India-US trade after Trump returns:Much to fret about but scope for optimism too

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Subscribe to enjoy similar stories. The much-awaited US election results on Wednesday showed that Donald Trump will be returning to the White House in early 2025. His return has intensified Indian discussions on future of the India-US trade relations.

Our bilateral trade relations have seen a new momentum in recent years, with the US trying to reduce its dependence on China with its China-plus-one strategy, and India trying to play a bigger role in US companies’ value chains. Between January and July 2024, India’s merchandise exports to the US increased by 9.3%, reaching $48.2 billion, up from $44.1 billion in the same period of 2023. Between 2018 and 2023, India’s export of goods to the US increased from $54.3 billion to $83.8 billion, while imports from the US saw a lower increase from $33.2 billion in 2018 to $40.1 billion in 2023.

Also read: US elections 2024 outcome is set to reshape India trade ties For India, a positive trade balance with the US is important, as it is among the country’s top three trade partners. But for the US, its negative trade balance with India is a cause for concern. In services, the US is India’s largest market for exports.

India enjoys a large positive trade balance in telecommunications, computer and information services, reaching $13 billion in 2023. The US, in turn, exports to India a diverse range of services from insurance and finance to audio-visual services. This positive trade balance of India in both goods and services is complemented by significant foreign direct investment (FDI) inflows from the US.

From April 2000 to June 2024, the US accounted for 10% of India’s total FDI equity inflows. Recently, US companies have also invested in India’s supercomputer industry. Therefore,