Explained: Why the U.S. Cannot Afford to Lose India’s Market?

The India US tariff war impact highlights a paradox: tariffs may pressure India, but Washington cannot afford to lose India’s Market, a $4 trillion economy and one of the fastest-growing consumer bases worldwide.

— Even Amid Tariff Wars and Strategic Frictions —

New Delhi (ABC Live): While U.S. foreign policy toward India remains cyclical and often unpredictable, one fact is increasingly undeniable: India has become too large, too fast-growing, and too strategically central for the United States to afford disengagement.

Despite tariff tensions and political disagreements, the structural interdependence between the two economies—spanning consumer markets, supply chains, technology ecosystems, defence co-production, and Indo-Pacific security—has deepened to the point where Washington risks hurting its own long-term interests if it sidelines India.

This report explains why the U.S. cannot afford to lose India’s market, supported by economic data, sectoral analysis, and geopolitical context.

1. India’s Market Scale: From Emerging to Indispensable

Indicator	Value (2024–25)
Nominal GDP	~$4.1 trillion
PPP-adjusted GDP	~$13.2 trillion (3rd largest)
GDP growth	~6.3 % (fastest among G-20)
Population	1.43 billion (world’s largest)
Middle-class consumers	400+ million and rising
Median age	28.4 years

Why it matters:

India is already the fifth-largest economy, and will be the third-largest consumer market by 2030.
It is the largest incremental demand pool in the democratic world for smartphones, automobiles, energy, aviation, infrastructure, health tech, and digital services.

2. U.S. Companies in India: Revenue Footprints Are Growing

A look at FY 2024 data shows that even though India’s share of global revenue is still modest, the growth trajectory is steep, and most U.S. companies now consider India a “must-win” market.

Company	India Revenue (USD bn)	Global Revenue (USD bn)	India Share (%)
Apple	~8.1	391.0	2.0 %
Alphabet (Google, gross ad billing)	~3.8	350.0	1.1 %
Microsoft	~2.8	245.1	1.1 %
Amazon (Seller Services)	~3.1	638.0	0.5 %
AWS (India cloud ops)	~1.7	107.6	1.6 %
Boeing* (India ops)	~0.23	66.5	0.35 %
GE Vernova*	~0.21	35.0	0.6 %

*Notes: Boeing and GE India revenues reflect subsidiary operations; aircraft sales and EPC contracts are often booked offshore.

Implication: As these firms scale manufacturing, R&D, cloud infrastructure, and services in India, their lobbying against hard decoupling intensifies.

3. Supply-Chain Logic: India Is a China Hedge

Electronics & smartphones: Apple, Foxconn, Pegatron, and Dell are shifting capacity to India to de-risk China.
Solar PV & batteries: India is the only other large-scale base investing in gigawatt-scale solar and ACC battery PLI schemes.
APIs & pharma: India is a top-3 global supplier of generics; U.S. pharma firms rely on Indian CMOs.
Semiconductors: Micron, Applied Materials, and Lam Research are co-investing in India’s fab and ATMP ecosystem.

Why it matters: Losing India’s participation undermines Washington’s own “China + 1” strategy, making supply chains more fragile, not less.

4. Strategic & Security Stakes

Indo-Pacific Strategy: India is a central pillar of the Quad, maritime domain awareness (MDA), and regional counter-balancing.
Defence Co-Production: Joint projects such as GE F-414 engine manufacturing, drones, and sensors are now long-term industrial linkages.
Tech Governance: India’s standards in data, AI, 6G, green hydrogen, EVs, and open-RAN will shape global rule-making.

Strategic cost of ignoring India:

Weakens the China-containment coalition.
Pushes India toward greater autonomy or hedging with Russia, EU, or BRICS+.
Undermines U.S. credibility in the Global South.

5. Why the U.S. Still Tries Tariff Pressure

Despite India’s strategic weight, the U.S. sometimes uses tariffs to:

Win short-term trade concessions (e.g. agriculture, dairy, e-commerce).
Punish India’s Russian oil imports or industrial policies.
Signal “tough on trade” domestically (especially in U.S. election cycles).

But this is increasingly counter-productive, because:

India is less aid-dependent, more confident, and can diversify partners.
Retaliation (even calibrated) raises U.S. exporters’ costs.
Tariffs undermine U.S. firms’ own India growth bets.

6. India’s Leverage (Quiet but Real)

Lever	Description
Market access	India can pace liberalization in aviation, agri-tech, med-tech, etc.
Defense & aerospace purchases	India can diversify procurement toward EU, Israel, indigenous
Standards & regulation	India can set data, digital, and green standards that U.S. firms must meet
South-South diplomacy	India can rally Global South support against unilateral trade coercion

7. Data Summary Table

Dimension	U.S. ? India	India ? U.S.
Goods trade (2024 est.)	$45 bn	$80 bn
Trade balance	–$35 bn	+$35 bn for India
U.S. FDI stock in India	~$65–70 bn	N/A
U.S. jobs tied to India exports*	~250,000+	N/A
India’s top export destination	—	?? United States

*Estimate based on U.S. Dept. of Commerce multipliers.

Bottom Line

India is no longer a “nice-to-have” for U.S. foreign economic policy—it is a “must-have.”

Ignoring or coercing India might deliver short-term bargaining wins, but risks:

Alienating a long-term strategic partner.
Weakening the U.S.’s own corporate competitiveness.
Strengthening rival coalitions in Asia, Africa, and Latin America.

As India becomes the world’s largest growth-engine market, Washington will have to rethink pressure-first tactics and move toward partnership-based industrial diplomacy.