News Desk: India’s rise as a dominant engine of the world economy has reached a defining moment. According to the International Monetary Fund’s 2026 projections, India has now overtaken the United States in its share of global real GDP growth, becoming the second-largest contributor to world economic expansion, behind only China.
This shift is not accidental. It is the outcome of two powerful trade breakthroughs that together reshaped India’s global economic position:
- the “Mother of All Deals” — the historic India–European Union Free Trade Agreement (FTA), and
- the “Father of All Deals” — the United States’ decision to slash tariffs on Indian goods to 18%.
Together, these agreements unlocked markets, strengthened manufacturing, boosted exports, and accelerated India’s growth momentum.
India Surpasses the US in Global Growth Contribution
IMF projections for 2026 show:
| Country | Share of Global Real GDP Growth |
|---|---|
| China | ~26.6% |
| India | ~17% |
| United States | ~9.9% |
This means that nearly one-sixth of all new economic output generated globally is now coming from India, more than the United States in growth contribution terms.
While the U.S. remains the world’s largest economy by nominal size, India’s faster expansion rate means it is now adding more to the world economy each year.
The “Mother of All Deals”: India–EU FTA
The India–EU Free Trade Agreement, finalised after years of negotiations, is one of the largest trade pacts India has ever signed. It opens the doors of a €16-trillion European market to Indian exporters.
Key Gains:
- Zero or sharply reduced tariffs on textiles, pharmaceuticals, auto parts, chemicals, and IT services
- Easier market access for Indian professionals and service firms
- Higher foreign investment into Indian manufacturing and logistics
The deal is expected to sharply raise India’s exports to Europe and integrate Indian companies into European supply chains.
The “Father of All Deals”: US Cuts Tariffs to 18%
In a major reset of bilateral trade relations, the United States agreed to cut tariffs on Indian goods to 18%, making Indian exports significantly more competitive in the American market.
Impact:
- Indian products now face lower cost barriers than many Chinese and Southeast Asian competitors
- Export sectors such as electronics, engineering goods, textiles, pharmaceuticals, and auto components gained immediate advantage
- Markets reacted positively, with the rupee strengthening and equity indices rising
The deal strengthened India’s role in global supply chains at a time when companies are shifting production away from China.
Manufacturing, Exports and Growth
These twin trade breakthroughs directly strengthened India’s industrial push:
- Make in India
- Production Linked Incentive (PLI) schemes
- Electronics, defence, renewable energy and automobile manufacturing
With better market access to both the U.S. and EU, India’s factories are now exporting at record levels — turning trade into a powerful growth engine.
Why This Matters Globally
As advanced economies face slower growth, India has emerged as the new driver of global demand. Capital, technology, and supply chains are increasingly flowing toward India, recognising it as a long-term growth anchor.
This is not just a statistical milestone — it is a geopolitical and economic shift.
The phrase “Mother and Father of All Deals” now fits the moment:
it symbolises how India’s two biggest trade breakthroughs with Europe and America repositioned the country as the world’s growth engine.By overtaking the U.S. in global real GDP growth contribution, India has not merely grown faster —
it has changed the balance of the global economy.
