Friday, 17 May, 2024
By: Yash Gupte
The trade between the world’s largest democracy and the world’s oldest democracy has continued to grow over the years. Image Source: IANS
Due to growing economic relations between the two nations, the U.S. has become India's largest trading partner in 2022–2023. The bilateral trade between India and the US has increased by 7.65 percent to $128.55 in 2022-23 as against $119.5 billion in 2021-22
Prime Minister Narendra Modi travelled from New York to Washington, where he presided over a historic gathering of UN representatives, diplomats, and notable individuals to celebrate the 9th International Day of Yoga earlier in the day at the UN Headquarters. PM Modi also attended a Skilling for Future event in Washington, DC, and met with the CEOs and senior leaders of Micron, GE, and Applied Materials afterward. Modi travelled from New York to Washington, where he presided over a historic gathering of UN representatives, diplomats, and notable individuals to celebrate the 9th International Day of Yoga earlier in the day at the UN Headquarters.
During Prime Minister Narendra Modi's ongoing official State Visit to the United States, a historic agreement to ease the transfer of at least 11 crucial jet engine technologies is scheduled to be unveiled. The American multinational corporation General Electric (GE) and Hindustan Aeronautics Limited (HAL) are expected to announce a deal for the manufacture of GE's F414 engine for the indigenous Light Combat Aircraft (LCA) Tejas Mk2 under licence in India. The likely technology transfer agreement came up in discussions between US Secretary of Defence Lloyd Austin and Indian Defence Minister Rajnath Singh earlier this month in New Delhi. It also featured prominently in National Security Advisor Ajit Doval's meeting with his American counterpart Jake Sullivan in February.
According to Reuters, in an effort to reduce their dependency on China for manufacturing-related operations, American businesses may be more inclined to invest in the South Asian nation as a result of Prime Minister Narendra Modi's visit to the United States. According to official figures, the United States is India's third-largest source of foreign investment, with approximately $60 billion spent between 2000 and 2023. Elon Musk claimed that Modi had been pushing the manufacturer of electric vehicles to make a "significant investment" in the nation, and that an announcement was shortly to come.
The timing of Indian Prime Minister Narendra Modi's visit to the US could not have been more ideal. As he pitches the country's potential to American corporate leaders and investors, a booming economy, equity benchmarks at all-time highs, and a quickly expanding consumer market all make for wonderful branding.
Since March, Indian stocks have attracted about $10 billion in net foreign inflows, which would likely make this quarter's inflows the highest since the end of 2020. According to Bank of America, rupee-denominated bonds are on course to see the longest string of monthly buying by foreign funds in almost four years, and the local currency is providing the second-best carry returns in Asia this year.
In recent times, there has been a lot of improvement in the trade relations between India and the United States. United States Secretary of Commerce Gina Raimondo visited New Delhi from March 7 to March 10 to participate in the US-India commercial dialogue and CEO Forum and to meet with public and private sector leaders. After a three-year hiatus, India and the US hosted a commercial dialogue on March 10 to discuss collaboration in a variety of areas that might open up new trade and investment prospects between the two nations.
Considering the growing trade relations between India and USA and Prime Minister Narendra Modi’s official visit to the United States, India Tracker takes a look at trade between both the nations in last few years.
Source: United States Census Bureau
The trade between the world’s largest democracy and the world’s oldest democracy has continued to grow over the years. India exported goods worth $48,594.4 million to US in 2017 whereas India imported goods worth $25,647.8 million. The trade between the two nations increased exponentially in 2019 before dropping to a record low in 2020 due to the COVID-19 pandemic which resulted in disruptions in the global supply chains. The pandemic brought major hurdles in the flow of goods and services between India and US. But with great measures and fruitful commercial discussions and negotiations, the trade between India and US witnessed a record increase. From export of goods worth $51,199.8 in 2020, the exports from India increased to $73,172.6 in 2021. Later, in the year 2022, the exports from India jumped to $85,670.8 million. India has benefited a lot from the trade with US as the trade balance has been in India’s favour. The bilateral trade in goods saw very robust growth during the CY 2022, surpassing $131 billion in goods, thus doubling since 2014 while total trade in Goods and Services is expected to cross $180 billion. The US is also India’s third most significant source of FDI and the US is one of India’s top five investment destinations.
Commerce and Industry Minister Piyush Goyal at the Hindustan Times Leadership Summit in November 2022 had marked that the India-US bilateral trade in goods and services will reach USD 500-600 billion by 2030 as the relations between both the countries continue to strengthen.
United States, home to 4 million people of Indian origin has now emerged as the top country when it comes to money being sent to India. According to Reserve Bank of India (RBI)'s monthly bulletin, US accounted for 23 percent of overall remittances in the financial year 2020-21. This corroborates with the World Bank report citing economic recovery in the US as one of the important drivers of India’s remittances growth.
According to experts, the trend of growing bilateral commerce with the United States would continue in the years to come as New Delhi and Washington work to further cement their economic connections. According to A. Sakthivel, president of the Federation of Indian Export Organisations (FIEO), increased exports of products like pharmaceuticals, engineering, and gems and jewellery are assisting India in pushing its shipments to the United States.
Remittances from the UAE now account for 17-18 per cent of India’s total inward remittances. In fact, the share of remittances from the GCC region in India’s inward remittances is estimated to have declined from more than 50 per cent in 2016-17 (last surveyed period) to about 30 per cent in 2020- 21. UK emerged as the third largest source of remittances followed by Singapore, Saudi Arabia and Kuwait.
The change in remittances pattern has also impacted the states revenue. According to central bank's estimates share of the traditional remittance recipient states of Kerala, Tamil Nadu and Karnataka, which had strong dominance in the GCC region, has almost halved in 2020-21, accounting for only 25 percent of total remittances since 2016-17. Maharashtra with 35 percent share in total remittance has emerged as the top recipient state surpassing Kerala. Apart from Maharashtra, Uttar Pradesh and Delhi has shown tremendous growth in remittance receipts.
Due to growing economic relations between the two nations, the U.S. has become India's largest trading partner in 2022–2023. The bilateral trade between India and the US has increased by 7.65 percent to $128.55 in 2022-23 as against $119.5 billion in 2021-22. Exports to the U.S. rose by 2.81 percent to $78.31 billion in 2022-23 as against $76.18 billion in 2021-22, while imports grew by about 16 percent to $50.24 billion.
