India’s semiconductor sector stands at a pivotal juncture, embodying the nation’s broader quest for technological sovereignty under the “Atmanirbhar Bharat” (Self-Reliant India) banner. Launched in 2021 with the India Semiconductor Mission (ISM), the government’s ambitious push aims to transform India from a near-total importer of chips—dependent on global giants like Taiwan, South Korea, and China—into a global hub for design, assembly, and manufacturing. With projections estimating the domestic market to swell from $45-50 billion in 2025 to $100-110 billion by 2030, the stakes are high. Yet, as discussions on platforms like X (formerly Twitter) and analyses from think tanks such as ODR India reveal, the narrative is one of bold claims clashing with stark realities: robust gross foreign direct investment (FDI) inflows mask plummeting net inflows, assembly operations dominate over true fabrication, and verifiable commercial products remain elusive despite 2025 production starts.

This article dissects the semiconductor landscape from 2020 to 2025, bifurcating assembly (back-end processes like packaging and testing) from full manufacturing (front-end wafer fabrication). Drawing on the ODR India report on India’s “FDI conundrum”—where gross FDI rebounded to $81 billion in FY 2024-25 amid PLI incentives, but net inflows cratered to $0.35 billion due to $51 billion in repatriations—we probe the veracity of government assertions. X threads echo this tension, celebrating milestones like ISRO’s Vikram chip while questioning ecosystem gaps. We also explore FDI trends, independent testing timelines, and the elusive “verifiable final product” for third-party commercial use.

Assembly vs. Manufacturing: A Bifurcated Reality (2020-2025)

Semiconductor production spans front-end (wafer fabrication, where silicon wafers are etched into chips) and back-end (assembly, testing, marking, and packaging or ATMP/OSAT). India’s journey since 2020 has skewed heavily toward the latter, leveraging lower barriers to entry and PLI incentives. Full manufacturing—requiring $10-20 billion fabs and ultra-pure supply chains—remains nascent, with actual capacity under 0.1% of global wafer fabrication in 2025.

From 2020-2022, India focused on electronics assembly (e.g., mobiles via PLI 1.0), achieving 70% value addition in devices like refrigerators but only 2-8% in components. The ISM’s 2021 launch shifted gears, approving OSAT units first. By 2023, assembly capacity ramped up: Tata’s Assam OSAT (48 million chips/day targeted for 2025) and CG Power-Renesas’ Gujarat facility (pilot OSAT operational by July 2025). Full fabs lagged, with SCL Chandigarh’s legacy nodes (180nm) producing niche chips like ISRO’s IRIS/SHAKTI.

In 2024-2025, bifurcation sharpened: 10 ISM-approved projects (total $18.23 billion) include 5 OSAT/ATMP (e.g., Micron’s Gujarat ATMP, first chips by late 2025) vs. 5 fabs (e.g., Tata-PSMC’s Dholera, 50,000 wafers/month by 2026). X users hail this as a “revolution,” but ODR notes PLI’s $25 billion incentives fueled gross inflows without addressing net retention, risking “shallow” manufacturing.

Year	Assembly Capacity (Key Projects/Output)	% of Total Capacity	Full Manufacturing Capacity (Key Projects/Output)	% of Total Capacity	Notes on Veracity
2020-21	Minimal; SPECS scheme launches incentives for ATMP (25% capex). Electronics assembly at 30% value add.	~100%	SCL Chandigarh: Legacy nodes (<1% global share). No new fabs.	~0%	Claims of “hub” status overstated; imports >$100B projected by 2025.
2021-22	PLI 2.0 approves OSAT; Tata Assam planning (48M chips/day).	95%+	ISM launches; first fab approvals (e.g., Vedanta-Foxconn, stalled).	<5%	Gross FDI up 3.4%, but net down; assembly hype ignores fab delays.
2022-23	CG-Renesas Gujarat OSAT ($0.92B); Micron ATMP announced.	90%	Tata-PSMC fab ($11B) approved; 0 wafers operational.	10%	Production claims unverified; X debates “assembly trap.”
2023-24	Micron Gujarat SEZ (6.33M chips/day); HCL-Foxconn UP ($0.45B).	85%	Dholera fab construction starts; SCL produces IRIS chip.	15%	4 units approved; net FDI -16.7%, questioning sustainability.
2024-25	5 OSAT operational/pilot (e.g., Renesas mid-2026 chips); Tata Assam live. Total: ~100M chips/year.	80%	First commercial fab output (28-90nm) by end-2025; Vikram chip qualified.	20%	Claims of “commercial start” by Modi; reality: test/pilot phase, no mass scale.
Cumulative (2020-25)	~$5-7B invested; 70-80% of approved capacity.	85%	~$13-15B (e.g., 10 projects); <0.1% global wafers.	15%	ODR: Gross $81B total FDI masks net $0.35B; semiconductors ~2-3% share, vulnerable to outflows.

In 2025, assembly constitutes ~80% of capacity (back-end focus for autos/EVs), vs. 20% full manufacturing (legacy nodes for defense/space). X sentiment: Optimistic on jobs (1M by 2026) but skeptical of “pure” manufacturing claims.

Government Claims vs. Veracity: Hype Meets Hurdles

The Modi administration touts 2025 as a “milestone year,” with PM Modi announcing commercial production by year-end at Semicon India 2025, showcasing ISRO’s Vikram 32-bit processor. ISM claims ₹76,000 crore ($9B) outlay, 97% committed ($7.17B), enabling 10 projects and 15,700 jobs. PLI/SPECS incentives (up to 50% capex for fabs) are credited for a 13.6% gross FDI rebound.

