India’s major trading partners are China and the United States. When PM Modi meets Trump at the White House in February, India intends to settle the tariff dispute.
US President Donald Trump has threatened to impose additional taxes on goods imported from China, India, and Brazil, calling them “tremendous tariff-makers.” His government will prioritise America, he declared. India’s exports to the US will become less competitive with any tariff hike.
It is anticipated that the United States will increase duties on Indian exports, including pharmaceuticals and textiles. The Trump administration increased steel and aluminium tariffs during its first term in 2018, which prompted retaliation from the impacted countries, including India.
India’s biggest trading partners for merchandise are the US and China. When Prime Minister Narendra Modi meets Trump at the White House in February, India intends to resolve the tariff dispute amicably. HT looks into how trade is going between the two nations.
What is the size of India’s US trade?
With about 18% of its total value, the US is India’s top destination for merchandise exports. In 2023–2024, India’s exports to the US totalled $77.5 billion, higher than the total value of its exports to the following three top destinations. This pattern persists in 2024–2025.
In contrast, just slightly over 6% of the world’s largest economy’s GDP comes from imports. Notably, India’s US imports dropped 17% to $42.2 billion in the previous year. Trump’s tariff threats were prompted by the growing trade deficit between the US and India as a result of this import-export mismatch.
What is included in the trade basket?
Approximately one-third of India’s imports from the United States are petroleum products and crude. Together, fake jewellery, pearls, and precious and semi-precious stones make up the second-largest imports. Other major purchases include medical equipment, electrical gear and equipment, aircraft and parts, and power plant equipment like nuclear reactors and boilers. As it moves away from Russia, India has also started acquiring military hardware from the US.
Petroleum products, pharmaceutical formulations, pearls, precious and semi-precious stones, telecom equipment, electrical gear, clothing, cotton textiles, and electronic components are among the goods that India exports to the United States. Following the 2020 Covid interruptions, India’s exports to the US increased significantly.
What is Trump’s demand of India?
Trump wants India to purchase more American goods and reduce tariffs on them. “The President emphasised the importance of India increasing its procurement of American-made security equipment and moving towards a fair bilateral trading relationship,” according to a White House readout following the recent phone conversation between Trump and Modi. During his first term, Trump frequently used India’s high tariffs on Harley-Davidson motorbikes as justification for his demands for reduced tariffs. In 2019, India reduced customs by half, and the famous bike is made there as well.
Ajay Srivastava, co-founder of the Global Trade Research Initiative, noted that when Trump calls on others to reduce their tariffs, he frequently cites the highest rates. India has a 17% import charge, compared to the US’s 3.3% average. Certain goods, such wine and whisky, are subject to 150% levy, while automobiles are subject to 125%. India abides by its obligations to the World Trade Organisation (WTO) despite these tariff levels. He went on to say that Trump’s demands for tariff reductions will violate the WTO obligations made by countries.
Will India lower its tariffs?
The same duties that apply to goods from any other nation with which India does not have a free trade agreement (FTA) also apply to goods imported from the United States. If the two nations had signed an FTA, India might have consented to reduce duties on American exports. Negotiating preferential treatment for member nations’ goods might have potentially been done through the Indo-Pacific Economic Framework for Prosperity (IPEF). IPEF does not, however, contain tariff reductions.
No country-specific concessions can be announced through the budget. China and Vietnam are likely to gain from any broad tariff cut, whether it is through the budget or another means, rather than the United States. Srivastava believed that before taking any action, India should wait for a list of US demands.
For trade balance, can India purchase more from the US?
The majority of trade occurs between private parties, and commercial terms dictate those decisions. Since India seeks to diversify away from Russia, there is a chance that the US’s request for India to purchase more weapons from it may be fulfilled. At the moment, India’s main US purchases are petroleum products and crude. Only if American oil corporations provide better prices than nations like the UAE and Russia will India be able to increase its purchases of petroleum crude.
Srivastava believed that the US should take into account the two nations’ total economic ties rather than just the trade deficit. In addition to banks, financial services, and traditional American businesses, India is a significant market for tech firms like Microsoft, Meta, and Alphabet as well as e-commerce giants like Amazon and Walmart. India is where social networking firms have the most users.