The two nations' trade was approximately $129.2 billion in 2024, with the U.S. importing $87.4 billion worth of goods from India, an increase from last year of 4.5%. The United States and India have established a robust trade relationship, exchanging various goods and services over the years. As two influential economies in the global market, the relationship between the two nations has evolved significantly through mutual interest, new technology, and growing consumer demand. The trade of approximately $129.2 billion during 2024 indicates that the relationship between the two nations is becoming stronger.

Main Types of US Imports from India

The U.S. imported $87.4 billion worth of goods from India last year, an increase of 4.5% from the previous year. This consistent rise indicates that India has emerged as a significant source of various products to the U.S., such as drugs, machinery, textiles, and information technology services. The U.S. imports various items from India that span vital sectors:

1. Precious Stones and Metals:

This category includes items such as diamonds, gold jewelry, and other precious stones, and it will amount to approximately $12.36 billion in 2023.

2. Electrical Machinery and Equipment:

Encompassing products like telecommunications equipment and circuit boards, imports in this sector were valued at around $12.08 billion in 2023. 

3. Pharmaceuticals:

India is a significant supplier of generic medicines to the U.S., with pharmaceutical imports totaling about $10.97 billion in 2023. 

4. Machinery:

This includes industrial machinery and mechanical appliances, with imports valued at approximately $6.67 billion in 2023. 

5. Mineral Fuels and Oils:

Covering products like refined petroleum, imports in this category were around $5.14 billion in 2023. 

6. Organic Chemicals:

This sector includes various chemical compounds used in different industries, with imports totaling $3.86 billion in 2023. 

7. Textiles and Apparel:

India exports a variety of textiles and clothing items to the U.S., amounting to $2.92 billion in 2023. 

8. Iron and Steel Products:

This category includes various metal products, with imports valued at $2.88 billion in 2023. 

9. Vehicles:

Including automobiles and parts, imports in this sector were approximately $2.70 billion in 2023. 

New Changes And New Trends

The business relationship between the US and India has seen some highs and lows:

- Trade Policies and Tariffs:

India's exports have faced pressure due to stringent trade policies from the U.S. and the European Union. Notably, the U.S. decision to escalate import tariffs and the implications of the CHIPS Act have impacted various sectors, including automobiles and agriculture. These measures could result in an estimated annual loss of $7 billion for Indian exporters.

- Trade Negotiations:

In response to potential tariffs, India's Trade Minister, Piyush Goyal, embarked on a visit to the U.S. to engage in negotiations aimed at clarifying the impact of these tariffs and discussing possible concessions to enhance bilateral trade. 

- Pharmaceutical Sector Concerns:

The U.S. consideration of imposing heavy tariffs on pharmaceutical imports has created uncertainty among Indian drugmakers, who supply nearly half of the generic medications in the U.S. market. Industry leaders have expressed concerns about the practicality and cost implications of relocating manufacturing to the U.S.

New Areas of US-India Trade

The U.S. imports a significant number of IT and software services from India, making it a crucial aspect of bilateral trade. India excels in software development, cloud computing, and AI services, contributing billions to the U.S. economy. Additionally, India is emerging as a key player in the automotive components market, with many American automakers relying on Indian suppliers for essential parts. The agricultural sector also plays a vital role in trade, as India exports large quantities of farm products such as spices, tea, rice, and seafood, benefiting the American food industry and retail sector.

Improving Trade through Novelty and Regulation

The trade balance is shifting because the industries in both nations are seeking new opportunities in green energy, tech, and infrastructure. The Indo-Pacific Economic Framework (IPEF) initiatives and trade deals are supporting this positive shift through the attempt to decrease tariffs and diversify the supply chain. India aims to raise manufacturing through the 'Make in India' campaign, whereas the US aims to diversify the supply chain. The volumes of trade will rise further in the next couple of years.

United States - India Trade Relations and Future Prospects

Even though trade rules are flawed, the U.S. and India are continually attempting to strengthen their economic relationship through intelligent partnerships. Constant negotiations regarding trade, deals, and diplomacy will generate more business opportunities for both nations. Improved technology and the expanding service sector will further strengthen India's role as a crucial trade partner to the U.S.

The Role of Small and Medium Businesses (SMBs) within US-India trade Small and medium enterprises (SMEs) play a very crucial role in exporting to the U.S., particularly in the sectors of textiles, crafts, and information technology services. The majority of SMEs export specialty, made-to-measure products that appeal to specific groups within the U.S. Government initiatives, such as trade fairs and financial assistance, have also contributed to growing SME exports to the U.S.

SMEs are crucial to the organic chemical and pharmaceutical industries. They employ low-cost manufacturing strategies and innovative concepts to remain globally competitive. Digitalization and online marketplaces simplify international transactions, making it easier for Indian SMEs to expand further in trade with the U.S.

How Different Supply Chains Influence Businesses

As global supply chains evolve, the US and India are looking to shift away from certain markets. US businesses are transferring manufacturing and sourcing away from China to India due to lower labor costs, improved infrastructure, and initiatives such as the government's Production-Linked Incentive (PLI) scheme.

The different components of the supply chain are used to ship electronics, semiconductors, and industrial machinery to the US. This shift provides new opportunities to Indian businesses to establish enduring trade relationships with American businesses to ensure steady trade growth.

A Growing Trade Partnership with a Promising Future

The trade relationship between the US and India benefits both nations. They sell and purchase a lot of things, such as gold, medicine, and technology services. There are issues like taxation and regulations, but both nations are attempting to maintain trade. With the growth of new industries, the US-India partnership will be crucial to the future. Looking to navigate international trade opportunities? Momex offers expert guidance in trade consulting, supply chain management, and market expansion strategies. Contact us today to optimize your trade operations and unlock new business potential!

FAQ

1. What are the primary imports that the US makes from India?

The U.S. imports valuable stones and metals, electric appliances, drugs, machinery, fuel minerals, organic chemicals, fabrics, iron and steel, and automobiles from India.

2. How has the US- India trade relationship evolved during the last couple of years?

The trade relationship has grown significantly, with total goods trade reaching $129.2 billion in 2024. However, challenges such as tariff disputes and policy changes have also emerged, impacting certain sectors.

3. What has the new US trade regime done to Indian trade?

Recent U.S. trade policies, including increased tariffs, have put pressure on Indian exports, potentially leading to significant annual losses for exporters in sectors like automobiles and agriculture.

4. How does the current policy influence the export of drugs from the U.S. to India?

The U.S. consideration of imposing heavy tariffs on pharmaceutical imports has created uncertainty among Indian drugmakers, who supply a substantial portion of generic medications to the U.S. market. 

5. What are the measures that can be taken to address trade issues between the two nations?

Indian officials, including the Trade Minister, are engaging in negotiations with their U.S. counterparts to discuss potential concessions and strategies to enhance bilateral trade and address imbalances. 7 The trade relationship between the US and India is complex and consists of numerous types of products and industries. There are issues to be solved, but negotiations are underway to strengthen this vital economic relationship.