Reality Check: ODR exposes the “conundrum“—gross figures dazzle, but net FDI at 0.01% GDP signals capital flight, eroding long-term capacity buildout. Fully manufactured chips? Vikram/IRIS are qualified for space (harsh conditions), but commercial scale is pilot-only; no third-party verifiable mass production yet. X threads question: “Assembly or real fabs?” amid stalled projects like Vedanta-Foxconn. Veracity: Partially true—progress in assembly (value add in electronics)—but full chips lag, with imports still >$100B annually.

FDI In Semiconductors: Gross Surge, Net Mirage (2020-2025)

Semiconductors fall under DPIIT’s “Computer Software & Hardware,” attracting 15% of cumulative FDI equity ($160B since 2000). Post-ISM, inflows targeted chips: Cumulative approved ~$18-20B (70% private).

Fiscal Year	Gross FDI in Semiconductors (USD Bn)	YoY % Change	Net FDI in Semiconductors (USD Bn)*	YoY % Change	Key Drivers/Notes
2020-21	0.5	+10%	0.3	-5%	SPECS launch; assembly focus. Total gross FDI: $82B.
2021-22	0.8	+60%	0.5	+67%	ISM/PLI approvals; Micron/Tata announcements.
2022-23	1.2	+50%	0.7	+40%	OSAT inflows; net drag from outflows.
2023-24	2.0	+67%	1.0	+43%	4 projects approved; $71.3B total gross.
2024-25	3.0 (est.)	+50%	0.1	-90%	$81B gross total, but net $0.35B overall; semis ~3% share, hit by repatriation.
Cumulative	7.5	–	2.6	–	~2-3% of total FDI; ODR: Net collapse risks “hollow” growth.

*Net = Gross minus repatriation/outflows; sector est. from 15% hardware share, adjusted for semis subset. In 2025, cumulative net ~$2.6B reflects ODR’s broader trend: High gross ($390B total 2020-25) vs. low net ($144B), with semis vulnerable to U.S. tariffs/geopolitics. X buzz: “FDI staggering, but retention key.”

ISRO/Government Chips: Path To Independent Verification

ISRO’s SCL has pioneered: IRIS (SHAKTI-based, 64-bit RISC-V for space, booted Feb 2025) and Vikram (32-bit, qualified for launch vehicles, presented Sep 2025). These mark India’s first “fully indigenous” chips, fabricated domestically (180nm node).

Testing: SCL/ISRO conducted in-house validation (electrical, fault tolerance). Independent verification? National (e.g., IIT Madras collaboration) ongoing; international possible via iCET (U.S.-India pact for joint R&D/testing) by late 2025, or SEMI standards at Semicon India. Flight tests (e.g., IRIS in ISRO missions) by Q4 2025 could enable third-party audits; full commercial certification (UL/ISO) targeted for 2026. X: “Breakthrough, but global scrutiny needed.”

Actual Production In 2025: Verifiable Commercial Products And Third-Party Use

2025 sees “starts,” not scale: CG Power’s Gujarat OSAT launches August 2024 (first operational back-end); Renesas pilot by July 2025; Tata Assam by year-end (48M units/day, but assembly-focused). Verifiable finals? Micron’s ATMP yields first “Made in India” chips (DRAM/NAND) by December 2025, Bosch-Tata collab for auto chips mid-2026. Third-party use: ISRO’s Vikram for defense (qualified, but govt-only initially); commercial via PLI exports by Q4 2025, verifiable via SEMI audits.

ODR/X Consensus: 2025 production is real but assembly-heavy (80% vs. 20% pure manufacturing), with net FDI woes delaying ecosystem maturity. True commercial viability? 2026-27, per Moody’s, if reforms sustain.

Conclusion: Bridging Claims And Capacity

India’s semiconductor saga is a tale of momentum meets moderation. Gross FDI and PLI have ignited assembly (85% cumulative capacity), but net inflows’ rock-bottom ($0.35B FY25) underscore ODR’s warning: Without curbing outflows, the “powerhouse” remains aspirational. X optimism—$110B market, 1M jobs—must temper with reality: Full manufacturing at 15-20%, verifiable products by late 2025. Independent testing (national/international) for ISRO chips could catalyze trust by Q4 2025, paving third-party commercial paths. As global chains diversify from China, India’s 20% design talent edge positions it well—but only if net FDI stabilises and fabs scale. The revolution is underway; verifiability will define its legacy.

The bilateral trade relationship between India and China has been a cornerstone of global economic interactions, characterized by rapid growth in imports from China to India, stagnant exports in the opposite direction, and a persistently widening trade deficit. From 2014 to 2025, India’s imports from China surged from approximately $58 billion to $127 billion, while exports to China hovered between $12 billion and $21 billion, peaking in 2020 before settling around $15 billion in 2024. This imbalance, exacerbated by India’s reliance on Chinese electronics, machinery, and chemicals, contrasts with its exports of raw materials like iron ore, cotton, and seafood.

The cotton and textile sector exemplifies this dynamic, where India simultaneously imports raw cotton to bolster its domestic industry while exporting processed yarn to China, acting as a key processing hub in global supply chains. Recent policy shifts, such as India’s duty cuts on U.S. cotton imports, further highlight efforts to navigate trade tensions and enhance competitiveness.

Amid these trends, criticisms have emerged regarding the effectiveness of Prime Minister Narendra Modi’s self-reliance initiatives like Atmanirbhar Bharat, Swadeshi, and Made in India, with some sources alleging these are mere rhetoric masking increased dependency on China. This article explores these trends, drawing on trade data, policy analyses, and sector-specific insights up to September 2025, incorporating perspectives on policy shortcomings and their role in perpetuating trade imbalances.

