EY Report Warns India of US Trade Vulnerabilities

Ernst & Young reports that India's trade surplus with the United States could nearly halve from 2025 levels by 2031. This projection assumes U.S. imports grow by 16% annually while exports grow by 10%, a scenario that would push bilateral trade in goods and services to 500 billion USD.

The firm warns that India's trade imbalances are heavily concentrated, leaving the country vulnerable to U.S. tariff hikes and policy shifts. While India maintains a significant surplus with the U.S., it faces a substantial merchandise deficit with China. The report notes that India continues to suffer from a growing merchandise trade deficit despite a rising surplus in services trade.

To mitigate these risks, the report recommends that the Government of India promote faster growth in U.S. imports and narrow the merchandise deficit with China through export promotion and import substitution.