Trump tariffs raise alarm, but how dependent is India on US imports

India's exposure to US imports is limited, but sectors like aerospace, LNG, and high-end tech remain strategically vulnerable

The United States (US) has slapped a 50 per cent tariff on most goods imported from India, escalating trade tensions over New Delhi's purchase of Russian oil.

 

Prime Minister Narendra Modi responded with a vow to "fiercely guard the livelihoods" of farmers, dairy workers, and fishermen. Meanwhile, the Ministry of External Affairs and Indian politicians have condemned the move as unjust and unfair.

 

The timing of the US action is sensitive. Between April 2024 and March 2025 (FY25), US imports to India rose by 7.44 per cent, placing the US firmly among India’s top five import sources.

 

While India is not likely to go down a reciprocal tariff route, it is worth asking: how dependent is India on US imports?

 

 

The scale of trade

India’s total imports in FY25 stood at $915.19 billion, with merchandise accounting for $720.24 billion and services for the rest.

 

The US contributed a relatively small slice of this. According to United Nations Comtrade data, India's imports from the US were $38.99 billion during 2024. India imported goods worth $3.63 billion from the US in May 2025 alone.

 

At the same time, India exported $81.4 billion worth of goods and services to the US, making it India’s largest export destination, particularly for IT services, pharmaceuticals, and engineered goods.

 

What India imports from the US

India relies on the US for specific categories:

• High-end electronics and semiconductors
• Aircraft and aerospace parts
• Medical devices
• Energy products, especially LNG
• Machinery and precision equipment
• Professional services and technology consulting 

These are not bulk imports like oil or gold, but they are critical for India's technology, defence, and infrastructure sectors. 

 

Indian tariffs on US imports

US goods entering India are already expensive—India has been accused by the US official of applying some of the world’s highest tariffs. The average import duty stands at 17 per cent overall, with agricultural products taxed at an average of 39 per cent, and some items like alcohol and walnuts attracting duties as high as 150 per cent and 100 per cent, respectively.

 

Can India replace US imports?

The short answer: mostly yes—but with caveats. Here’s a sector-by-sector view:

 

Electronics and semiconductors

While US firms supply advanced components, China dominates the electronics supply chain, shipping $10.3 billion (OEC data) worth in May 2025 alone. Other alternatives include Vietnam, South Korea, and Japan, which already supply smartphones, displays, and consumer electronics. 

 

Aircraft and aerospace

US firms, including Boeing and Lockheed Martin, have strong ties with India, especially in defence and civil aviation. But India also sources aircraft and parts from France (Airbus), Russia, and Israel. The US holds a strategic edge here, but not a monopoly.

 

Pharmaceuticals and medical devices

While the US provides advanced formulations and devices, India imports APIs (active pharmaceutical ingredients) largely from China, and equipment from Germany, Switzerland, and Singapore. Additionally, India is a net exporter of medicines, limiting dependence.

 

Energy products

India buys LNG from the US, but Iraq, Saudi Arabia, Russia, Qatar, and the UAE remain its dominant energy suppliers. The US helps diversify supply, but it is not critical for energy security.

 

Agricultural goods

Imports of almonds, apples, and walnuts from the US were once significant, but India diversified during the retaliatory tariff phase (2019–2023), sourcing from Australia, Chile, Canada, and Turkey. These alternatives remain active.   

 

Spirits and alcohol

US bourbon and whiskey are well-regarded, but Scotch from the UK, Cognac from France, and Japanese whiskies dominate the Indian market. At a 150 per cent tariff, cost is already a bigger barrier than supply.

 

Strategic, not structural, dependence

US imports matter more for strategic value than volume. For instance, when it comes to aircraft parts or cloud infrastructure, US firms are not easily replaceable in the short term. But India has cultivated multi-source supply chains across Asia, West Asia, and Europe. 

 

In sectors like telecom, India navigates between US and Chinese suppliers, balancing technology performance, cybersecurity, and pricing. European firms like Nokia and Ericsson also offer alternatives. However, India has banned over 200 Chinese apps and restricted tech firms from tenders, making China an unlikely alternative.

 

What’s at stake beyond goods

While the spotlight is on goods, services dominate India’s trade surplus with the US. In FY25, India exported $383.51 billion in services, much of it to the US, where Indian IT firms have their largest client base. Any trade tension that spills into services could affect employment and revenue more than any tariff on physical goods.

 

Bottom line

The new US tariffs may not cripple Indian trade flows, but they add friction to a relationship that is increasingly defined by both cooperation and competition. India is not structurally dependent on US imports in most categories, but the US remains crucial in high-tech, defence, and aviation.