Exploring India US Trade and Economic Relations | IBEF (2024)

Introduction

India's largest trading partner is the US, and it is also one of the few countries with which India had a trade surplus in 2022-23. India's major exports to the US include gems and jewellery, pharmaceutical products, light crude oil and petroleum, electrical and electronics goods, engineering products, apparel, frozen marine products, and others.

India-USA Trade

• In FY23, the bilateral trade between India and the US stood at a record US$ 128.78 billion as against US$ 119.48 billion in FY22.
• In FY23, India had a trade surplus of US$ 28.30 billion with the US.
• Of the total trade in FY23, Indian exports to the US stood at US$ 78.54 billion, while American exports to India stood at US$ 50.24 billion.
• USA is the 3rd largest investor in India with cumulative FDI inflows of US$ 62.24 billion from April 2000-September 2023.

Major exported items from India to the USA with amount & quantity

• India exported 7,753 commodities to the US in FY23.
• India’s export to the US increased from US$ 76.17 billion in FY22 to US$ 78.54 billion in FY23.
• Major exported items from India to the US include pearls, semiprecious, and precious stones (US$ 9.20 billion); followed by drug formulations and biologicals (US$ 6.77 billion, petroleum products (US$ 6.03 billion), gold and other precious metal jewellery (US$ 3.32 billion), and RMG cotton including accessories (US$ 3.12 billion), among others in FY23.
• India’s export to the US stood at US$ 50.34 billion during April-November 2023.
• Major exported items from India to the US include Engineering goods (US$ 11.46 billion), Gems and Jewellery (US$ 6.96 billion), Electronic goods (US$ 5.8 billion), Drugs and Pharmaceuticals (US$ 5.53 billion), Petroleum Products (US$ 4.28 billion), etc. from April-November 2023.

Major imported items by India from the USA with amount & quantity

• India imported 6,206 commodities from the US in FY23.
• Imports from the US to India rose to US$ 50.24 billion in FY23 as compared to US$ 43.31 billion in FY22.
• India's imports from the US include petroleum: crude (US$ 10.18 billion); followed by pearls, precious, and semi-precious stones (US$ 5.38 billion), coal, co*ke, and briquettes etc. (US$ 3.76 billion), petroleum products (US$ 3.18 billion), and gold (US$ 1.88 billion), among others in FY23.
• Imports from the US to India stood at US$ 28.95 billion during April-November 2023.
• India's imports from the US include Mineral Fuel and Oils (US$ 9.56 billion), Pearls and Semi-precious stones (US$ 3.8 billion), Nuclear reactors and boilers (US$ 2.45 billion), Electrical machinery and parts (US$ 1.57 billion), Optical and Photographic apparatus (US$ 1.29 billion), etc. from April-November 2023.

