India's US Trade Surplus Hits 3-Year Low Amid Record Imports and Stabilizing China Exports.

India's Trade Surplus with US Narrows to Lowest in Three Years

India's imports from the United States have hit a record high in 2025-26, reaching $52.90 billion, more than doubling over the past decade. This surge in imports, driven by higher purchases of crude oil and liquefied natural gas (LNG), has led to a sharp narrowing of India's trade surplus with the US, which fell to $34.41 billion from $40.88 billion in the previous fiscal year.

The decline in trade surplus is attributed to a significant increase in crude oil imports from the US, which rose 62.6 percent to $9.45 billion during April 2025-February 2026, up from $5.81 billion in the corresponding period last year. Despite tariff-related uncertainties, the US remained India's top export destination in FY26, with outbound shipments rising 0.92 percent year-on-year to a record $87.31 billion from $86.51 billion in FY25.

However, exports to the US declined 20.95 percent in March 2026 to $8.02 billion from $10.15 billion during the same month last year, while imports rose 14.40 percent to $4.31 billion. This decline in exports is largely due to the imposition of elevated tariffs on several Indian goods in the US market, which were introduced as part of the Section 232 tariffs.

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Notably, exports to China provided a cushion, surging 36.66 percent to $19.48 billion during the year and helping offset weaker demand in other regions. Exports to key West Asian markets, however, showed signs of strain, with shipments to the United Arab Emirates growing a modest 1.99 percent to $37.37 billion in FY26, while those to Saudi Arabia declined 12.53 percent to $10.28 billion.

India's total merchandise exports in FY26 stood at about $441.8 billion, registering a marginal year-on-year growth of around 0.9 percent. The country's dependence on China remains high, with the country continuing as India's top import source, as inbound shipments rose 16.03 percent to $131.63 billion in FY26.

Against this backdrop, India and the US are expected to finalize the interim trade agreement soon, which would help secure relatively lower and more predictable tariff rates for Indian exports. The agreement would also help address the concerns raised by President Donald Trump, who had repeatedly flagged the imbalance and pushed for more reciprocal trade terms.

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