India-US trade deal: New Delhi's trade surplus with Washington may shrink as bilateral trade deal nears finalisation - Report

India’s trade surplus with the United States, which stood at $41.18 billion in FY25, is likely to narrow following the conclusion of a bilateral trade agreement (BTA), a CRISIL research report has said.

The first phase of this deal is expected to be finalised by September 2025, as both countries aim to reach a balanced and mutually beneficial pact.

According to CRISIL's 'Quickonomics' analysis, the reduction in tariffs under the BTA would make US goods more competitive in the Indian market, especially in sectors such as energy, agriculture, defence and aviation. “India should be prepared to see more imports from the US under BTA,” the report noted, adding that New Delhi’s average tariff levels are much higher than Washington’s, and tariff rationalisation would favour US exporters.

As per news agency PTI, the US paused its proposed 26% reciprocal tariff on Indian goods for 90 days starting April 10, during which time negotiations have intensified. The baseline 10% duty remains applicable in this period. The US had rolled out these tariffs in April 2025, targeting countries with high trade surpluses, including India.

Officials familiar with the talks said both sides held productive discussions on key areas such as market access, digital trade, customs facilitation, and sanitary and technical barriers. An interim trade deal may be finalised before the July 9 deadline, with India seeking full exemption from the reciprocal tariffs.

India is currently the US’s largest trading partner, with bilateral trade touching $131.84 billion in 2024-25. However, CRISIL cautioned that while imports from the US could rise, India’s exports may not see a significant jump. Most top exports from India, including pharmaceuticals and garments, already enjoy duty-free access in the US.

On the import side, India's growing energy needs, especially in LNG, could align well with US supply capabilities. CRISIL said the synergy in LNG trade is stronger than crude oil due to better pricing stability and long-term contracts.

In agriculture, imports of US items like walnuts, pistachios, and cranberries could increase, though India's resistance to broad agricultural access remains.

Defence is another area where trade may expand. “While India is boosting its domestic defence production, it remains one of the largest arms importers,” the report said, noting that the US, as the world’s largest arms exporter, has begun stepping up its defence collaboration with India, including through initiatives like the INDUS-X ecosystem launched in 2023.

Despite likely pressure on India’s trade surplus, the report identified opportunities for boosting Indian exports in labour-intensive sectors such as textiles, gems and jewellery, and in high-value products like smartphones and pharma.

India and the US are currently negotiating a multi-sector BTA, which both sides see as a step towards deeper economic engagement.

As one official was quoted by PTI as saying, “The negotiations were productive and helped in making progress towards crafting a mutually beneficial and balanced agreement, including through achievement of early wins.”