Overall Trade Trends Between India And China

India’s trade with China has grown asymmetrically over the past decade, with imports dominating the narrative. The trade deficit ballooned from $46 billion in 2014 to over $112 billion in 2024, driven by India’s demand for value-added goods from China. Key imports include electronics (e.g., smartphones and components), machinery, and organic chemicals, which constitute a significant portion of the bilateral trade. In contrast, India’s exports remain commodity-heavy, with cotton playing a pivotal role despite fluctuations.

The following table summarises the bilateral trade data, illustrating the import surge and export stagnation:

Year	Imports from China (USD Bn)	% Change	Exports to China (USD Bn)	% Change
2014	58	–	12	–
2015	71	+22%	12	0%
2016	61	-14%	9	-25%
2017	76	+25%	13	+44%
2018	70	-8%	17	+31%
2019	65	-7%	17	0%
2020	65	0%	21	+24%
2021	97	+49%	21	0%
2022	102	+5%	14	-33%
2023	99	-3%	16	+14%
2024	127	+28%	15	-6%
2025 (up to Sept)	~75	+15% (proj.)	~10	+10% (proj.)

Trade Surplus/Deficit Between India And China

The trade imbalance has resulted in a consistent deficit for India, which has widened significantly since 2014. This deficit reflects India’s growing dependency on Chinese imports despite efforts to promote domestic manufacturing. The table below details the annual trade deficit (calculated as imports minus exports), highlighting the absence of any surplus and the escalating gap.

Year	Trade Deficit (USD Bn)	% Change from Previous Year
2014	46	–
2015	59	+28%
2016	52	-12%
2017	63	+21%
2018	53	-16%
2019	48	-9%
2020	44	-8%
2021	76	+73%
2022	88	+16%
2023	83	-6%
2024	112	+35%
2025 (up to Sept)	~65	+8% (proj.)

The Paradox Of Cotton Trade: Importing While Exporting

A striking aspect of India-China trade is India’s dual role in the cotton market. As the world’s second-largest cotton producer (behind China), India generates about 23-25% of global output, with domestic production reaching around 24-29 million bales annually from 2015 to 2025. Yet, it imports raw cotton—primarily extra-long staple (ELS) varieties like Pima from the U.S., Brazil, and Australia—to address quality gaps in its medium-staple dominant harvest (Gossypium hirsutum, 25-32 mm staple length). These imports, which surged 324-499% in early 2025, fill seasonal shortages caused by pests (e.g., pink bollworm), erratic monsoons, and declining yields (down to 436 kg/ha in 2024).

Simultaneously, India exports surplus cotton, often as processed yarn, to China, which values it for cost-competitiveness and suitability in mass production. Indian yarn is 10-20% cheaper than alternatives, with strong luster and spinability, making it ideal for China’s textile factories. Exports to China spiked 411% in mid-2023, reaching 248,000 tons valued at $800-1,000 million. This dynamic is not a sign of inefficiency but a reflection of global specialisation: India consumes 85-90% of its cotton domestically for its $200 billion textile industry, which employs over 45 million people, while exporting value-added products to meet China’s demand amid its raw cotton import quotas and tariffs.

Duty Cuts On U.S. Cotton: Enabling Profitable Re-Exports

India’s policy of periodic duty exemptions on cotton imports has been instrumental in turning imported raw fiber into profitable exports. From 2014 to 2021, imports were largely duty-free, supporting the textile sector. An 11% duty was introduced in October 2021 to protect farmers, but exemptions in 2022 (April-October) and 2025 (August-December) reversed this amid U.S. tariffs on Indian apparel (up to 50%). These cuts reduce landed costs by 5-10%, allowing India to import cheap U.S. cotton, process it into yarn (adding 20-30% value), and re-export to China.

In 2025, U.S. cotton imports reached $234 million (FY25 partial), potentially yielding $300-500 million in yarn export profits to China. However, this risks local price depression below the minimum support price (INR 7,710/100 kg), impacting farmers and the Cotton Corporation of India (CCI) with estimated losses of INR 700 crore. Critics argue that such policies, while aimed at self-reliance, inadvertently exacerbate dependencies, as seen in the broader trade context where U.S. tariffs (e.g., 25% imposed by former President Trump) threaten India’s $45.7 billion trade surplus with the U.S. in 2024, potentially leading to losses of around $46 billion that primarily affect elite intermediaries rather than the wider economy.

Year	Import Duty Status	Raw Cotton Imports from US ($M)	Cotton Yarn Exports to China ($M)
2014	Duty Free	N/A	~1,900
2015	Duty Free	N/A	N/A
2016	Duty Free	N/A	N/A
2017	Duty Free	~300	N/A
2018	Duty Free	N/A	N/A
2019	Duty Free	N/A	N/A
2020	Duty Free	N/A	N/A
2021	11% imposed Oct	N/A	N/A
2022	Exempt Apr-Oct	N/A	N/A
2023	11%	N/A	~800-1,000
2024	11%	199	430
2025 (partial)	Exempt Aug-Dec	234	N/A (proj. dip 66% in FY25)

India As A Global Processing Hub In Cotton

India’s position as a “processing hub” involves importing specialised raw materials to enhance domestic output and exporting surplus value-added products. With over 50 million spindles, India processes 1-2 million imported bales annually into yarn, exporting $1.5-2 billion worth to China yearly—14% of its yarn exports—helping offset the trade deficit by 1-2%. This model thrives on China’s quotas on raw cotton, making Indian yarn a tariff-free alternative amid U.S.-China tensions.

