India has committed to purchasing more industrial goods from the United States, a move made following Prime Minister Narendra Modi's recent visit to the U.S.
This promise comes as the latest trade data reveals India's merchandise trade deficit for January 2025 stood at $22.99 billion, which aligns closely with the expectations of economists.
The deficit for the month was slightly higher than the $22.35 billion predicted in a Reuters poll but remains within anticipated levels.
In terms of merchandise trade, India's exports for January amounted to $36.43 billion, a decrease from $38.01 billion recorded in December 2024.
Meanwhile, imports for January were reported at $59.42 billion, slightly lower than the $59.95 billion seen the previous month.
A significant portion of the exports was driven by electronics, with pharmaceuticals and rice also contributing notably to the numbers.
Trade Secretary Sunil Barthwal highlighted these sectors as key drivers for the country’s export performance.
Services trade, on the other hand, showed growth in January. India’s services exports were estimated at $38.55 billion, while imports stood at $18.22 billion.
Both figures marked an increase from December, when services exports were recorded at $32.66 billion and imports at $17.50 billion. These changes reflect a robust performance in the services sector, which is one of India’s strong economic pillars.
This data was released shortly after Prime Minister Modi’s U.S. visit, during which both countries made progress in resolving ongoing tariff issues. As part of the discussions, India agreed to purchase more U.S. oil, gas, and military equipment.
The trade deficit data also comes amid growing tensions surrounding tariffs, as U.S. President Donald Trump announced plans to impose reciprocal tariffs on countries, including India, that impose high tariffs on U.S. goods.
Currently, India’s tariffs are among the highest globally, with Trump proposing that India should pay the same tariffs on U.S. goods as India imposes on American imports.
The trade imbalance between the U.S. and India remains significant, with the U.S. carrying a $45.6 billion trade deficit with India. According to World Trade Organization data, the U.S. has an average tariff rate of about 2.2 pc, compared to India’s 12 pc.
These figures have set the stage for more intense negotiations between the two nations. Both countries have committed to a tough timeline for reaching the first phase of a trade deal, focusing on addressing tariff concerns and increasing U.S. exports of industrial goods to India.
India is also keen on negotiating a reduction in tariffs from the U.S. in certain sectors, aiming to strike a fairer balance in trade relations.
Among the key areas under discussion are the import duties on products like electronic goods, pharmaceuticals, and agricultural commodities, which form a major part of India’s export basket.
January’s trade figures also saw a decline in India’s imports of gold, which fell to $2.68 billion from $4.7 billion in December. This decrease is attributed to global gold prices and market conditions, influencing demand.
Similarly, crude oil imports also fell, reaching $13.4 billion compared to $15.2 billion the month before. Despite these reductions, India’s import dependence remains a major challenge in narrowing its overall trade deficit.
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