India’s merchandise trade surplus with the United States narrowed sharply in FY26 as imports from the US grew significantly faster than exports, highlighting a major shift in bilateral trade dynamics at a time when both countries are negotiating the first phase of the proposed India-US Bilateral Trade Agreement (BTA).
According to Commerce Ministry data, India’s exports to the US increased marginally to $87.31 billion in FY26 from $86.51 billion a year earlier, registering growth of just 0.93%. In contrast, imports from the US surged 17.24% to $53.48 billion from $45.62 billion, pushing India’s trade surplus down 17.3% to $33.83 billion from $40.89 billion in FY25.
The widening import bill was driven primarily by higher purchases of US energy products. Imports of mineral fuels, crude oil and LNG rose to $17.32 billion in FY26 from $14.37 billion in the previous year. Other key import categories showing strong growth included electrical machinery and equipment ($5.56 billion), precious stones and metals ($6.85 billion), and aircraft and aircraft parts ($1.91 billion).
The trend has continued into FY27, with India’s exports to the US during April-May growing only 0.5% year-on-year to $17.29 billion, indicating that the trade surplus may continue to narrow unless export growth accelerates.
The latest figures come as Commerce and Industry Minister Piyush Goyal and US Trade Representative Jamieson Greer hold discussions in New Delhi to advance the proposed BTA framework. The agreement is expected to address tariffs, market access and trade barriers while helping both sides navigate recent changes in the US tariff regime.
For Washington, the deal could help reduce its long-standing trade deficit with India by expanding access for American goods and services. For New Delhi, the agreement offers an opportunity to secure more predictable market access and strengthen the competitiveness of Indian exports in the US market.
While a shrinking trade surplus may reduce one of India’s traditional advantages in trade negotiations, rising imports of US energy, technology products, aviation equipment and industrial machinery could support the country’s manufacturing growth, infrastructure development and energy security objectives.
The outcome of the BTA negotiations will be closely watched by businesses and policymakers, as it could shape the future trajectory of one of the world’s fastest-growing strategic trade partnerships.
