New trade deals with US, EU, others may support growth: RBI’s annual report

India’s export sector is also expected to encounter some headwinds from rising geopolitical tensions, inward-looking policies, and the risk of a potential tariff war among major economies, according to the Reserve Bank of India (RBI). However, India’s participation in 14 free trade agreements (FTAs) and six preferential trade agreements (PTAs), along with the new trade deals under negotiation with the US, Oman, Peru and the European Union (EU) may support growth in trade, the central bank said in its annual report for the financial year 2024-25.

Resilient services exports and inward remittances are likely to cushion India’s current account deficit (CAD), which would remain eminently manageable in 2025-26, the RBI said.

Global merchandise trade volume is projected to contract by 0.2% in 2025 based on the tariff situation as of April 14, 2025, the central bank said. “However, the signing of a trade deal between the US and the UK on May 8, 2025 and the agreement made by the US and China on May 12, 2025 to avoid retaliation and to engage in future discussions augur well for global trade, going ahead,” it added.