

Some Key Points:

-In terms of trade, India's overall exports hit record highs of USD 825.3 billion in FY25 and USD 418.5 billion in the first half of FY26. This strong performance was fueled by robust growth in services exports and continued momentum in non-petroleum and non-gems & jewellery categories.

-The rise in higher-value manufactured exports, particularly in electronics, pharmaceuticals, and electrical machinery, combined with greater diversification of both export markets and import sources, has enhanced India's trade resilience in the face of growing protectionism and tariff uncertainties worldwide.

-The services trade surplus continues to play a crucial stabilizing role, consistently covering a substantial part of the merchandise trade deficit. This is underpinned by solid expansion in software services, business process services, and the increasing presence of Global Capability Centres.

-India's current account has remained stable, supported by strong inflows from services exports and remittances.

-On the capital account, the country has drawn significant gross investment inflows even amid a challenging global environment for foreign direct investment (FDI) and fluctuating portfolio investments. Gross FDI inflows have shown resilience, driven by equity investments and new greenfield projects, whereas portfolio flows have remained volatile in line with broader global financial market conditions.

Also Read: What Is Economic Survey? The Key Document Presented Before Union Budget 2026, and Why It Matters