Year	Domestic Production (000 480 lb bales)	Total Raw Cotton Imports ($M)	Cotton Yarn Exports to China ($M)	Trade Deficit with China ($B)
2014	N/A	N/A	~1,900	46
2015	25,900	N/A	N/A	59
2016	27,000	N/A	N/A	52
2017	29,000	N/A	N/A	63
2018	26,000	N/A	N/A	53
2019	28,500	N/A	N/A	48
2020	27,500	N/A	N/A	44
2021	24,300	N/A	N/A	76
2022	26,300	1,703	N/A	88
2023	25,400	~1,400	~800-1,000	83
2024	24,000	~590	430	112
2025 (partial)	24,000	~1,200	N/A	~65

Imports Of Final Textile Products From China

Despite its textile prowess, India imports final products like ready-made garments and home textiles from China, valued at $1.8-4.0 billion annually from 2014 to 2024. These imports, under HS codes 61-63, meet demand for affordable synthetics and designs, with China’s share at 40-42% of India’s total textile imports. Growth was volatile, dipping in 2020 due to COVID-19 but rebounding 59% in 2021. By September 2025, imports reached $2.5 billion, projected at $4.2-4.5 billion for the year, amid concerns over dependency and calls for anti-dumping measures.

Year	Imports from China (USD Bn)	% Change
2014	1.8	–
2015	2.2	+22%
2016	1.9	-14%
2017	2.4	+26%
2018	2.8	+17%
2019	2.5	-11%
2020	2.2	-12%
2021	3.5	+59%
2022	3.8	+9%
2023	3.2	-16%
2024	4.0	+25%
2025 (up to Sept)	2.5	+4% (proj.)

Criticisms Of Self-Reliance Policies And Increased Dependency

Modi’s flagship initiatives—Swadeshi, Atmanirbhar Bharat, and Made in India—have faced sharp criticism for being empty rhetoric (Jumlabaazi) that masks policy failures and deceit. Launched prominently during the COVID-19 era, these slogans promised reduced foreign dependency, yet the trade deficit with China has increased annually since 2014, reaching $112 billion in 2024. Critics argue that superficial bans on Chinese goods are bypassed by rerouting them through warehouses controlled by government-aligned elites (“Govt Buddies“), who then re-export to markets like the EU and UK for profit, benefiting a select few while small businesses and MSMEs suffer.

Two additional inputs underscore these concerns: First, India’s $45.7 billion trade surplus with the U.S. in 2024 is at risk from U.S. tariffs (e.g., 25% under Trump), potentially erasing around $46 billion in value that critics claim disproportionately affects elite intermediaries rather than boosting broad-based GDP growth. Second, despite self-reliance rhetoric, economic distress persists, with claims that 81 crore Indians rely on government rations (5 kg per person) and 100 crore are hand to mouth, highlighting a failure to build domestic production capabilities and counter Chinese market flooding.

Conclusion: Balancing Trade And Self-Reliance

The India-China cotton and textile trade from 2014 to 2025 reveals a complex interplay of comparative advantages, policy interventions, and global disruptions. While India’s role as a processing hub generates employment and forex, the growing deficit and import dependency on final products underscore the need for diversification, innovation, and stronger domestic value chains. Criticisms of Modi’s self-reliance initiatives suggest that without addressing underlying deceit and elite favoritism, these efforts may perpetuate rather than resolve imbalances. As of September 2025, ongoing U.S. tariff impacts and duty exemptions signal potential shifts, but sustainable growth will require tackling farmer vulnerabilities, MSME support, and genuine reductions in Chinese dependency to make slogans like Atmanirbhar Bharat a reality. But for the time being, Indians can be fooled with useless jumlas like GST Bachat Utsav.

This article is about how US tariffs are hurting India’s trade, jobs, and growth in 2025. All info comes from trusted sources.

Trade With The US: Less Money Coming In

India sells $73 billion to the US this year—$45 billion in goods like clothes and chemicals, $28 billion in services like IT help. India buys $37 billion back, so we have a $36 billion extra (surplus). But tariffs cut goods sales by 43%, making it smaller than planned.

Worldwide, India sells $419 billion and buys $470 billion, leaving a $51 billion gap (deficit). Services make extra money, but goods lose it.

Tariffs Slow India’s Growth

Tariffs are extra costs on Indian goods in the US. They could lower India’s growth by 0.5 to 1 point in 2025. Without them, growth would be 6-6.5%. With them, it’s 5-5.5%. (This means subtracting points, not a small percent—easy to mix up.)

Sales to the US dropped from $11 billion in March to $7 billion in September. This might cost 1-2 million factory jobs, plus 3-5 million related ones. Unemployment could hit 6.5%. Stocks fell 8-10% in August, losing $500-700 billion. Main indexes are down a bit this year.

The rupee is weaker (88 to 1 USD, down 5%). This helps sell more exports (up 2-3%), but makes buying imports costlier and slows spending.

Data splits before and after tariffs started on September 8. Extra rules could cut services sales by 15-20%, losing $6 billion in half a year. Growth isn’t fair—many people still face poverty and hunger.

How Tariffs Hit Hard: Before And After

Tariffs hurt clothes, jewels, and chemicals most (30-70% less sold). People shipped extra in April (up 18%), but August sales fell 14%. Some exemptions let rivals take business, risking 50,000 small companies.

IT services (half to US, $225 billion) face visa cuts and taxes. Goods could lose $42 billion yearly, services $7 billion in half a year. Total loss: $49 billion, plus big wage hits.

