India-US Trade Pact, China's Trade Barriers and the Case for Infrastructure Spending: Finance Ministry's View
The Union Finance Ministry said it hopes the India-US trade agreement will be concluded at the earliest, in the interest of global trade and of trade between the two countries. A day earlier, the Ministry of Commerce and Industry had said the first phase of the pact is finalised and is now going through legal drafting (turning the agreed points into a formal legal text).
The remarks came at an interaction with the Atlantic Council (a US think tank) on the sidelines of the IMF-World Bank Annual Meetings in Bangkok, Thailand.
On China, the Finance Ministry said the growing trade imbalance (India buys far more from China than it sells there, a gap of over $100 billion a year) and China's restrictions on market access remain major concerns. India has sought entry for generic medicines, bovine meat, vegetables and other perishable goods for years, with little progress.
It named non-tariff barriers, including phytosanitary measures (plant and animal health rules), as the biggest hurdle in India-China trade. It added that India has not used punitive tariffs to correct trade gaps and prefers negotiation, even if it is slow.
On BRICS, the Ministry said the grouping is a partnership for the welfare of its people, not a platform to counter any country or bloc. It noted that BRICS has nearly 40% of the world's population, and that its 11 to 12 actively engaging countries account for around 45% of global trade.
On growth, the Ministry said India has been the fastest-growing major economy for the past four to five years. It credited public capital expenditure on infrastructure, which it said has a stronger multiplier effect than direct cash transfers, creates jobs, and puts less pressure on the fiscal deficit, because borrowing is used for building assets.
Fiscal Multiplier: How Government Spending Grows the Economy
The fiscal multiplier tells us how much a country's total output (GDP) rises when the government spends one extra rupee, or how much it falls when the government cuts one rupee of spending or raises one rupee of tax. If the multiplier is 2, then ₹100 of extra government spending finally adds ₹200 to GDP. If it is 0.5, the same ₹100 adds only ₹50. It is the single most useful number for judging whether a type of government spending is "worth it" for growth.
The Finance Ministry's argument that public investment in infrastructure gives a "stronger multiplier effect" than direct cash transfers is exactly the capex vs transfer comparison that Indian studies measure (about 2.45 against about 1). Its point that borrowing is "aligned with infrastructure expenditure" is the golden rule in action: debt is used to build assets that raise future growth, which is the core of India's capex-led strategy since the pandemic.
Non-Tariff Barriers (NTBs): Types and the WTO Framework
A non-tariff barrier (NTB) is any trade hurdle, other than an import tax, that makes it harder or costlier to sell goods in another country. Examples include quotas, import licences, strict product standards, testing rules and slow customs checks. Many such rules have genuine safety goals, but when they are stricter than needed or applied unequally, they work as hidden protection. One big group of these rules covers food safety and plant and animal health, called Sanitary and Phytosanitary (SPS) measures.
The Finance Ministry named non-tariff barriers, including phytosanitary measures, as the biggest hurdle in India-China trade. China's tariffs on many Indian products are not the main problem; slow or withheld health and safety approvals keep Indian medicines, meat and farm produce out, which is one reason the trade gap stays above $100 billion.
BRICS: Origin, Expansion, and Institutional Character
BRICS is a group of major emerging economies that meet every year to work together on the world economy, trade, finance and global governance. The name comes from the first letters of its first five members: Brazil, Russia, India, China and South Africa. Since 2024 it has expanded to include more countries from Asia, Africa and West Asia. It is not a military alliance and not a trade bloc with common tariffs. It is a forum for cooperation, with two financial institutions of its own.
The Finance Ministry described BRICS as a partnership for the welfare of its people, not a bloc to counter others. This restates India's long-held "non-Western, not anti-Western" view of the group. Its point that 11 to 12 actively engaging countries now cover a large share of world population and trade reflects the 2024-2025 expansion and the uncertain status of Saudi Arabia.
- First phase of the India-US trade pact: finalised, now in legal drafting
- Venue of remarks: IMF-World Bank Annual Meetings, Bangkok, Thailand, October 2026
- India-China trade deficit: over $100 billion; about $112 billion in 2025-26 (imports about $131.6 bn, exports about $19.5 bn)
- Products India wants access for in China: generic medicines, bovine meat, vegetables, other perishables
- SPS Agreement and TBT Agreement: in force with the WTO, 1 January 1995
- BRICS: nearly 40% of world population cited by the Finance Ministry; 11 to 12 engaging countries, about 45% of global trade
- Capex multiplier (NIPFP 2013): 2.45; transfer payments 0.98
- Union capex 2026-27 (BE): about ₹12.2 lakh crore; fiscal deficit target 4.3% of GDP