New Delhi: US claims of a deficit in its bilateral trade with India —the reason it cites for imposing stiff tariffs—are misleading as Indians buy billions of dollars’ worth of American services and arms, a think-tank said on Monday.
Global Trade Research Initiative (GTRI) said calculations must take into account the trade in both goods and services, whereas the US figures are on goods alone.
It said the US is actually sitting on a “hidden” economic surplus of $35–40 billion with India—challenging the narrative of a one-sided trade relationship where the US buys far more than India.
The report finds that the US earns $80–85 billion annually from India through sectors such as education, digital services, finance, intellectual property, and even arms. Arms sales don’t show in official figures.
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“Trade in goods is only one slice of the pie,” said Ajay Srivastava, co-founder, GTRI. “When India negotiates trade agreements, it must look at the full economic picture. The US already earns handsomely from India. It cannot claim victimhood on the basis of a narrow deficit figure.”
In FY2025, India recorded a trade surplus of $44.4 billion with the US in goods and services, as per commerce ministry data. India exported $86.5 billion in goods and $28.7 billion in services to the US, while importing $45.3 billion and $25.5 billion respectively.
President Donald Trump, however, has repeatedly exaggerated the gap, claiming as recently as in February that the US suffers a $100 billion trade deficit with India—more than double the actual figure.
But trade experts argue that the even these official trade deficit figures do not capture the full economic reality.
When US earnings from education, digital services, financial operations, intellectual property royalties, and arms sales to India are taken into account, the balance actually shifts in America’s favour, and significantly so, according to the GTRI report released on Monday.
“US universities are among the top beneficiaries. Nearly 300,000 Indian students spend over $25 billion annually in the US, including $15 billion in tuition fees and another $10 billion in living costs. Top institutions like the University of Southern California (USC), New York University (NYU), and Northeastern have thousands of Indian students enrolled, making education one of America’s most lucrative informal exports,” the report said.
“US tech giants like Google, Meta, Amazon, Apple, and Microsoft earn an estimated $15–20 billion annually from India’s rapidly growing digital market through digital ads, cloud services, app stores, software and device sales, and streaming subscriptions — with most of this revenue flowing straight back to the US due to minimal local rules on data and taxation,” the GTRI report said.
India’s growing financial sector also adds to US earnings. Firms including Citibank, JPMorgan, Goldman Sachs, McKinsey, BCG, Deloitte, PwC, and KPMG are estimated to earn $10–15 billion annually from their work in India’s financial sector, advising companies, managing corporate deals, and providing high-end services, the report said.
Another major source of US income comes from Global Capability Centers (GCCs) operated by companies like Walmart, Dell, IBM, Wells Fargo, Cisco, and Morgan Stanley in Indian tech hubs such as Bengaluru and Hyderabad.
“These back-end offices manage global functions in technology, finance, and analytics. Though the bulk of the work happens in India, the actual economic value is largely recorded in the U.S.,” the report said, adding that GCCs generate an estimated $15–20 billion in annual revenue through their India-based operations.
US pharmaceutical companies such as Pfizer, Johnson & Johnson, and Merck earn an estimated $1.5–2 billion annually from India through patents, drug licensing, and technology transfers, it said.
“American auto majors like Ford and General Motors, along with their component suppliers, generate another $0.8–1.2 billion from licensing agreements and technical services. Meanwhile, Hollywood studios and US-based streaming platforms earn $1–1.5 billion each year from Indian box office revenues, subscriptions, and content licensing, with Netflix alone reportedly investing $400–500 million annually in Indian content,” the GTRI said in its report.
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Defence is another key area. While precise figures remain classified, the US has sold billions of dollars worth of military equipment to India over the past decade, including aircraft, helicopters, and surveillance systems. These deals often include long-term maintenance and technology contracts.
Meanwhile, people aware of India’s negotiating strategy told Mint that New Delhi is aware of this imbalance and is unlikely to accept sweeping US demands—particularly on digital trade, government procurement and IP protection—without reciprocal benefits.
“If the US wants to focus narrowly on tariffs, India may do the same,” an official said on the condition of not to be named.
Talks on a Bilateral Trade Agreement (BTA) are in the final stage, and a high-level Indian delegation led by union commerce minister Piyush Goyal returned late Sunday after holding high-stakes deliberations with their counterparts in Washington.
Talks are in the final stage and the first tranche of the much-awaited trade deal is likely to be inked before 8 July—the deadline for the expiry of the reciprocal tariffs imposed by the US on over 60 countries.
Source:https://www.livemint.com/news/us-india-bilateral-trade-deficit-goods-services-gtri-11748272472726.html