US-India Trade Deal: How Much Does India Need A Trade Deal With The US? Here's What Data Shows

US-India Trade Deal: As the August 1 deadline set by US President Donald Trump for new tariffs approaches, trade tensions between the US and its global partners—including India—are heating up. 

While Trump has already announced a 25% tariff on imports from Japan and South Korea, he has also threatened a 30% duty on European goods and warned of tariffs as high as 200% on Indian pharmaceutical exports if companies don’t start manufacturing in the US within 12–18 months.

Despite these tensions, Trump remains optimistic. “We have some pretty good deals to announce,” he said recently, hinting at a possible trade deal with India. 

Talks are underway with an Indian delegation in Washington, but an agreement has been elusive. From dairy exports involving “non-veg milk” to genetically modified crops and high Indian tariffs, several issues have stalled progress.

Why the US Market Matters Deeply for India

The US is India’s largest export destination and a vital source of trade surplus. In FY25, India recorded a trade surplus of $41.2 billion with the US. Nearly 18% of India’s total merchandise exports go to the United States, according to Trendlyne data.

When it comes to specific sectors, the US is critical. Electronics exports to the US stood at $12.6 billion, making up 31.4% of India’s total electronics exports. Gems and jewellery followed at $9.3 billion (31%), and pharmaceuticals at $8.9 billion (19.7%). The US also absorbs large volumes of Indian machinery ($6.5 billion), mineral fuels ($4.5 billion), iron and steel ($3 billion), textiles ($2.9 billion), auto components ($2.7 billion), and apparel ($2.6 billion).

In certain segments, such as textiles, the US accounts for 48.8% of India's total exports, underscoring the significant reliance of some Indian industries on the American market.

The Corporate Export Heavyweights

India’s biggest companies have significant stakes in the US market, as per Trendlyne data. Reliance Industries is the largest merchandise exporter to the US, with a massive market capitalisation of Rs 20,03,483 crore and a momentum score of 58.7. Sun Pharma comes next with a market cap of Rs 4,09,998 crore and a momentum score of 50.1.

Other major exporters include Hindalco Industries (Rs 149,665 crore market cap) in aluminium products, Motherson (Rs 108,626 crore) in auto parts and equipment, and Dixon Technologies (Rs 97,620 crore) in consumer electronics.

Glenmark Pharma stands out in the pharmaceutical space with a high momentum score of 68.5, despite a relatively smaller market cap of Rs 63,086 crore.

Agrochemical companies like PI Industries and UPL also feature on the list, with momentum scores of 59.7 and 59.5, respectively.

Services Sector: India's Quiet Strength

While merchandise exports dominate headlines, services exports have been India’s real success story. Between 2015 and 2024, India’s services exports jumped 124%, from $152 billion to $341.1 billion. In contrast, merchandise exports grew only 39%, from $314 billion to $437.1 billion.

This trend reflects India’s comparative strength in sectors like software, IT services, consulting, and financial processing—areas less impacted by tariffs but still vulnerable to broader trade policy shifts.

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What's at Stake?

With the US being such a key trade partner, India has a lot to lose if talks break down. Trump has said India is the “highest tariffed nation in the world,” and while this is a typical exaggeration, India’s average import tariffs (12%) are still higher than China (3%), Vietnam (5%), or Japan (2%).

Trump’s threat of imposing new tariffs could severely hurt exports, especially from pharma and agrochemicals.

At the same time, India has shifted from being inward-looking to actively pursuing trade deals with the UK, EU, and Australia and providing incentives to exporters.

However, a successful US-India trade compact, dubbed "COMPACT" (Catalysing Opportunities for Military Partnership, Accelerated Commerce & Technology), would be a breakthrough.

How Much Does India Need a Trade Deal With US

The cost of not signing a deal could be high. A 200% tariff on pharma products could seriously hurt Indian drugmakers. Higher duties on other products like electronics and chemicals would reduce competitiveness and profitability. Companies may also hesitate to invest in India as a global manufacturing hub without a stable trade relationship with the US.

India has clearly become more outward-looking in recent years, pursuing trade agreements with the UK, EU, and Australia. However, a trade deal with the US remains its most urgent priority. The American market is too big, too profitable, and too influential to ignore. A well-negotiated deal could protect India’s exports, boost investor confidence, and help India strengthen its position as a global economic force.