New Delhi: India's Finance Ministry has highlighted the potential of a forthcoming trade agreement with the United States to invigorate the nation's export sector and unlock new market avenues. In its May 2025 monthly economic review, the ministry emphasized that such a deal could transform existing economic challenges into opportunities for trade growth.
The ministry also noted that ongoing government initiatives, including direct tax exemptions, targeted fiscal measures, and interest rate cuts from the central bank, are expected to expedite economic recovery and support growth at the higher end of the anticipated 6.3% to 6.8% GDP forecast range.
As part of efforts to bolster export competitiveness, India will reinstate the Remission of Duties and Taxes on Exported Products (RoDTEP) scheme starting June 1. This program reimburses exporters for embedded taxes and levies not covered by other government refund programs. The reinstated scheme will benefit various sectors, including textiles, chemicals, pharmaceuticals, automobiles, agriculture, and food processing.
In a move to further enhance trade relations, India is considering opening parts of its traditionally protected government procurement market, valued at approximately $700–$750 billion annually, to foreign companies, including U.S. firms. This potential policy shift, currently under negotiation as part of an interim trade deal with the U.S., would allow access to federal contracts worth over $50 billion, though state and local government procurements would remain restricted.
The Reserve Bank of India (RBI) has also adopted an accommodative monetary policy stance, cutting its key policy rate for the second consecutive time in April. Easing inflation pressures were noted, with the consumer price index dropping to 3.16% in April—below the RBI’s 4% target and the lowest level since July 2019. The RBI projects inflation to remain within the target range into 2025–26.
These developments underscore India's strategic efforts to strengthen its economic ties with the United States, aiming to enhance export performance and foster economic resilience amid global uncertainties.