Recent Trends & development

• During FY23, India received foreign direct investment amounting to US$ 6.04 billion. With 9% of the total FDI equity inflow, the US is the third biggest source.
• US Ambassador to India, Mr. Eric Garcetti called on Home Minister Amit Shah on July 11, 2023, discussed “building on the positive outcomes” of Prime Minister Mr. Narendra Modi’s visit to the US two weeks ago, the first such meeting between a US envoy and the Home Minister since 2015.
• US Secretary of Energy, Ms. Jennifer M. Granholm and Indian Minister of Petroleum and Natural Gas Mr. Hardeep Singh Puri held the third ministerial meeting of the US-India Strategic Clean Energy Partnership in July 2023, which was launched in September 2021.
• An US-India Defence Acceleration Ecosystem (INDUS-X) was set up “as a network of universities, startups, industry and think tanks to facilitate joint defence technology innovation, and co-production of advanced defence technology.” The US Department of Defence Space Force has signed its first International Cooperative Research and Development Agreement with two Indian startups.
• The Joint Statement issued by the US President Mr. Joe Biden and the Prime Minister of India Mr. Narendra Modi, after their meeting on June 22, 2023, spoke of the two countries being “among the closest partners in the world”, and of a “new level of trust and understanding.”
• The India-US Defence Industrial Cooperation Roadmap which concluded in May 2023, seeks to fast-track technology cooperation and co-production in areas of mutual interest. The India-US Defence Acceleration Ecosystem (INDUS X) – a network of universities, incubators, corporates, think tanks, and private investment stakeholders was launched in June 2023.
• The United States and India launched a new high-level partnership, the “US-India Climate and Clean Energy Agenda 2030 Partnership,” which envisages bilateral cooperation on strong actions in the current decade to meet the goals of the Paris Agreement.
• India and the United States have signed an agreement for cooperation in the development of Air-Launched Unmanned Aerial Vehicles (ALUAV), to expand bilateral defence and military cooperation.
• In 2022, India and the United States signed a bilateral space situational awareness arrangement, and this will support greater information sharing and cooperation in space.
• India is actively participating in the US-led Global Action Plan (GAP) framework launched in February 2022 to bridge policy gaps and end the COVID pandemic. Under GAP, India is leading in three areas, get shots in arms, supply chain resilience, and capacity building for healthcare workers.
• India-U.S. 2+2 Annual Ministerial Dialogue, led by External Affairs Minister and their respective counterparts, reviews bilateral ties in defence, strategic, and security domains as well as important regional and global issues. The fourth 2+2 Dialogue was held on April 11, 2022, in Washington D.C.
• India and the United States are set to sign a Memorandum of Understanding (MoU), which will clear the way for the ISRO's ‘NETRA’ in Bengaluru to start collaborating with the American Combined Space Operation Center (CSpOC) to protect satellites of both nations from natural and man-made threats. It will create a framework for India and the US to share data about space debris and other objects and the potential threat they could pose to the safety and security of the new and existing satellites and the other space assets of the two nations.
• Investment Incentive Agreement between the Ministry of Finance and the U.S. Development Finance Cooperation [DFC] was signed on May 23, 2022, to enable enhanced Investment support provided by US DFC in India.
• The 3rd Counter Narcotics Working Group (CNWG) meeting between India and US was held in New Delhi on July 7, 2022. Indian delegation was led by Director General, Narcotics Control Bureau. An Amended Letter of Agreement (ALOA) for cooperation in drug-related matters was signed.
• Prime Minister Mr. Narendra Modi made his first State Visit to the US from 21-23 June 2023 at the invitation of President of the USA, H.E. Mr. Joseph R. Biden. In addition to a bilateral meeting with President Biden, he addressed a Joint Meeting of US’ Congress and interacted with business and thought leaders.
• President of the USA, H.E. Mr. Joseph R. Biden visited New Delhi from 8-10 September 2023 to attend G-20 Leaders’ Summit. President Biden and PM Modi had a bilateral meeting and co-hosted a group of G20 leaders to accelerate investments in high-quality infrastructure projects and development of 2 economic corridors through the India Middle East Europe Economic Connectivity Corridor and the Partnership for Global Infrastructure and Investment (PGI).
• An Investment Incentive Agreement between our Ministry of Finance and U.S. International Development Finance Cooperation [DFC] was signed in 2022 to enable equity investment, co-insurance, grants, feasibility studies, and technical assistance. As of March 2023, DFC’s India portfolio stood at more than US$ 3.1 billion across 100+ projects.

Bilateral Trade and Economic Relations

Rapidly expanding trade and commercial linkages between India and the US form an important component of the multi-faceted partnership between the two countries. Total bilateral trade (goods and services) between India and US increased at a CAGR of 11.5% from US$ 20 billion in 2000 to US$ 142 billion in 2018. In 2021, overall US-India bilateral trade in goods and services reached a record US$ 157 billion.

The US emerged as India's biggest trading partner in 2022-23 on account of increasing economic ties between the two countries. According to the provisional data of the Commerce Ministry, the bilateral trade between India and the US increased by 7.65% to US$ 128.55 in 2022-23 as against US$ 119.48 billion in 2021-22.

India-USA trade is likely to touch US$ 300 billion in 2026-27 from its current trade, a report released by industry body PHD Chamber of Commerce and Industry (PHDCCI) stated.

Many US companies view India as a critical market and have expanded their operations. Many Indian companies are investing in the US and adding value. According to a CII study released in April 2023 ,163 Indian companies invested over $40 billion in the US and created over 425,000 direct jobs.

The U.S. is one of the most favoured destinations of Indian students for higher education.

As of September 2023, there are 320,260 Indian students, mostly in graduate (Masters)

programs in STEM fields. As per the US State Department’s website, Indian students in the US contribute about US$ 7.7 billion annually to the US economy.

U.S.A is the 3rd largest investor in India, with cumulative FDI inflows of US$ 62.24 billion from April 2000-September 2023. In 2023, the U.S. Embassy and Consulates in India processed a record-smashing 1.4 million U.S. visas. Demand across all visa classes was unprecedented, with a 60% increase in applications compared to 2022.

Conclusion

India-U.S. trade relations have developed into a "global strategic partnership", based on shared democratic values, and increasing convergence of interests on bilateral, regional, and global issues. Despite the COVID-19 pandemic, India-U.S. cooperation witnessed intense engagement under various bilateral dialogue mechanisms in a wide range of areas including defence, security, health, trade, economic, science & technology, energy, and people-to-people ties.

Contacts

• Embassy of India, Washington DC, USA
  Telephone: (202) 939-7000
  Ms. Sripriya Ranganathan (Deputy Chief of Mission) – psdcm.washington@mea.gov.in
  Mr. Ajay Kumar (Minister – Commerce) - mincom.washington@mea.gov.in
• USA Embassy in India
  Ms. Melinda M. Pavek -Consul General - admin@uaeembassy.inAddress- Shantipath, Chanakyapuri, New Delhi - 011-91-11-2419-8000 - admin@uaeembassy.in
• The Confederation of Indian Industry (CII), USA
  Ms. Shuchita Sonalika - Director and Head, North America - + 1 571 232 7170 - shuchita.sonalika@cii.in