US isn't running trade deficit with India, think tank GTRI decodes hidden surplus

New Delhi [India], May 26 (ANI): US President Donald Trump's regular targeting of India about the trade deficit and accusations that India unfairly benefits from trade are incorrect, argued Global Trade Research Initiative (GTRI) in a report, explaining threadbare how India fuels US profits beyond trade what it termed it as "hidden surplus".

President Trump's trade deficit narrative is "misleading and incomplete", said trade think tank GTRI.

In 2024-25, the US recorded a trade deficit of about USD 44.4 billion with India, meaning it imported far more goods and services from India than it exported. On February 13, 2025, President Trump claimed the US had a USD 100 billion trade deficit with India, though the actual figure is under USD 45 billion.

According to GTRI founder Ajay Srivastava, "this trade deficit narrative is misleading and incomplete" as the US "quietly" rakes in USD 80-85 billion every year from India through education, digital services, financial operations, intellectual property royalties, and arms sales.

"These massive earnings don't show up in the narrow goods trade statistics. When you factor them in, the US isn't running a deficit with India at all -- it's sitting on a USD 35-40 billion surplus," said Srivastava in the report.

"Far from being a victim in the relationship, the US is a top beneficiary," he said.

For India, he said, this means it has every reason to walk into free trade agreement negotiations with confidence, pushing back hard against inflated deficit claims and demanding fair, balanced terms that reflect the full economic relationship.

"If the US insists on focusing solely on the trade deficit, then India should narrow the conversation strictly to tariff cuts -- and firmly refuse to entertain talks on government procurement, digital trade, intellectual property, and the many other areas where U.S. firms stand to massively expand their profits inside India."

GTRI also explained in its report how the US "quietly" earns from India:

One of the biggest US sources of money from India is its higher education sector. Indian students studying in the US spend over USD 25 billion every year -- about USD 15 billion on tuition and another USD 10 billion on living expenses.

US tech giants like Google, Meta, Amazon, Apple, and Microsoft bring in another USD 15-20 billion a year in sales from India's booming digital market. These revenues come from digital ads, cloud services, app stores, software and device sales, and streaming subscriptions.

"Most of which flow straight back to the US, thanks to limited local rules on data and taxation," GTRI argued.

American banks and consulting firms -- including Citibank, JPMorgan, Goldman Sachs, McKinsey, BCG, Deloitte, PwC, and KPMG -- earn an estimated USD 10-15 billion revenue annually from their work in India's financial sector, advising companies, managing corporate deals, and providing high-end services, GTRI noted.

Another major source of US income comes from Global Capability Centres (GCCs) run by companies like Walmart, Dell, IBM, Wells Fargo, Cisco, and Morgan Stanley in Indian tech hubs like Bengaluru and Hyderabad.

"These back-end offices handle global operations in tech, finance, and analytics. While most work is done in India, much of the real economic value is booked in the US. GCCs earn USD 15-20 billion revenue yearly through India operations," GTRI said.

The US pharma firms like Pfizer, Johnson & Johnson, and Merck earn USD 1.5-2 billion annually through patents, drug licensing, and technology transfer. Auto companies like Ford, GM, and component suppliers earn USD 0.8-1.2 billion through licensing and technical services.

Hollywood and US streaming platforms contribute another USD 1-1.5 billion through Indian box office sales, subscriptions, and content licensing.

Finally, US defence sales to India bring in billions more, although exact figures are often confidential, GTRI said.

In conclusion, GTRI urged the Modi government to stand firm even as the US pushes India to make one-sided trade concessions.

"The facts are clear: India is not just a passive trade partner but a major contributor to American wealth across education, technology, finance, and defence. India can and should negotiate the free trade agreement from a position of strength -- rejecting hollow deficit arguments and demanding fair, balanced, and reciprocal terms," GTRI concluded.

India and the United States are poised to sign the first tranche of the much-anticipated Bilateral Trade Agreement (BTA) before July, according to sources who spoke to ANI.

Commerce and Industry Minister Piyush Goyal was recently in the United States, leading negotiations with American officials.

India and the US aim to more than double their total bilateral trade to USD 500 billion by 2030. (ANI)

(The story has come from a syndicated feed and has not been edited by the Tribune Staff.)