India US Trade Deal: Why a Low-Tariff Pact is Crucial for Jobs and Growth Now

India stands at a critical economic crossroads. As global trade dynamics shift, a low-tariff trade deal between India and the United States could emerge as a defining opportunity to drive exports, attract investments, and create millions of new jobs. However, achieving this requires decisive action on agriculture and labour reforms, which continue to pose internal challenges.

Over the past few years, India’s exports to the US have shown steady growth, making America one of its largest trading partners. But recent tariff policies have placed Indian exporters at a disadvantage. The US tariff structure, especially after the adjustments under former President Donald Trump, saw Indian exports shrink by nearly 20% in a single quarter—impacting sectors such as textiles, leather, and manufacturing.

The Need for a Low-Tariff Agreement

Experts believe that a comprehensive India–US Free Trade Agreement (FTA) could significantly alter this scenario. By lowering tariffs and easing non-tariff barriers, India could expand its export capacity across labour-intensive industries like garments, footwear, furniture, and marine products. Economists estimate that such a pact could raise India’s exports to the US from $81 billion to nearly $230 billion by 2035, potentially creating five million direct and indirect jobs.

Key Sectors That Could Benefit

If structured strategically, the agreement could boost both labour-intensive and capital-intensive sectors—from apparel and toys to pharmaceuticals, plastics, and metal goods. Beyond market access, a well-designed trade deal could also enhance mutual recognition of standards, streamline testing and certification processes, and enable short-term worker mobility, addressing skill gaps in the US while opening opportunities for Indian professionals.

The Reform Imperative

However, the road to success is not without challenges. The US is expected to demand reductions in agricultural protections, a politically sensitive area in India. Critics often argue that trade liberalisation may harm farmers, but the opposite may be true. Experts suggest that India can use this opportunity to restructure farm subsidies, replacing distortionary benefits such as free electricity and fertiliser subsidies with direct benefit transfers (DBTs). Such reforms would empower farmers to move toward high-value crops while ensuring income stability.

In addition, simplifying labour regulations, improving land-use policies, and reducing compliance burdens will strengthen India’s competitive edge. These reforms would directly benefit export-oriented industries that operate on thin margins.

A Transformative Opportunity

Even a moderate increase in export volumes to the US could generate two to three million additional jobs over the next decade. More importantly, it would mark a decisive step toward making India a global manufacturing and export powerhouse.

If India combines a low-tariff trade deal with robust domestic reforms, the economic impact could mirror the transformative effect of the 1991 liberalisation era. The question, therefore, is not whether India can afford to strike such a deal—but whether it can afford not to.

A united approach between policymakers, industry, and citizens could ensure that this trade partnership becomes a long-term driver of economic growth, employment, and prosperity for millions.