India-US Trade Deal Gives India a Strategic Edge; Exports Could Cross $100 Billion

New Delhi, February 12:
India has gained significant advantages from the recently finalized India-US trade agreement, according to SBI Research. The analysis suggests that India’s annual trade surplus with the United States could rise to $45 billion, while exports may surge to $100 billion, signaling a transformative shift in bilateral trade relations.

The report highlights that the agreement has cut reciprocal tariffs on Indian goods by up to 18%, making India one of the most competitive Asian exporters in the US market—lower than rates applied to Vietnam and most ASEAN economies. This tariff reduction substantially improves India’s relative pricing power across multiple sectors.

Boost to GDP and Foreign Exchange

SBI Research estimates that India’s GDP could rise by about 1.1% due to the deal. The reduction in import duties is also expected to save around $3 billion in foreign exchange annually. Even after accounting for a projected $55 billion increase in imports from the US, India’s net goods trade surplus with the US could reach $45 billion, pushing the total bilateral surplus above $90 billion per year.

Exports Supported by Unmet US Demand

The US has a total annual import demand exceeding $3 trillion, yet India currently meets only about 3% of this demand. Key sectors with significant export potential include electrical machinery, pharmaceuticals, engineering goods, gems and jewelry, textiles, chemicals, vehicles, and seafood. The top 15 product categories alone could drive $97 billion in incremental exports annually, with the total potential exceeding $100 billion when additional products are included.

Agriculture Benefits

Nearly 75% of India’s agricultural exports to the US will now face zero additional tariffs, covering rice, spices, tea, coffee, oilseeds, nuts, and seafood. India already maintains a $1.3 billion agricultural trade surplus with the US, and the tariff reduction is expected to benefit farmers, fishermen, and plantation sectors directly. The US currently sources around 25% of its rice imports from India, with further growth anticipated in seafood and spice exports.

Strategic Entry into Global Supply Chains

On the import side, India has agreed to reduce or eliminate tariffs on a wide range of US industrial and agricultural products, planning to purchase $500 billion worth of American goods over the next five years, including energy, aviation, technology, and precious metals. SBI Research notes that the overall balance decisively favors India.

The deal also opens doors for a China+1 supply chain diversification strategy, particularly in electronics, enabling India to substitute Chinese imports while positioning itself as a hub for global exports. This could attract US investments into India, adding value to domestic manufacturing and strengthening India’s role in global supply chains.

A Game-Changer for India

Overall, the India-US trade agreement positions India in a strong strategic and economic stance. By improving export competitiveness without compromising sensitive domestic sectors, the deal has the potential to boost manufacturing, increase exports, strengthen the external balance, and deepen India’s role in global supply chains. Analysts view this agreement as a decisive shift in India-US economic engagement, with far-reaching implications for India’s growth trajectory.