India under pressure over pledge to buy $500 billion worth of goods from US

India is under pressure over a reported commitment to purchase goods worth $500 billion from the United States over the next five years.

The discussion has sparked intense debate among political circles and trade analysts in India, with experts questioning why the country agreed to what appears to be a one-sided arrangement and what tangible benefits it will actually gain in return.

During a recent visit to India, US Secretary of State Marco Rubio stated that India has committed to increasing imports of US goods over the next five years, prioritizing energy, technology, and agricultural products.

A report published by the Financial Times noted that “it is quite puzzling why India would make such a commitment at this moment.” The newspaper argued that sticking to such an agreement despite changing circumstances could be detrimental for India.

The idea of this large trade commitment first emerged in February this year, when an interim trade deal between India and the United States was announced. At that time, US tariffs on Indian goods were reduced from 50 percent to 18 percent by US President Donald Trump. While this provided some relief to India, the White House stated that India had agreed to significantly increase imports of US information technology products, coal, and other goods in return.

India’s Ministry of Commerce initially downplayed the significance of the announcement. Later, aircraft and aircraft parts were also added to the list. Facing criticism, Indian Commerce Minister Piyush Goyal said that such a target is natural for India’s fast-growing economy, adding that demand in the aviation sector alone could create massive trade opportunities over the next five years.

However, the situation shifted later that month when the US Supreme Court declared Trump’s broad tariff policy unlawful. The Trump administration then imposed a 10 percent tariff on all trading partners using Section 122 of the 1974 Trade Act.

The Financial Times report noted that despite these changes, India has not backed away from its plan to continue large-scale purchases from the United States. New Delhi has also not publicly objected to Rubio’s remarks, effectively allowing the statement to stand as an informal commitment.

Experts argue that while India may have the financial capacity to purchase aircraft and engines in large quantities, it should also keep its market open to other international suppliers. They also note that tensions in global energy markets, rising oil prices due to conflicts involving Iran, and a weakening Indian currency are putting additional pressure on India’s foreign exchange reserves.

Economists question how realistic it is for Indian companies to be encouraged to buy $10 billion worth of goods annually from US suppliers without a clear government policy mandate.

Madhavi Arora, an economist at Emkay Global, told Reuters, “The numbers do not quite add up. The target appears to be overly ambitious compared to economic reality.”
Currently, the United States is India’s largest export market. In the 2024–25 fiscal year, nearly one-fifth of India’s total exports went to the US. However, if imports from the US increase rapidly, India’s large trade surplus with the United States could shrink. This could also widen India’s overall trade deficit. In 2024–25, India’s total merchandise trade deficit stood at $283.05 billion.

Trade expert Biswajit Dhar told Reuters that “to import $100 billion every year would completely disrupt India’s trade balance.” According to him, the current arrangement mainly helps India maintain access to the US market, rather than creating new opportunities for export growth.

This visit by US Secretary of State Marco Rubio took place at a sensitive time in India–US relations. In India, there are concerns over the Trump administration’s recent policies toward China and Pakistan. At the same time, Trump’s tariff policies and his claims regarding the India–Pakistan peace deal have created tensions in Washington–New Delhi relations.

A report by The New York Times claims that India faced punitive tariffs after Prime Minister Narendra Modi refused to nominate Trump for the Nobel Peace Prize.

However, at a joint press conference in New Delhi, Rubio stated that the pace of US–India relations has not slowed and that the partnership remains strong. Responding to questions about tariffs, he urged India not to take the issue personally, saying there is a “significant imbalance that needs to be addressed,” but that it is not specifically targeted at India.

Standing alongside him, India’s Foreign Minister S. Jaishankar said that the Trump administration is clear about its “America First” policy, while also emphasizing that India has its own priority, which is “India First.”