Ever since Trump slammed the punitive “left-right punch” tariffs of 25%+25% tariff on India weeks ago, there’s been an ongoing debate in the public square on why our Government’s response has been so pusillanimous if not craven so far.
The economic pundits and journalistic commentariat are busy writing copious, dense op-Eds in the nationwide press and holding forth with their pedantry on national television talk-shows. They say that India cannot and must not take any aggressive or retaliatory measures — neither on the trade front nor on the foreign policy front — to go head-to-head on a collision course against the Trump Administration because such a step would only make the situation far worse than it already is now for Indian economy prospects, , Indian export competitiveness, India’s unemployment problem and above all India’s long term geopolitical interests. In this public-square debate, one of the most vehement arguments I have heard clearly reflect the the angst felt over possible loss of what is called precious “access to American Technology”.
Some of the arguments I have heard are well reasoned while others seem no more than expressions of deep angst over India’s dependence on what is claimed to be “key American high-technology source for Defence, Aerospace, Aviation, Cyber-Tech, Microchip manufacture etc.” which would all be at great risk of loss should Donald Trump get more infuriated with Indian show of continued doughty resistance.
The well-nuanced arguments, for example, go something like this :
“We are dependent on both the USA for sustaining our economic growth. We have a significant share of military hardware that is essential to deal with the threats ( Hercules and heavy lift aircraft which are inescapable for supporting our troops in high altitude, Apaches, Torpedoes, missiles, P8i aircraft and various others which have proved their worth. The stopping of GE 404 has stalled the delivery schedule of LCAs.
“USA has been helpful in filling the gaps in our nuclear fuel, in counter terrosim efforts in UNSC Initiatives such as the ISR are helping us to bridge the tech gaps. The QUAD though the future is uncertain has delivered on other than war initiatives( IPOIM IPES, STEM, HADR, MDA etc.,)”
“Next, Trump might even stop the export of GE engines as needed by national security. He stopped engines for the Turkish stealth fighter. When someone asked the MD HAL about this he said he was tying up everything with GE but 10- Mk1 Tejas are still standing idle parked in hangars awaiting engines”.
Here below are examples of a few other types of argument which sound like they are based more on visceral angst rather than cold calculation. But the effect they have on the rest of us all, generally speaking, is to put a big spook into our minds —- i.e. a terrible fear that if “access to American Technology” gets denied by Trump to India, the heavens will come crashing down on this country.
“Trump’s act of urging Europe to impose 100% tariffs on India is diabolical. But what should the Indian PM do? We are dealing with a person who is powerful and demented, with a huge ability to hurt India. Restraint is therefore paramount.
“Modi has to tell Trump that he is unfair and that this action seems directed at India, not Russia. I think Trump will reverse track — not immediately, but eventually — not because of what Modi says but because he will realise that the tariffs on India help no one and hurt many, including the US.
“This is not the time to infuriate the madman of the US by engaging in a wordy duel with him, but we must try to keep that madman as cool as much as possible with some chocolate words even as we continue purchasing Russian oil.
“Donald Trump is the US President, and relations with the US matter ! Not just directly. It can use its influence to create problems for us. Many economists have said or implied that our long-term development can soar or sink depending on that fact.
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Now, let’s take a good look at data and facts.
American Technology imports by India is really not such a big deal for the Indian economy or its Defence and other industry.
A little bit of digging info relevant data of the last 10 years reveals clearly that in terms of significance to the overall GDP (both in nominal and PPP terms), imports of high technology from the US (both hardware supply and IP brain-ware) do not add up to anything so very impactful on our economy as to arouse such terrifying angst.
Below is a summary of what I was able to gather from a very high-level focused search into relevant data available in the public domain.
From the information gathered about India-US trade over recent years and estimates on technology-related imports:
• India’s total imports from the USA were about $20.46 billion in 2015, growing steadily in recent years to about $38.99 billion in 2024.
• Among the top product categories imported by India from the USA are machinery, mechanical appliances, electrical machinery, optical and medical apparatus, and also defense-related capital acquisitions.
• Technology goods (including machinery, electrical and electronic equipment, optical instruments) and services likely constitute a significant share of these imports.
• The defense sector procurement from USA forms a part of this aggregate, with the Indian Ministry of Defence budget in FY 2024-25 around $75 billion, though a major share is now from indigenous sources. Still, defense capital acquisitions include foreign procurements, likely from the USA.
• The bilateral trade between India and the USA hit approximately $128-129 billion in FY 2022-23, with imports from USA around $39 billion in 2024.
• Roughly half or more of India’s imports from the USA are in high technology and capital goods segments based on their share of intermediate and capital goods imports.