World Trade: Goods vs. Services

Goods sold: $220 billion (up 2.5%). Bought: $368 billion (up 2.5%). Services sold: $199 billion (up 11%), bought $102 billion, extra $97 billion. Total gap: $51 billion.

Weak rupee helps sales but hurts oil buys. August was good, but year-end sales $850-860 billion with higher unemployment.

US As Partner: Challenges And Changes

US buys 17-20% of India’s sales. Goods: $45 billion, services $28 billion, total extra $36 billion. But barriers threaten IT. India is selling more to EU (up 12%) and UAE (up 20%).

Jobs: Growth But Problems

Jobs grew from 470 million in 2014 to 660 million in 2025, thanks to services and gig work (up to 13 million). But most (89%) are informal, no safety. Permanent jobs are just 10-12%.

Unemployment official: 4-6%, but real higher. Tariffs make it worse for youth.

Table (jobs in crores, gig in millions):

Year	Total Jobs	Permanent	Other	Gig	Jobless (%)	Total Change (%)	Permanent Change (%)	Gig Change (%)
2014	47	4.7	42.3	4	5	–	–	–
2015	48	4.8	43.2	4.5	5	+2	+2	+13
… (shortened for simplicity; pattern shows steady growth, peaks in 2020/23)
2025	66	6.3	59.7	13	6.5	+6.5	+1.6	+6

Social Issues: Poverty, Hunger, Gaps

Poverty down, but 810 million need food aid (56% people). Hunger better but still bad (score 27.3, rank 105). Inequality same, top 1% own 58% wealth.

Average income up from $1,560 (2014) to $2,880 (2025), but behind China ($13,000), US ($83,000). Neighbors: Bangladesh close at $2,690.

Table (incomes $; shortened):

Year	India	China	US	…
2014	1560	7670	55000	…
2025	2880	13000	83000	…

Stocks Drop From Tariffs

August fall 8-10%, $500-700 billion gone. Indexes down 0.2-4% this year.

Table:

Index	2024 Up (%)	2025 So Far (%)	Why
Nifty 50	12	-1	Tariffs, rivals
Sensex	12	-0.2	Weekly drops

Key Areas And Pressures

Drugs up 10%, IT up 12% but risky. Oil buys $100 billion. Shift to Asia for sales.

India-China Trade: Big Gap

Deficit $101 billion (2024). This half-year: Sell $8 billion, buy $61 billion, gap $53 billion. Growing over years.

2025-26 Future: GDP Predicted To Be 2.5-4% In 25-26

Growth could drop to 2.5-4% if not fixed. Sales over $850 billion, gap under $100 billion, jobless 6.5%. Keep US ties in green energy. Fix China gap by selling elsewhere.

Plan: Push sales, make real jobs, help gig workers, cut imports. Turn problems into better growth, fix poverty.

India’s services sector remains a cornerstone of its external economic stability, recording a strong net surplus of approximately $97.5 billion for April–September 2025. This estimate draws from Reserve Bank of India (RBI) data through August, with September trends extrapolated based on observed patterns, marking a 14% year-over-year (YoY) rise. Services exports totaled ~$199.2 billion, fueled by robust expansion in information technology (IT), software, business process outsourcing (BPO), and nascent fields like artificial intelligence (AI) and cloud computing. Imports were ~$101.8 billion, growing at a more modest 3.8% YoY, primarily in transport, travel, and tech inputs. This services surplus substantially mitigates the merchandise goods trade deficit, estimated at ~$148 billion for the period (with goods exports ~$220 billion and imports ~$368 billion) , resulting in a current account deficit of just 0.2% of GDP, according to RBI’s Q1 FY25-26 Balance of Payments (BoP) report.

The services performance highlights India’s edge in knowledge-based exports, with cumulative growth through August at 10.6% YoY. Computer and software services hold a 60% share, followed by business services at 25%. Bilateral breakdowns are constrained by data lags from RBI and the World Trade Organization (WTO), but prorated 2024 baselines adjusted for 2025 growth indicate surpluses with most partners. The following analysis uses non-overlapping regional aggregates to prevent double-counting, encompassing ~94% of exports through key destinations like the US, UK, EU, Canada, and Asia.

To contextualise the pivotal US role—accounting for over half of services exports and contributing significantly to India’s overall trade surplus—this report compares US-India dynamics with India-China trade patterns. Unlike the balanced, surplus-generating US ties (driven by services and select goods), India-China relations feature a persistent, widening goods deficit with negligible services offset, underscoring structural vulnerabilities.

India-China Trade: A Contrasting Deficit-Driven Landscape (2014–2024)

India’s trade with China has ballooned over the decade, but it is overwhelmingly goods-dominated, with India running chronic deficits due to heavy reliance on Chinese imports for electronics, machinery, chemicals, and pharmaceuticals. Bilateral goods trade surged from ~$71.7 billion in 2014 to ~$135 billion in 2024, per data from India’s Ministry of Commerce, UN COMTRADE, and the Observatory of Economic Complexity (OEC).

Exports grew modestly from $11.3 billion to ~$17 billion, while imports exploded from $60.4 billion to ~$118 billion, yielding a cumulative deficit exceeding $700 billion over the period.

Services trade, in contrast, remains marginal—estimated at $1–2 billion annually in both directions, with India’s net services surplus to China hovering around $0.2–0.5 billion yearly, per RBI BoP aggregates and WTO services profiles. This pales against the goods imbalance, highlighting China’s role as a low-cost supplier rather than a balanced partner.

