India’s recent trade celebrations around the EU, UK and Japan deals often eclipse the stark reality of its trade data. Between 2020‑25, India’s annual goods surplus with the United States averaged $42 billion, whereas the combined surplus from the three celebrated partners was only about $12 billion – a four‑to‑one ratio that should steer the national strategy.

The Significance of the US Relationship

India’s comparative strengths – generic pharmaceuticals, electronics assembly adjacent to software, and skilled labour‑intensive goods – find a ready market in the US. A comprehensive FTA that removes remaining tariffs on these categories would cement demand for Indian exports and open the door for Indian IT and professional services, a sector that has yet to receive a dedicated trade framework.

Limitations of EU, UK and Japan Agreements

Although the EU‑India FTA has lowered tariffs on textiles and jewellery, rates of 9‑12% still persist, while Vietnam enjoys zero rates under a similar pact. The UK’s CETA delivers duty‑free access for 99% of Indian exports, yet the current goods surplus is a modest $5 billion. Japan’s CEPA eliminated most tariff barriers, but non‑tariff obstacles keep India in a trade deficit with the island nation.

China’s Deficit and the Bigger Picture

India’s goods trade deficit with China hit a record $99 billion in 2024‑25, with imports of $113 billion against exports of just $14 billion. Even the combined surplus from the EU, UK and Japan would cover less than one‑eighth of this shortfall. In this context, a robust US FTA would not only preserve the existing surplus but also counterbalance China’s growing dominance.

Conclusion

India’s trade agenda should be driven by the magnitude of economic gains, not merely the popularity of agreements. A balanced, goods‑and‑services FTA with the United States would be the most consequential contract India has ever signed, aligning with its ambition for a market‑oriented growth trajectory.