Author: Shivangi Acharya and Jaspreet Kalra
NEW DELHI, Feb 11 (Reuters) – India’s stated intention to buy $500 billion in U.S. goods over five years under a trade deal has raised suspicion, with economists warning it could distort commercial purchases and significantly reshape New Delhi’s trade balance.
U.S. President Donald Trump last week said he would cut tariffs on Indian goods from 50% to 18%, giving India relief. But he demanded that New Delhi more than double its annual imports of U.S. goods in return.
Bilateral trade volume in 2024-25 is $132 billion, of which India has a surplus of about $41 billion.
Trade experts and economists question whether $100 billion in annual imports are feasible without clear policies to push companies to switch to U.S. suppliers.
“The math just doesn’t add up,” said economist Madhavi Arora of Emkay Global, who called the target “more idealistic than realistic.”
A joint statement issued by the two countries stated that India intended to purchase US$500 billion worth of US goods – wording that was not binding at all.
But Trump has shown little patience with countries that fall short, including raising tariffs on some South Korean goods to 25% from 15% in late January after saying Seoul failed to legislate a previous deal.
India plans to step up purchases of oil, natural gas, coking coal and aircraft from the United States, the two countries said in a joint statement.
Arora warned that such a target could mean a government push for private airlines and corporate purchasing decisions, which could be inefficient.
While India is eyeing big orders from Boeing as part of the plan, some analysts say companies may still favor Airbus if commercial terms are better.
Indian markets stabilized after a first relief rally, but economists said investors appeared wary of the $500 billion headlines.
“The market appears to be somewhat skeptical of $500 billion in buying intentions,” ANZ economist Dhiraj Nim said.
India’s largest market
The US is India’s largest export destination, accounting for nearly a fifth of the Asian country’s total exports in the 2024-25 financial year.
If exports remain near pre-tariff levels and imports rise sharply, India’s largest bilateral surplus could shrink and widen its overall trade deficit. India’s goods trade deficit will total $283.5 billion in 2024-25.
Biswajit Dhar, an independent trade expert, said: “If it reaches $100 billion a year, it will completely disrupt India’s trade balance.”