Year	Goods Exports to China ($B)	Goods Imports from China ($B)	Goods Trade Balance ($B)	Total Goods Trade ($B)	Est. Services Exports ($B)	Est. Services Imports ($B)	Est. Services Balance ($B)	Combined Balance ($B)
2014	11.3	60.4	-49.1	71.7	1.2	1.0	0.2	-48.9
2015	9.0	60.4	-51.4	69.4	1.1	0.9	0.2	-51.2
2016	8.0	55.4	-47.4	63.4	1.0	0.8	0.2	-47.2
2017	8.3	59.3	-51.0	67.6	1.2	1.0	0.2	-50.8
2018	16.7	70.3	-53.6	87.0	1.4	1.1	0.3	-53.3
2019	16.7	70.8	-54.1	87.5	1.5	1.2	0.3	-53.8
2020	7.2	65.3	-58.1	72.5	1.3	1.0	0.3	-57.8
2021	21.3	97.5	-76.2	118.8	1.6	1.3	0.3	-75.9
2022	17.4	101.7	-84.3	119.1	1.7	1.4	0.3	-84.0
2023	16.7	101.7	-85.0	118.4	1.8	1.5	0.3	-84.7
2024	17.0	118.0	-101.0	135.0	1.9	1.6	0.3	-100.7

Sources: Ministry of Commerce & Industry (India), UN COMTRADE, RBI BoP, WTO Services Trade Hub. Services estimates prorated from aggregate bilateral flows; actual bilateral services data is limited and often bundled in “other Asia” categories. FY data aligned to calendar years for consistency. Deficits reflect India’s perspective (negative balance).

This asymmetry contrasts sharply with US-India trade, where services surpluses (~$53.6 billion estimated for April–September 2025) complement goods surpluses (~$36 billion cumulative), yielding a combined surplus. China’s dominance in goods imports has fueled concerns over dependency, with deficits widening to a record $99.2 billion (data mismatch, it is more) in FY24-25 (April 2024–March 2025), per Reuters analysis of commerce data.

India-China Trade Snapshot: April–September 2025

For the first half of FY25-26, India-China goods trade mirrors historical patterns, with cumulative bilateral goods trade estimated at ~$67.2 billion (exports ~$7.2 billion, imports ~$60 billion), per OEC monthly data and Ministry of Commerce extrapolations through August, with September preliminary. Monthly averages show exports at ~$1.2 billion (e.g., $1.38 billion in June, up 16.4% YoY, led by petroleum products and telecom instruments) and imports at ~$10 billion (e.g., $11.2 billion in June, up 9.4% YoY, dominated by electronics and machinery). The goods deficit stands at ~$52.8 billion. Services trade remains subdued at ~$0.6 billion exports and ~$0.5 billion imports (net +$0.1 billion), focused on business and transport services. Overall combined deficit: ~$52.7 billion—over half the period’s goods deficit, with no meaningful services offset.

Category	Exports ($B)	Imports ($B)	Balance ($B)	Key Drivers
Goods	7.2	60.0	-52.8	Exports: Petroleum ($1.4B), iron ore ($0.7B). Imports: Electronics ($20B), machinery ($15B). YoY import growth 8%, amid supply chain reliance.
Services	0.6	0.5	+0.1	Business/IT services exports; transport imports. Minimal YoY change.
Combined	7.8	60.5	-52.7	Persistent goods drag; services negligible (1% of total).

Sources: OEC (June 2025 data), Ministry of Commerce (April–August cumulatives), RBI preliminary BoP. September extrapolated at 10% below August due to seasonal slowdowns. Estimates ±5% uncertainty.

In comparison, US-India trade for the same period yields a combined surplus of ~$89.6 billion (~$53.6 billion services + $36 billion goods), per article baselines and US Census/BEA data. This underscores the US as a surplus partner, while China exacerbates India’s overall trade gap.

US-India Trade Growth: Pre-Tariff Surge Amid Tariff And Non-Tariff Pressures

US-India bilateral trade expanded significantly in 2024–2025, reaching ~$129 billion in goods (2024 full year, per US Census Bureau) and ~$83.4 billion in services (2024 BEA annuals), with India’s combined surplus climbing to ~$60 billion annually by mid-2025. For April–September 2025, goods trade averaged ~$12.5 billion monthly (India exports ~$8.8 billion, imports ~$3.7 billion; surplus ~$5.1 billion monthly), while services held steady at ~$6.95 billion monthly total (India surplus ~$3.6 billion). This growth—18% YoY in goods exports to the US (April–August, per Ministry of Commerce)—was propelled by anticipation of US tariffs and easing of select non-tariff barriers (NTBs), alongside structural factors like supply chain diversification from China.

Drivers Of Pre-Tariff Expansion (January–August 2025)

(a) Tariff Anticipation and Front-Loading: US President Donald Trump’s April 2, 2025, Executive Order (EO 14257) imposed a baseline 10% tariff on all imports, with “reciprocal” escalations for high-deficit partners like India (initially 25% announced July 31, effective August 7, doubling to 50% on August 27 for non-compliant nations).

Importers rushed shipments pre-deadline, boosting Indian goods exports by 22% in July 2025 ($9.17 billion) from June ($9.15 billion), per US Census. Sectors like textiles, apparel, and gems/jewelry saw 30–40% spikes, as firms stockpiled to avoid post-August duties.

India, not qualifying as an aligned partner due to trade imbalances and Russian oil purchases, faces a 50% tariff on most exports (effective August 27, 2025), affecting ~$60.2 billion in U.S.-bound trade. This could reduce exports by 70% in some sectors and slow GDP growth by 0.5-1%.

The exemptions create a price gap, with aligned partners’ goods entering at near-zero duties versus India’s 50%, leading to market share shifts, supply chain reconfigurations, and investment diversions. India’s U.S. exports could drop $20-30 billion annually, while competitors surge 20-40%.

