Trade diversification could be one of the ways to bridge the bilateral trade deficit with the US, they said requesting anonymity. Under the ongoing negotiation of a bilateral trade agreement (BTA),the two partners are considering supply chain integration for mutual gains. Under BTA, concessional duties for precious metals and finished jewellery could be win-win for both, they said.
“The US is a leading producer of gold, silver, and platinum. India can easily source a sizable quantity of these valuable items from the US,” one of the people said on condition of anonymity. India’s total import of precious metals, including gold and gems crossed $74 billion in first 11 months of current financial year (April 2024-February 2025). In 2023-24 India imported $74.81 billion worth of these items. Of this about $5 billion of imports were from the US.
Besides crude oil, import of high value items such as American gold, precious metals and gem stones would certainly help in balancing trade between the two countries, a second person said, also on condition of anonymity. “The US is miffed by the trade deficit, which is one of the key reasons for imposing 26% reciprocal tariff on Indian. BTA is expected to suitably address this.”
On Wednesday, the external affairs ministry spokesperson addressed the issue and said both are very strong partners in the realm of trade and economic relations. “As far as trade issues are concerned, we are in negotiations on a bilateral trade agreement, and hopefully, we will be able to address these issues and conclude expeditiously this particular agreement,” spokesperson Randhir Jaiswal told a media briefing.
According to commerce ministry’s data, India exported merchandise worth $76.37 billion to the US in the first 11 months of current financial year (April 2024-February 2025) and imported goods of $41.62 billion, resulting in a deficit of $34.75 billion.
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The reciprocal tariffs kicked in on Wednesday, although India is still hopeful that a BTA will solve this problem. The impact of reciprocal tariffs slapped on India by President Donald Trump is yet to be known but the government is engaged with the US administration to deal with the situation by concluding a bilateral trade agreement, external affairs minister S Jaishankar said on Wednesday.
On February 13, PM Narendra Modi and President Donald Trump resolved to deepen US-India trade relations, aiming to boost total bilateral trade from about $200 billion to $500 billion by 2030 — an ambitious initiative dubbed “Mission 500.” To start with, the two leaders on February 13 also agreed to sign a BTA by the fall of 2025. “Both sides are deeply engaged to fast-track a mutually beneficial BTA at the earliest,” the first person said.
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Indian refiners have already started importing American crude oil, which is also part of the trade diversification strategy. However, sourcing precious items from the US is advantageous because they are easy to transport, hence economical in terms of logistics costs compared to crude oil, he added. India imports over 87% of crude oil it processes and it imported crude worth $124 billion from various countries in 11 months of 2024-25 (April-February period).
India has already raised its crude oil imports from the US and currently it is among the five top suppliers after Russia, Iraq, Saudi Arabia and the United Arab Emirates (UAE). Indian refiners imported about 221,000 barrels per day (bpd) of crude oil from America in January 2025 compared to 70,600 bpd in December 2024. In February 2025, it rose to 3,57,000 bpd.
According to the US Energy Information Administration (EIA) data, after the bilateral push during the Trump 1.0, the US’ monthly crude oil exports to India jumped from 524,000 barrels in April 2018 to 10,441,000 barrels in just two months, and peaked at 21,558,000 barrels in December 2021 only to plunge to 2,881,000 barrels in December 2023.
“Imports of energy and precious metals from USA are some of the low-hanging fruits to reduce India-US trade deficit. Flow of oil from American fields in huge quantity will not only break cartelisation by OPEC, but also soften international oil prices and thereby, fuel-induced inflation,” the first person said. While India may increase imports of American crude, gold, silver and platinum, focus is also made on importing other high-value merchandise, almonds and American whiskey, he added.
“From the Indian perspective, actually working out something bilaterally with the US is not at all a sort of a negative or a sort of an unwanted situation. On the contrary, it is something which has long been our objective,” Jaishankar added while speaking at a conference.
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