US President Donald Trump could have referred to India as a “useless” financial system, however the numbers inform a special story. Whereas the Indian financial system is predicted to decelerate within the present fiscal amid the worldwide uncertainties and tariff wars, most up-to-date projections by economists and worldwide companies paint a reasonably vivid image since they see India because the quickest rising massive financial system on the planet with a 6 per cent plus progress price.
Trump’s aggressive stance in opposition to India in his social media posts has additionally uncovered an inconsistency in America’s stance and coverage actions contemplating India and America have engaged collectively on a number of essential initiatives, starting from important minerals, commerce, defence and area after he took cost because the President in January.
The newest collaboration between India and the US was seen final week because the Indian House Analysis Organisation (ISRO) positioned the NISAR satellite tv for pc, a first-of-its-kind collaborative mission between India and the US, into its meant orbit. NISAR, which stands for NASA-ISRO Artificial Aperture Radar, is essentially the most highly effective Earth remark satellite tv for pc to be put in area, the results of over one decade of analysis and improvement by the area companies of India and the US. The collaboration is ready to develop as ISRO is planning to launch the Block 2 BlueBird communications satellite tv for pc, developed by the US-based AST SpaceMobile, over the course of subsequent few months.
When Prime Minister Narendra Modi visited the US in February, the 2 international locations introduced.cooperation on a number of initiatives together with the Remodeling Relationship Using Strategic Expertise (TRUST) initiative — a bilateral initiative for cooperation within the restoration and processing of important minerals corresponding to lithium and uncommon earth components. It was seen as a step in direction of decreasing limitations to expertise switch, addressing export controls, and enhancing high-tech commerce. The TRUST initiative adopted India’s induction into the US-led Minerals Safety Finance Community in September final yr. India had joined the Minerals Safety Partnership in 2023.
A transfer in direction of stronger commerce ties was additionally mentioned intimately throughout Modi’s US go to, with the international locations agreeing to double their bilateral commerce to $500 billion by 2030. India’s commerce relationship with the US has already been strengthening. In 2024, the whole items commerce between the 2 nations stood at $129.2 billion, with the US’ exports to India rising 3.4 per cent to $41.8 billion, whereas its imports had been up 4.5 per cent at $87.4 billion, leading to a deficit of $45.7 billion for the US.
India’s rising exports of digital items, particularly smartphones, to the US have been in focus. India’s share in US’ smartphone imports surged to almost 36 per cent within the first 5 months of 2025, pushed primarily by Apple’s iPhones, from about 11 per cent in 2024. China, which continues to dominate the class, noticed its share drop from 82 per cent to 49 per cent over the identical interval. Roughly 20 per cent of Apple’s international iPhone manufacturing capability is now primarily based in India.
Trump’s often-cited cost in opposition to India has been of it being a ‘Tariff King’, and India in response has made a aware effort to broadcast the message that it isn’t. Within the Union Funds for 2025-26, introduced in February, duties on the highest 30 US items imported by India, together with crude oil, LNG, coal, diamonds, aeroplanes, and motor automobiles, had been lowered. Within the car sector, India lowered tariffs on bikes primarily based on engine capability. Finance Minister Nirmala Sitharaman has additionally highlighted the identical, mentioning final month that India has lowered the tariff charges to eight, together with the zero per cent price.
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Modi and Trump had additionally agreed to resume the 10-year defence framework, with the American President having talked about rising navy provides to India and finally offering the F-35 stealth fighter. The 2 leaders had introduced plans to pursue new procurements and co-production preparations for Javelin anti-tank guided missiles and Stryker infantry fight automobiles and 6 extra P-8I maritime patrol plane. Earlier this month, an official assertion mentioned India and the US will signal a brand new 10-year defence partnership framework when Defence Minister Rajnath Singh and his US counterpart, Pete Hegseth, meet later this yr.
Vibrant spot, not useless financial system
Whereas there are some draw back dangers to the Indian progress story from Trump’s risk of a 25 per cent tariff on Indian items and a ‘penalty’ for its power and arms imports from Russia, even a 20-40 bps decline within the progress price to six per cent or so is not going to cease the financial system from being the quickest rising massive financial system on the planet. That is evident within the progress projections made by outstanding international score and multilateral companies. Final week, the Worldwide Financial Fund (IMF) raised India’s GDP progress forecast to six.4 per cent for each 2025-26 and 2026-27 after it had reduce the projection for the present fiscal by 30 bps to six.2 per cent in April. The Reserve Financial institution of India (RBI) additionally has predicted progress for FY26 to be secure at 6.5 per cent – the identical as within the final fiscal. In the meantime, the Finance Ministry estimates progress to be within the vary of 6.3-6.8 per cent, saying in its newest month-to-month financial assessment report that the financial system presents an image of “cautious optimism” within the face of world headwinds marked by commerce tensions, geopolitical volatility, and exterior uncertainties.
To make sure, the Finance Ministry has flagged sluggish credit score progress and the personal sector’s funding urge for food as points. However these hardly make an financial system ‘useless’ — particularly one which the IMF estimates because the fifth-largest on the planet with a GDP of $3.9 trillion in 2024. And it’s solely going to get higher — by 2028, the IMF expects India to overhaul Germany and Japan and rise to the third spot, solely behind the US and China.
Whereas Trump known as each India and Russia as “useless economies”, the latter is a special animal altogether. In contrast to India’s, the Russian financial system has suffered from its battle in opposition to Ukraine, with GDP progress averaging 2.2 per cent from 2022 to 2024, per IMF. That is even decrease than the US’ common progress price of two.7 per cent over the identical interval. The determine for India, in the meantime, is 7.8 per cent.
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American frustrations, inconsistencies
Trump’s feedback, the imposition of a 25 per cent tariff on India, and an as-yet unspecified penalty — whilst officers from the 2 international locations are negotiating a bilateral commerce deal — is being seen as Washington placing strain on New Delhi to shortly come to an settlement. US Treasury Secretary Scott Bessent has admitted as a lot, saying on Thursday that Trump and the American commerce group had been pissed off by the tempo of talks with India.
“India got here to the desk early. They’ve been slow-rolling issues, so I feel that the President, the entire commerce group is pissed off with them,” Bessent instructed CNBC.
Nonetheless, similar to the US, India has an obligation to its folks and should get the absolute best deal. As Commerce Minister Piyush Goyal mentioned within the Lok Sabha on Thursday, the federal government will take “all essential steps to safe our nationwide curiosity”.