India-US Trade Relations- Relevance for UPSC Exam
- GS Paper 2: International Relations- Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests.
India-US Trade Relations in News
- Recently, the U.S. surpassed China to become India’s top trading partner in 2021-22, reflecting strengthening economic ties between the two countries.
- Recently, India has also joined a U.S.-led initiative to set up an Indo-Pacific Economic Framework (IPEF) and this move would help boost economic ties further.
Data on India-US Trade Relations
- Total Bilateral Trade: the bilateral trade between the U.S. and India stood at $119.42 billion in 2021-22 as against $80.51 billion in 2020-21.
- Export to USA: Exports to the U.S. from India increased to $76.11 billion in 2021-22 from $51.62 billion in the previous fiscal year.
- Import from the USA: imports to India from the USA rose to $43.31 billion in 2021-22 from about $29 billion in the previous fiscal year.
India-US Trade Relations- Comparing with India-China Trade Relation
- Total Bilateral trade: During 2021-22, India’s two-way commerce with China aggregated at $115.42 billion as compared to $86.4 billion in 2020-21.
- Export to China: Exports to China marginally increased to $21.25 billion last fiscal year from $21.18 billion in 2020-21.
- Import from China: imports from China jumped to $94.16 billion in 2021-22 from about $65.21 billion in 2020-21.
- Trade Deficit: Trade gap rose to $72.91 billion in 2021-22 from $44 billion in the previous fiscal year.
Why India-US Trade Relations is Improving?
- Growing Trust and Cooperation: Growing cooperation in various areas has led to increasing bilateral trade with the U.S.
- Growing trade is expected to continue in the coming years as New Delhi and Washington are engaged in strengthening economic ties.
- Alternative to China: India is emerging as a trusted trading partner and global firms are reducing their dependence on China for their supplies and are diversifying business into other countries like India.
- Great Potential of Indian Economy: India is the fastest growing market economy with unparalleled demographic dividend and provides enormous opportunities for the U.S. and Indian firms for technology transfer, manufacturing, trade and investment.
What is Indo-Pacific Economic Framework (IPEF)?
- “Indo-Pacific economic framework” is the centre piece of the present U.S regime’s economic strategy toward Indo-Pacific region.
- In October 2021, US announced the development of an Indo-Pacific Economic Framework (IPEF) with partner nations to define shared objectives around trade facilitation, standards for the digital economy and technology, supply chain resiliency, decarbonization and clean energy, infrastructure, worker standards, and other areas of shared interest.
- The U.S. is working out the details of this strategy with a range of countries in the region, including Japan, Singapore, Malaysia, New Zealand, South Korea and India.
- Pillars of IPEF: The IPEF will focus on four main pillars: trade facilitation, supply chain resilience, infrastructure and decarbonization, and taxation and anti-corruption.