(b) Non-Tariff Barriers (NTBs) Easing: US complaints over India’s “obnoxious” NTBs—such as quality control orders (QCOs) on electronics and steel, localisation mandates, and data protection rules—eased partially in early 2025. The US-India Terms of Reference (April 2025, USTR) led to India relaxing QCOs on 20% of affected goods (e.g., certain IT hardware), unlocking $5–7 billion in annual exports. However, persistent NTBs like US Buy American policies and cybersecurity reviews slowed some goods inflows.

However, the situation has changed after August 2025. Based on various reports, the estimated loss to India in 2025 from such U.S. restrictions on Indian services is approximately $7 billion in foregone exports and related revenue.

India’s services exports to the US are dominated by IT and BPM, making up over 60% of total services trade. The total value of Indian services exports to the US in 2024 was $41.6 billion, with projections for 2025 showing growth to around $45-50 billion absent restrictions. However, NTBs could reduce this by 10-15%, contributing to the $7 billion loss estimate.

(c) Geopolitical And Supply Chain Shifts: India’s diversification from China (post-2020 border tensions) funneled $10–15 billion in redirected US-bound exports (e.g., pharmaceuticals up 25% YoY). US incentives under the CHIPS Act and Inflation Reduction Act favored Indian suppliers, adding $3 billion in semiconductor-related services. Stats: India’s goods surplus with the US hit $5 billion monthly in May 2025 (exports $9.43 billion), per Economic Times, versus $4.5 billion average in 2024.

(d) Quantitative Impact: Pre-tariff (April–July 2025), goods exports totaled $36.6 billion (up 18% YoY), services $27.8 billion (up 14%). Front-loading added ~$4–5 billion to goods volumes, per GTRI estimates, but risked post-tariff corrections.

India shipped ~80% of projected August–September goods pre-tariff deadlines, preserving surpluses temporarily. Services, immune to physical shipment rushes, maintained steady growth. But post August /September 2025 things would become nasty for Indian services too due to U.S. NTBs.

Post-August 2025 US Tariffs: Impacts, Exemptions, And Barriers On India

Effective August 27, 2025, the US escalated tariffs to 50% on most Indian goods (via EO amendments), targeting the $45.8 billion 2024 US goods deficit. This “reciprocal” measure punishes India’s Russian oil purchases (25% penalty layer) and aims to force market openings. Aligned partners (e.g., those signing framework pacts like the UK) gain exemptions—zero duties on 45+ categories (metals, pharma, chemicals)—but India, lacking a deal, faces full exposure. NTBs compound this: US reviews intensified on Indian steel (anti-dumping duties up 20%) and digital services (data localization probes).

Impacts On Goods Trade

Tariffs hit ~70% of Indian exports ($60+ billion annually affected), projecting a 43% drop in US-bound goods ($38 billion in 2025 full year, down from $87.4 billion in 2024). August 2025 saw exports dip to $6.86 billion (from $9.17 billion in July), per Reuters/Ministry data, with textiles/apparel down 25%. Exemptions shield pharma/electronics (~30% of exports, $26 billion), but non-exempt sectors like auto parts face 50% duties, shaving 0.3% off India’s GDP (Moody’s). NTBs add friction: US FDA delays on Indian generics cost $1–2 billion quarterly.

Sector/Category	Pre-Tariff Exports (Apr–Jul 2025, $B)	Post-Tariff Projection (Aug–Sep 2025, $B)	Impact (% Change)	Key Factors
Pharma/Electronics (Exempt)	12.5	6.5	-5%	Zero duties; aligned exemptions partial (India negotiating). NTBs minimal.
Textiles/Apparel	8.0	3.2	-60%	50% tariff + NTB quality checks; front-loading exhausted.
Gems/Jewelry/Auto	10.1	4.0	-60%	Full 50% hit; US localization preferences. Deficit for US shrinks $2B/month.
Total Goods	36.6	15.7	-57%	Overall surplus falls to $1.5B/month; $10B annual loss projected.

Impacts On Services Trade

Services face no direct tariffs but indirect NTBs: US visa caps (H-1B reduced 10% in 2025) and data rules threaten IT/BPO (80% of $103.6 billion exports). Growth slowed to 8% YoY in August (BEA: US imports from India $18.5 billion Q3 prelim.). Exemptions via “digital trade pacts” could shield, but delays risk $7 billion annual hit. Net surplus dips to $2.8 billion/month post-August.

Category	Pre-Tariff Exports (Apr–Jul 2025, $B)	Post-Tariff Projection (Aug–Sep 2025, $B)	Impact (% Change)	Key Factors
IT/Software/BPO	21.0	10.5	-10%	Visa/NTB pressures; no tariff but regulatory scrutiny up.
Business/R&D	6.8	3.5	-15%	US cybersecurity reviews; partial exemptions negotiated.
Total Services	27.8	14.0	-10%	Surplus to $2.8B/month; $8B annual erosion if NTBs persist.

Combined Goods And Services Impact (Post-August 2025)

Aggregated, bilateral trade volumes contract 35–40%, with India’s surplus halving to ~$4.3 billion/month (August prelim: $4.7 billion). Full-year 2025 projection: combined trade $190 billion (down 15% from 2024), surplus $45 billion (vs. $60 billion). Geopolitical risks (e.g., oil-linked penalties) could add $3 billion in costs; negotiations for aligned status might recover 20% via exemptions.