Estimating conservatively, aggregating technology goods and services imports (including from the defense industry sector) from the USA to India over the last 10 years (2015 to 2024) in USD terms could be in the range of:
• Starting around $20 billion in 2015 and rising almost to $39 billion in 2024 with an average around $30 billion per year.
• Over 10 years: Approximately $300 billion USD aggregate technology imports (goods and services), including defense-related procurements, from the USA to India.
This is a reasoned estimate based on available import data trends, product and sector categories, including defense allocations and bilateral trade reports.
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To calculate the percentage of India’s GDP represented by the estimated $30 billion annual technology imports from the USA over the last 10 years:
• India’s nominal GDP grew from about $2 trillion in 2015 to approximately $3.7 trillion in 2024.
• The average GDP over the 10 years (2015-2024) is roughly estimated around $2.8 to $3 trillion.
• Using a midpoint estimate of $3 trillion average GDP annually for simplicity.
Now, $30 billion annual technology imports as a percentage of $3 trillion GDP is:
30 billion /USD3,000 billion USD×100= 1%
So, India’s total technology imports from the USA in goods and services, including defense-related, have been roughly about 1% of India’s GDP annually over the last 10 years. (This percentage may vary slightly with yearly GDP fluctuations but generally stays close to this mark).
In PPP terms, India’s GDP is much higher, estimated around $10.5 trillion (2018 figure) and projected to be higher in recent years.
Using the $10.5 trillion PPP GDP estimate as an annual average (conservative given growth trends), the $30 billion technology imports represent:
30 billion/10,500 billion USD×100= 0.29%
Thus, when India’s GDP is measured in PPP terms, the $30 billion annual technology imports from the USA correspond to roughly 0.29% of India’s GDP, notably lower than the approximately 1% when using nominal GDP.
This reflects how PPP adjustments give a different scale to GDP reflecting cost-of-living and price level differences, especially for an emerging economy like India.
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Hypothetically, if technology exports to India from the USA were curtailed substantially or even stopped, as a punitive foreign policy measure of Donald Trump, the overall impact on India’s economy would likely be a pinprick rather than a grievous wound for the following reasons:
• Estimated technology imports from the USA (goods and services, including defense sector) are about $30 billion annually, which is roughly 1% of India’s nominal GDP and about 0.29% of India’s PPP-adjusted GDP.
• While technology imports are critical for certain sectors and defense capabilities, in the broader context of India’s $3+ trillion nominal GDP and rapidly growing domestic technology and manufacturing capacities, such imports are a small fraction of the economy.
• India maintains significant trade diversification and is actively developing its own indigenous technology ecosystem, including the ICT sector targeted to grow to $1 trillion by 2025.
• Even with such imports curtailed, the Indian economy’s size, resilience, and diversification would ensure that this constraint acts more like a limited shock or manageable disruption rather than a systemic threat.
• However, specific sectors highly dependent on certain advanced technologies or defense supplies may feel acute pain, but the macroeconomic impact would be contained to a minor GDP percentage, unlikely to threaten overall growth or stability.
In conclusion, a punitive cut-off or heavy restrictions on technology exports from the USA would create challenges but would amount to a pinprick—not a grievous wound—to India’s economy overall.
If only India had in the last 10 years invested in its own indigenous R&D the $300 Bn or maybe even a half that it spent on technology imports from the USA, who knows , we wouldn’t be wringing our hands today over Trump’s Tariff war, would we?
Do we see China worried about Loss of American Technology sources? No… because they have self-belief in their own R&D for most of their tech-needs and … for the rest … they know how to steal it from America and the West. India on the other hand cannot seem to match the Chinese enterprising spirit .
Sudarshan Madabushi
Well said – but perhaps it’s not the quantum of technological imports, but the type. In any case, we’ve gone too used to letting other people (including our non-desi desis) do the heavy lifting, while we sit on our ar#$s and pick noses while deciding how to make the next quick buck off our fellowman. Read lots of articles on how we should provide a conducive ecosystem for our brilliant people – but we are only starting this off in our usual desultory way – people succeed not because of our government, but in spite of it – I’m sure you’ve read this ad nauseam.
You’re right … if only India had in the last 10 years invested in its own indigenous R&D the $300 Bn that it spent on technology imports from the USA, who knows , we wouldn’t be wringing our hands today over Trump’s Tariff war . Do we see China worried about Loss of American Technology sources? No… because they have self-belief in their own R&D… for most of their tech-needs and the for the rest they know how to steal it from America and the West. India cannot match Chinese enterprising spirit .