GTRI reveals the US runs a $35–40 billion surplus with India when education, digital services, finance, and arms are included, challenging the reported trade deficit.
FREMONT, CA: The US officially reports a trade deficit of $44.4 billion with India, based on goods and services exchanged during the 2024–25 period. However, according to the Global Trade Research Initiative (GTRI), this figure paints an incomplete picture. When revenues from sectors like education, digital services, financial activities, intellectual property, and defense trade are included, the US enjoys a surplus of $35–40 billion with India.
A Broader Economic Relationship
India’s exports to the US totaled $86.5 billion in goods and $28.7 billion in services, while imports from the US amounted to $45.3 billion in goods and $25.5 billion in services. This results in a combined surplus of $44.4 billion for India. On the surface, this would seem to validate concerns raised by US policymakers about an imbalanced trade relationship. However, it’s important to note that this is a trade surplus, not a trade balance, which takes into account all the goods and services exchanged between the two countries. However, this calculation excludes several key income streams that flow from India to the US. These include massive inflows from Indian students, tech service payments, financial advisory operations, and arms transactions. When these factors are taken into account, GTRI estimates that the actual trade balance tilts in favor of the US.
Education as a Major Revenue Stream
One of the most significant contributors to US income from India is its higher education sector. Indian students in American universities spend over $25 billion annually, including around $15 billion in tuition and $10 billion in living expenses. Institutions such as the University of Southern California, New York University, and Purdue University benefit significantly from these financial inflows, making education one of the US’s most valuable exports.
Digital and Financial Earnings
US-based digital giants earn substantial revenue from India’s growing internet economy. Companies such as Google, Meta, Apple, Amazon, and Microsoft collectively generate $15–20 billion annually through digital advertising, software sales, cloud services, app stores, and subscriptions. Much of this revenue is booked in the US, with limited reinvestment in India due to lenient data and tax policies. Financial services firms in the US also generate $10–15 billion annually through their advisory, investment, and consulting activities in India’s corporate sector. These services are vital to Indian enterprises, yet the economic value is largely retained abroad.
Global Capability Centers and Intellectual Property
Global Capability Centers (GCCs) operated by American firms in Indian cities such as Bengaluru and Hyderabad generate an additional $15–20 billion. Although these centers are physically located in India and staffed by Indian professionals, much of the revenue is registered in the US, contributing to American corporate earnings. Moreover, US pharmaceutical companies earn between $1.5 billion and $2 billion annually through licensing and patent-based transactions. Similarly, American auto and component manufacturers generate $0.8–1.2 billion through licensing arrangements. The entertainment industry, led by Hollywood and US streaming platforms, adds another $1–1.5 billion via subscriptions, box office sales, and licensing deals.
The US also benefits significantly from arms sales to India. While exact figures remain confidential, the defence relationship, which includes not only arms sales but also joint military exercises and technology transfers, has grown rapidly in recent years and forms a crucial part of bilateral trade. These earnings are not included in conventional trade statistics but play a critical role in the overall economic equation.
GTRI argues that India should approach future free trade negotiations with greater confidence. With the US earning tens of billions annually from various non-merchandise sectors in India, the traditional deficit narrative does not reflect the whole picture. India has the grounds to demand reciprocal terms and resist pressure to lower tariffs or open markets without proportionate benefits unilaterally.