Trade Profile
India and the United States have developed a broad economic relationship covering merchandise trade, services, investment, technology and supply-chain cooperation.
The United States is one of India’s largest trading partners and an important destination for Indian exports. India generally records a merchandise trade surplus with the United States, which remains a concern for American trade policy.
India’s major exports to the United States include:
- pharmaceuticals;
- electronics and engineering goods;
- gems and jewellery;
- textiles and garments;
- chemicals and petroleum products;
- machinery and automobile components.
Major American exports to India include:
- crude oil and liquefied natural gas;
- aircraft and aviation equipment;
- machinery and electronics;
- medical and scientific instruments;
- agricultural products;
- defence equipment.
Services are a major pillar of the relationship, particularly information technology, professional services, financial services, research, tourism and education.
Investment and Strategic Sectors
American companies have invested significantly in India’s technology, manufacturing, financial services, e-commerce, renewable energy and research sectors.
Indian companies have also invested in the United States, particularly in:
- information technology;
- pharmaceuticals;
- automobiles;
- steel and manufacturing;
- hospitality;
- professional services.
Economic cooperation increasingly extends to strategic sectors such as:
- semiconductors;
- critical minerals;
- clean energy;
- artificial intelligence;
- telecommunications;
- defence manufacturing;
- resilient supply chains.
The relationship is therefore moving beyond conventional trade towards joint production, technology partnerships and investment-led integration.
Bilateral Trade Agreement
India and the United States launched negotiations for a multi-sector Bilateral Trade Agreement in 2025, with the broader objective of increasing bilateral trade to US$500 billion by 2030.
In February 2026, the two countries announced a framework for an interim trade agreement. It provides for tariff reductions and improved market access for selected industrial and agricultural products.
India agreed to reduce or eliminate tariffs on various American industrial goods and selected agricultural products. The United States offered preferential access to several Indian exports, including textiles, footwear, chemicals, machinery, handicrafts and other labour-intensive goods.
Negotiations continue on wider matters such as:
- tariffs and non-tariff barriers;
- rules of origin;
- digital trade;
- customs procedures;
- services and investment;
- technical and sanitary standards;
- supply-chain security.
The interim framework is intended to form part of a more comprehensive bilateral agreement.
Major Areas of Friction
Agriculture
The United States seeks greater access to India’s agricultural and dairy markets. India remains cautious because agriculture supports millions of small farmers and is closely linked with food security and rural livelihoods.
Tariffs and standards
The United States has criticised India’s relatively high tariffs and regulatory barriers, while India raises concerns about American duties, product standards and restricted market access.
Digital trade
Differences exist over data governance, localisation, digital taxation, regulation of online platforms and cross-border data flows.
Intellectual property
The United States seeks stronger patent protection, particularly in pharmaceuticals. India emphasises affordable medicines and the use of public-health safeguards.
Professional mobility
India seeks easier access for skilled professionals and predictable visa rules, while immigration remains politically sensitive in the United States.
Trade imbalance
India’s merchandise surplus is viewed by the United States as evidence of unequal market access, while India points to its purchases of American energy, defence equipment and services.
Future Direction
Both countries can benefit from combining India’s large market and skilled workforce with American technology, investment and research capacity.
Future cooperation should focus on:
- diversification of supply chains;
- growth of labour-intensive Indian exports;
- technology transfer and joint manufacturing;
- easier movement of professionals;
- transparent and stable trade rules;
- cooperation in energy and critical minerals;
- protection of farmers and sensitive sectors;
- faster resolution of commercial disputes.
India must ensure that greater market access does not weaken food security, public-health safeguards or domestic manufacturing. At the same time, excessive protectionism could limit exports, investment and integration into global value chains.
Conclusion
India–US trade relations have become a major component of the wider strategic partnership. Their long-term strength will depend on resolving market-access disputes while creating a balanced framework that promotes trade, technology, investment and domestic economic development.
