India’s Trade Surplus with the US: Growth Fueled by Exports Despite Tariff Hurdles
India has experienced a significant increase in its trade surplus with the US, despite facing tariff challenges from the American administration. According to data released by the commerce ministry, India’s trade surplus with the United States surged by 16.6% in the financial year ending March 2025, rising to $41.18 billion from the previous year’s $35.32 billion.
Increase in Trade Surplus and Export Growth
The increase in surplus is driven primarily by a boost in Indian goods exports to the US, which rose by 11.6%. India’s exports climbed from $77.52 billion in FY24 to $86.51 billion in FY25, with major exports including electronic goods, textiles, pharmaceuticals, engineering products, gems and jewelry, petroleum products, and various agricultural goods.
However, imports from the US also experienced an uptick, albeit at a slower pace, increasing by 7.42% from $42.20 billion to $45.33 billion in the same period. Despite the rise in imports, the trade surplus still saw substantial growth, highlighting the strength of Indian exports to the American market.
Impact of Tariff Policies
The trade dynamics have been under pressure with the US administration under President Donald Trump raising tariffs on Indian goods to 27% on April 2nd. However, this move was temporarily halted when a 90-day pause on tariff hikes for all countries was announced on April 9th.
Meanwhile, globally, India’s trade deficit soared to $21.54 billion in March from a three-year low of $14.05 billion in February. The global trade scenario reflects the challenging economic conditions as merchandise exports for FY25 stood at $437.42 billion, barely exceeding the $437.07 billion achieved in FY24. Imports, however, increased significantly to $720.24 billion in FY25 from $678.21 billion in the previous fiscal year.
Detailed Figures and Growth Analysis
March’s exports reached $41.97 billion, while imports were at $63.51 billion, indicating a sharp increase compared to February’s figures of $36.91 billion in exports and $50.96 billion in imports. The spike in imports was partly fueled by a surge in oil imports, which jumped to $19 billion in March from $11.8 billion in February. This marks the highest monthly oil import bill since May 2024.
Services exports also showed positive trends, rising by 12% to $383.51 billion, while services imports rose by 9% to $194.95 billion in FY25. Despite these positive developments, the overall merchandise export figure fell short of expectations, with the Export-Import Bank of India predicting a full fiscal year target of $446.5 billion, which was not met.
Trade Relations with China
Imports from China rose by 11.5%, while exports to the Chinese market decreased by 14.5%, revealing a shift in trade dynamics with one of India’s significant trading partners.
Economic Outlook
The US remains India’s top export destination, followed by the UAE, Netherlands, and the UK. The continuous challenges faced in global markets include weak demand, geopolitical tensions, and volatile commodity prices, compounded by reciprocal tariff actions threatened by the US.
Commenting on the trade scenario, Commerce Secretary Sunil Barthwal expressed optimism, saying, “The export sector has performed exceptionally well, surpassing the $800 billion milestone. We aim to continue this momentum into FY26.”
Industry leaders share mixed reactions, with Colin Shah of Kama Jewelry highlighting the need for swift relief measures amid ongoing global uncertainties and tariff threats. Despite the challenges, India approaches the future with cautious optimism.
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