India-US trade relations: A MEGA $500 bn vision

MAGA meets MIGA! Indian Prime Minister Narendra Modi and U.S. President Donald Trump convened for their highly anticipated bilateral meeting yesterday, with President Trump hosting PM Modi for an Official Working Visit.

As the Trump 2.0 administration ushers in a renewed emphasis on ‘Making America Great Again (MAGA)’ through a recalibrated trade policy, business leaders from both nations keenly observed the discussions, recognizing their potential to shape the future of India-US economic and strategic ties.

During the visit, the two leaders launched a new initiative – the “US-India COMPACT (Catalyzing Opportunities for Military Partnership, Accelerated Commerce & Technology) for the 21st Century” – to drive transformative change across key pillars of cooperation. They committed themselves to a results-driven agenda.

Indian PM Shri Narendra Modi stated during his address, “Americans are familiar with President Trump’s motto, Make America Great Again, or “MAGA.” The people of India are also moving towards development at a fast pace with the determination of “Viksit Bharat 2047” on the track of heritage and development. If I say in the language of America, developed India means Make India Great Again, i.e. “MIGA”. When the United States and India work together, i.e. “MAGA” plus “MIGA”, the “MEGA” Partnership for prosperity is formed.”

While it is India’s largest export market, the US has a very high merchandise trade deficit with India at around US$ 35 billion in 2023-24.

India’s major merchandise exports to the US in 2023-24 included the following:

• Diamonds (US$ 5.6 billion, 7.2% share)
• Smartphones (US$ 5.6 billion, 7.2% share)
• Other – Petroleum oils (US$ 4.4 billion, 5.7% share)
• Medicines (US$ 3.35 billion, 4.2% share)
• Photovoltaic cells (US$ 1.9 billion, 2.5% share)
• Vannamei Shrimp (US$ 1.7 billion, 2.2% share)

PM Modi and President Trump resolved to deepen the US-India trade relationship to promote growth that ensures fairness, national security and job creation. For this, they set an ambitious goal for bilateral trade – “Mission 500” – which aims to more than double bilateral trade to US$ 500 billion by 2030.

For this, they have announced plans for the first tranche of a mutually beneficial, multi-sector Bilateral Trade Agreement (BTA) by fall of 2025. The agreement is aimed at strengthening and deepening bilateral trade across the goods and services sectors, increasing market access, reducing tariff and non-tariff barriers, and deepening supply chain integration.

India has recently lowered tariffs on US bourbon, motorcycles, ICT products and metals, and also eased access for US agricultural products, like alfalfa hay and duck meat, and medical devices. On the other hand, US has taken steps to increase exports of Indian mangoes and pomegranates to the United States. Both sides have also committed to collaborate to enhance bilateral trade by increasing US exports of industrial goods to India and Indian exports of labor-intensive manufactured products to the US. Agricultural goods have been also earmarked as a major area of focus.

Similarly, they have committed to support US and Indian companies looking to make greenfield investments in high-value industries of each other’s economies. Ongoing investments by Indian companies worth approximately $7.35 billion were appreciated, such as those Hindalco’s Novelis in finished aluminum goods at Alabama and Kentucky; JSW in steel manufacturing operations at Texas and Ohio; Epsilon Advanced Materials in the manufacture of critical battery materials in North Carolina; and Jubilant Pharma in the manufacture of injectables in Washington. These investments are supporting over 3,000 high-quality jobs for local families.