$500 billion target; plans for trade pact to help India boost its exports to US: Exporters

A target to take bilateral trade to USD 500 billion by 2030 and plans to negotiate a bilateral trade agreement will help India boost its exports to the US, say exporters. The focus on technology, defence, and green energy will particularly benefit India's export sectors and enhance global competitiveness, exporters said.

Federation of Indian Export Organisations (FIEO) President Ashwani Kumar underscored the importance of enhancing bilateral trade by eliminating barriers and streamlining processes.

International trade expert and Hi-Tech Gears Chairman Deep Kapuria said that the USD 500 billion bilateral trade target is an important outcome of Prime Minister Narendra Modi's high-level visit to Washington.

"Since India has surplus in trade with the US, it would bring significant gains to India in terms of enhanced export to the world's largest economy. What is important here is that the two leaders have agreed to negotiate the first tranche of a mutually beneficial multi-sector bilateral trade agreement by fall of 2025," he said.

Kapuria added that this decision will give a big boost to US investors who want to relocate to India and also looking for new investment opportunities in India.

"For Indian industry, this is a great opportunity to enhance their exports to the US as well as integration into GVCs (global value chains) led by US companies," he said.

However, economic think tank GTRI (Global Trade Research Initiative) said that a full India-US FTA appears unlikely.

"The US prioritizes securing the best tariff deals but has little appetite for broad FTA-driven tariff cuts. India also has limited gains in services, as Washington is unwilling to expand business visas," GTRI Founder Ajay Srivastava said.

He added that many trade issues are already covered under the US-led Indo-Pacific Economic Framework (IPEF), where India is a member.

Additionally, Trump's tariffs on Mexico and Canada, despite the USMCA (United States-Mexico-Canada Agreement), signal his scepticism toward trade agreements.

"Given these factors, India should focus on sector-specific deals instead of pursuing a comprehensive FTA," Srivastava said.

In 2023, the US and India bilateral trade in goods and services stood at USD 190.08 billion (USD 123.89 goods and USD 66.19 services trade). In that year, India's merchandise exports to the US stood at USD 83.77 billion, while imports were USD 40.12 billion, leaving a trade gap of USD 43.65 billion in favour of India.

The country's services exports to America were USD 36.33 billion in 2023, while imports were USD 29.86 billion. The trade gap (difference between imports and exports) was USD 6.47 billion in favour of New Delhi.