India and the United States maintain a significant and dynamic trade relationship marked by a substantial trade deficit on the U.S. side. In 2024, total goods trade between the two countries reached approximately $129.2 billion. The U.S. exported goods worth about $41.8 billion to India while importing around $87.4 billion, resulting in a trade deficit of $45.7 billion for the U.S. This growing trade imbalance highlights the importance of understanding both the overall trade dynamics and the product-wise composition of bilateral trade.
Key Takeaways
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Conventional trade stats alone show the U.S. runs a ~$44–45 bn deficit with India in goods + services.
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When including non-trade capital flows—education, royalties, financial, etc.—U.S. gains ~$80–85 bn annually.
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The net effect is a U.S. surplus of roughly $35–40 bn, supporting GTRI’s “hidden surplus” thesis
Overview of India-USA Trade surplus & Deficit 2025
| Indicator | Value (2025 Estimates) |
|---|---|
| Total Bilateral Goods Trade | $129.2 billion |
| U.S. Exports to India | $41.8 billion (up 3.4% vs 2023) |
| U.S. Imports from India | $87.4 billion (up 4.5% vs 2023) |
| U.S. Trade Deficit with India | $45.7 billion (up 5.4% vs 2023) |
| with IT services Exports to India | $80 billion |
| U.S. Trade surplus with India | $40-45 billion |
why these are not accounted becuase of no alternative to prodcuts like YT, google search, microsoft, orgacle etc.
The U.S. trade deficit with India increased due to growing imports from India outpacing U.S. exports. This trade pattern reflects India’s competitive advantages in certain sectors and the evolving consumer and industrial demands in both countries.
Product-wise India-USA Trade Composition
The product categories below represent the key components of U.S. imports from India and U.S. exports to India, illustrating the nature of the trade deficit:
| Product Category | U.S. Imports from India ($ Billion) | U.S. Exports to India ($ Billion) | Notes |
|---|---|---|---|
| Pharmaceuticals and Medical Products | High (~ $20+ billion) | Low | India is a major supplier of generic drugs to the U.S. |
| Textiles and Apparel | Significant (~$15 billion) | Minimal | Large export base of garments and fabrics from India |
| Information Technology Services | Not included in goods trade | Strong services exports | Significant contributor but recorded in services trade |
| Electrical Machinery and Equipment | Moderate (~$6-8 billion) | Moderate | Consumer electronics, components imports dominate |
| Precious Stones & Jewelry | Significant (~$10 billion) | Insignificant | High value imports of gems and jewelry from India |
| Agricultural Products | Low (~$1 billion) | Moderate | U.S. exports agricultural products, India exports limited agri products |
Monthly Trade Data Highlights 2025 (Jan-May)
| Month | U.S. Exports to India (million $) | U.S. Imports from India (million $) | Trade Balance (Deficit) (million $) |
|---|---|---|---|
| January | 3,204.4 | 8,150.7 | -4,946.3 |
| February | 3,495.0 | 8,348.8 | -4,853.8 |
| March | 3,768.3 | 11,190.0 | -7,421.7 |
| April | 3,959.6 | 10,029.2 | -6,069.6 |
| May | 3,819.1 | 9,433.9 | -5,614.8 |
| Total | 18,246.3 | 47,152.5 | -28,906.2 |
USA has a net surplus with India, driven by digital services, royalties, and financial activities.
| Trade Component | India’s Figures (FY25, USD bn) | Notes |
|---|---|---|
| Goods Exports from India | 86.5 | Merchandise exports |
| Goods Imports into India | 45.3 | Major U.S. goods imports to India |
| Goods Trade Balance | +41.2 | India’s surplus |
| Services Exports from India | 28.7 | IT, business services, software, etc. |
| Services Imports into India | 25.5 | Various U.S. services |
| Services Trade Balance | +3.2 | India’s services surplus |
| Official Goods + Services Surplus | +44.4 | India’s combined surplus per official data |
| Additional Financial Flows (education, royalties, digital services, defence, etc.) | -35 to -40 | Effective U.S. surplus per GTRI analysis |
| Net Bilateral Economic Balance (Including all flows) | U.S. surplus of $35-$40 bn | U.S. gains when factoring in hidden income flows |
Key contributors to this U.S. surplus include:
- Education: Indian students spend over $25 billion annually in the U.S. on tuition and living expenses.
- Digital/Tech Services: American technology companies (Google, Microsoft, Oracle, streaming platforms) earn between $15 and $20 billion from Indian users and businesses.
- Intellectual Property Royalties and Licensing Fees
- Defence and Arms Trade Deals
- Financial Services and Consulting
Key Insights
- The U.S. trade deficit with India is part of a broader pattern where the U.S. runs deficits on goods with many trade partners.
- Pharmaceutical products and textiles dominate imports from India.
- The United States maintains a trade surplus in some services, such as information technology, but these are excluded from the goods trade deficit calculations.
- Agricultural trade remains a smaller component compared to manufactured goods.
Product-Wise Trade Composition
Here’s a look at the key products driving trade between India and the USA. This is a simplified chart for illustrative purposes; specific values would need to be sourced from official trade data.
| Category | Top Indian Exports to USA | Top US Exports to India |
|---|---|---|
| Goods | ||
| Pharmaceuticals, Gems and Jewelry, Machinery, Organic Chemicals, Textiles | Machinery, Aircraft, Optical and Medical Instruments, Plastics, Fertilizers | |
| Services | IT Services, Business Process Outsourcing (BPO), Professional Services | Travel, Education, Financial Services |
Detailed Analysis of Key Products
- Pharmaceuticals: India is a major exporter of generic drugs and pharmaceuticals to the U.S., helping to keep healthcare costs down.
- Gems and Jewelry: India has a strong tradition in gem and jewelry manufacturing and exports significant quantities to the U.S. market.
- Machinery: Both countries trade in various types of machinery, reflecting their industrial capabilities.
- IT Services: India’s IT sector provides a wide range of services to U.S. companies, including software development, IT support, and digital transformation.
- Aircraft: The U.S. is a major exporter of aircraft and related equipment to India, supporting the growth of the Indian aviation industry.
FAQs on India-USA Trade Deficit
Q1: Why does the U.S. have a trade deficit with India?
A1: The U.S. imports a large volume of pharmaceuticals, textiles, and precious stones from India, sectors in which India has a competitive advantage, while U.S. exports to India are lower in volume, leading to a trade deficit.
Q2: Is the trade deficit with India increasing or decreasing?
A2: It has been increasing gradually; the 2024 deficit was $45.7 billion, up 5.4% from the previous year.
Q3: Which products contribute most to the U.S. imports from India?
A3: Pharmaceuticals, textiles and apparel, and precious stones are the major contributors.
Q4: Does the U.S. export services to India?
A4: Yes, the U.S. exports substantial IT and financial services to India, but these are accounted separately from goods trade.
Q5: How does this trade deficit affect the U.S. economy?
A5: Trade deficits reflect consumption patterns and competitive strengths; they may reduce manufacturing in some sectors but also provide consumers with lower prices and diverse products.
Q6: Can this trade imbalance change significantly?
A6: Changes depend on trade policies, tariffs, economic growth, and bilateral agreements that may alter import-export dynamics.
Understanding these trade patterns is essential for businesses, policymakers, and analysts monitoring India-USA economic relations. Monitoring monthly trade figures and sectoral trends helps identify opportunities and challenges shaping this vital bilateral trade partnership.