Month/Period	Goods Surplus ($B)	Services Surplus ($B)	Combined Surplus ($B)	Total Bilateral ($B)	YoY Change (%)
Aug 2025 (Actual)	1.0	2.8	3.8	14.0	-25%
Sep 2025 (Est.)	1.5	2.8	4.3	15.5	-20%
Post-Aug Total (Q3–Q4 Proj.)	12.0	22.4	34.4	120.0	-30%

Sources: US Census/BEA (July–August data), USTR EOs, GTRI/Moody’s projections, Reuters. Impacts include 50% tariffs on 70% goods; NTBs add 10–15% effective barrier. Exemptions cover ~25% if India aligns by Q4.

Bilateral And Regional Services Trade Balances

India’s services trade favors surpluses with advanced economies via IT/BPO strengths, while Asia shows mixed results due to energy/logistics imports. Prorated estimates cover ~94% of exports.

Partner/Region	Estimated Exports ($B)	Estimated Imports ($B)	Estimated Net Surplus ($B)	Share of Total Exports (%)	Key Notes
US	103.6	50.0	53.6	52	IT/software (80%); 15% YoY pre-tariff boost, but post-Aug NTBs slow growth. Exemptions eyed for digital flows.
UK	13.9	4.0	9.9	7	Finance/BPO; UK-India FTA (July 2025) aids 12% growth. Low NTB exposure.
EU (aggregate)	35.9	15.0	20.9	18	Germany/France/Netherlands lead; 12% YoY via FTA talks. Business services key.
Canada	4.0	1.0	3.0	2	IT/professionals; 8% growth. Minimal barriers.
Asia (aggregate)	29.9	20.0	9.9	15	China/Japan/Singapore/UAE; 10% YoY via RCEP. Imports high in logistics; contrasts US surplus.
Subtotal	187.3	90.0	97.3	94	Aligns with aggregate; US tariffs indirectly pressure via rupee volatility.

Emerging Markets: Trade With The Rest of the World

~6% of services exports (~$11.9 billion) target Africa, Latin America, Oceania, non-EU Europe, and others, yielding ~$8.0 billion surplus (exports $11.9B; imports $3.9B). High margins (65–70%) from low imports signal Global South diversification.

Sub-Region/Group	Share of Total Exports (%)	Estimated Exports ($B)	Estimated Imports ($B)	Estimated Surplus ($B)	Key Insights
Africa	1.5	3.0	0.8	2.2	Business/education; 12% growth via AfCFTA.
Latin America	1.0	2.0	0.5	1.5	IT to Brazil/Mexico; 15% YoY.
Oceania	1.5	3.0	0.8	2.2	Professionals; 12% from Australia ECTA.
Non-EU Europe	1.0	2.0	0.7	1.3	Finance to Switzerland; Russia offsets minor.
Other	1.0	2.0	1.1	0.9	Tourism/IT; low-volume.
Total Remaining	6	11.9	3.9	8.0	+10–15% YoY; offsets US tariff risks.

Spotlight: US-India Trade Dynamics Amid Tariff Turbulence

The US-India axis exemplifies services strength, with ~$6.95 billion monthly services trade (14% of India’s global services). Goods show US deficit (~$6B monthly average pre-tariff). Post-August tariffs disrupt, but pre-tariff front-loading sustained April–August momentum.

US-India Services Trade (April–September 2025)

Month	Estimated Bilateral Total ($B)	% of India’s Global Services Trade
April 2025	6.95	14%
May 2025	6.95	14%
June 2025	6.95	14%
July 2025	6.95	14%
August 2025	6.95 (prelim.)	14%
September 2025	~6.5 (est., NTB impact)	~13%

US-India Goods Trade (April–September 2025)

Month	US Exports to India ($M)	US Imports from India ($M)	Bilateral Total ($B)	India’s Global Goods Total ($B)	% of India’s Global	India’s Goods Surplus with US ($M)
April 2025	3,959.6	10,029.2	13.99	96.5	14.5%	6,069.6
May 2025	3,819.1	9,433.9	13.25	95.2	13.9%	5,614.8
June 2025	3,805.8	9,153.4	12.96	94.8	13.7%	5,347.6
July 2025	3,406.0	9,170.6	12.58	95.1	13.2%	5,764.6
August 2025	3,406.0 (est.)	6,860.0	10.27	96.7	10.6%	3,454.0
September 2025	~3,200 (est.)	~6,500 (est.)	~9.7	~95.0	~10%	~3,300

Combined US-India Goods And Services Trade

Month	Bilateral Combined Total ($B)	India’s Global Combined Total ($B)	% of India’s Global
April 2025	20.94	146.0	14.3%
May 2025	20.20	145.1	13.9%
June 2025	19.91	144.7	13.8%
July 2025	19.53	145.1	13.5%
August 2025	17.22	146.5	11.8%
September 2025	~16.2 (est.)	~145.0	~11%

BEA confirms July US services imports at $265 billion (up from $252.4 billion June), with India contributing via IT.

Broader Implications And Outlook

The $97.5 billion services surplus (14% YoY) fortifies forex reserves (~$680 billion, August 2025) and rupee stability. US ties (53% of surplus) drive core growth, but post-August tariffs/NTBs threaten $15–20 billion in annual losses, per GTRI. China contrasts as a deficit sink, emphasising diversification needs. Catalysts: EU/UK FTAs, RCEP; risks: Asian imports, US barriers. India eyes aligned exemptions via talks.

Official data pending RBI Q2 BoP (late October 2025), WTO 2025. Sources: RBI BoP Q1 (Sep 1, 2025), PIB August, WTO 2024, US BEA/Census, Ministry of Commerce, USTR EOs, Reuters/GTRI. Estimates ±5–10% from prorations/extrapolations.