How India rewrote the playbook in 11 days
From trade deals with the US and EU to a reform-minded Budget and a measured RBI, India aligned trade, fiscal and monetary policies
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Prefer us on GoogleLast Updated: Feb 24, 2026, 14:06 IST4 min
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Heading into this year’s Budget on February 1, India was hemmed in by a tough external scenario, curdled beyond recognition by US President Donald Trump’s decision to raise tariffs on Indian goods to a level several times higher than before. The first relief came in the form of a long-awaited trade deal with the European Union (EU) on January 27, which was followed by Trump’s decision to lower tariffs, which he announced on social media on the night of February 2. The previous day, Finance Minister Nirmala Sitharaman presented a Budget that takes forward the reforms push and seeks to build domestic capacities. And on February 6, the Reserve Bank of India (RBI), though it did not lower interest rates further—which it was not expected to—said the Indian economy was “in a sweet spot” with strong economic growth and low inflation.
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In a matter of 11 days, India began to look like a very different country to do business with and invest in. Those 11 days can one day become a case study in how macroeconomic scenario can quickly turn when politics, economics and pragmatism align.
Here is where India was before January 27: There was no trade deal with the EU after years of negotiations, the country was locked in an attritional standoff with Washington DC, and it was about to present a Budget with little elbow room given what had already been done outside the Budget exercise, the biggest of them being the GST cuts effective September 22 last year. Monetary policy, too, looked tapped out after 125 basis points of rate cuts since the easing cycle started in February 2025. In effect, the government appeared boxed in.
It stepped out of the box in those 11 days.
US Secretary of State Marco Rubio with foreign minister S Jaishankar in Washington DC on February 3, a day after a new trade deal lowering tariffs was announced. Photo by Luke Johnson/Getty Images
Mother of all Deals
The trade deal with the EU had been hanging fire for so long that it had begun to feel theoretical. Talks had dragged on for years without any concrete confirmation. Then—perhaps because of high US tariffs—things moved. The agreement finally came together not because every disagreement was resolved but because both sides decided that delays had become costlier than compromise.With this, New Delhi showed it was ready to close deals—fast. For Europe, it was an acknowledgment that India now sat closer to the centre of global supply chains.
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Daddy of all Deals
Soon after—and unexpectedly—came the interim trade deal with the US. For months, the relationship had been defined by threats, barbs and what trade watchers call arm-twisting. The interim trade deal that was finally announced did not deliver a clean win to anyone. But it did something just as useful: It lowered the temperature and brought reassurance. Tariffs came down from 50 percent to 18 percent, lower than the rates on most of India’s rival countries in exporting to the US. Market access stayed intact and both governments chose to count incremental gains rather than blow up the relationship in pursuit of maximalist demands. Read More
What stood out weren’t the details of the interim trade framework but the willingness to do an imperfect deal now and keep working on it later. India was also negotiating from a position of confidence having just signed a deal with the EU.
The result was not a sweeping bilateral agreement, but a pragmatic truce. The pragmatism was underlined further when the revised factsheet of the deal removed a reference to pulses and said India “intends to buy” US goods worth $500 billion. An earlier draft had said “committed”.
Finance Minister Nirmala Sitharaman before presenting the Union Budget on February 1. Photo by Hardik Chhabra/ The India Today Group via Getty Images
Dealing with the Budget
Between these two external milestones came something more domestic.The Union Budget was measured in its tone. It did not have eye-popping giveaways and, instead, focussed on getting the job done.
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The focus was on future-oriented sectors such as data centres even as infrastructure spending continued to do the heavy lifting on growth. It signalled that if India wanted deeper trade relationships, it needed domestic capacity that can scale, compete and absorb global capital. This was less about shielding local industry and more about equipping it.
RBI Governor Sanjay Malhotra.Photo by Dhiraj Singh/Bloomberg via Getty Images
Final Act
The closing piece came from the central bank.At its monetary policy meeting, the RBI struck a careful balance. “External headwinds had intensified though the successful completion of trade deals augurs well for the economic outlook,” Governor Sanjay Malhotra said.
The RBI stayed alert to inflation risks while acknowledging a global environment defined by uneven growth, volatile capital flows and policy divergence among major economies. The central bank’s pause signalled confidence in India’s growth.
The past few days were an example of how trade, fiscal and monetary policy must speak the same language. In an era of unprecedented global uncertainty, that alignment itself is the most valuable signal.
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First Published: Feb 24, 2026, 14:16
Subscribe NowHimani is an Associate Editor at Forbes India where she writes about startups shaking things up, legacy firms seeking fresh grounds, and sectors in the middle of big transformations. Always curious ab
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