India US Trade

India US Trade Agreement

Last updated: Mar, 2023

Introduction

India's largest trading partner is the USA and it is also one of the few countries with which India had a trade surplus in 2021-22. 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 2021-22, the bilateral trade between India and the USA stood at a record US$ 119.42 billion as against US$ 80.51 billion in 2020-21.
In 2021-22, India had a trade surplus of US$ 32.8 billion with the US.
Of the total trade of US$ 55.57 billion in the first five months of FY22 (Jan-May), Indian exports to the US stood at US$ 35.99 billion, while American imports stood at US$ 19.58 billion.
USA is the 3rd largest investor in India with cumulative FDI inflows of US$ 56,753 million from April 2000 to September 2022.
The bilateral trade between India and the USA stood at US$ 87,342 million from April to November 2022.

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

India exported 7,546 commodities to the USA in FY21.
India’s export to the USA increased from US$ 51.62 billion in the previous fiscal year to US$ 76.17 billion in FY 2021-22.
Major exported items from India to the USA include pearls and precious stones/metals and articles thereof, imitation jewellery and coin (US$ 14,667.49 million); followed by pharmaceutical products (US$ 6,472.25 million); and nuclear reactors, boilers, machinery, and mechanical appliances; parts thereof (US$ 5,798.52 million) in FY21.
India’s export to the USA stood at US$ 53.14 billion during April-November 2022.
Major exported items from India to the USA include pearls, precious and semi-precious stones (US$ 6,803 million), followed by drug formulations and biologicals (US$ 4,489 million), etc. during April-November 2022.

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

India imported 6,229 commodities from the USA in FY21.
Imports from the USA to India rose to US$ 43.31 billion in 2021-22 as compared to about US$ 29 billion in 2020-21.
India's imports from the United States include mineral fuels, mineral oils & products; bituminous substances; mineral waxes (US$ 4,716.64 million); followed by pearls, precious or semi-precious stones/metals and articles thereof; imitation jewellery and coin (US$ 6,839.18 million).
Imports from the USA to India stood at US$ 34.2 billion during April-November 2022.
India's imports from the United States include petroleum crude (US$ 6,429 million), followed by pearl, precious and semi-precious stones (US$ 4,085 million), etc. during April-November 2022.

Recent Trends & development

During FY2020-21, India received the highest-ever foreign direct investment amounting to US$ 81.72 billion. With 17.94% of the total FDI equity inflow, the United States of America is the second biggest source.
The United States and India launched a new high-level partnership, the “U.S.- 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 defense 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 defense, 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 U.S. DFC in India.
The 3rd Counter Narcotics Working Group (CNWG) meeting between India and U.S. was held in New Delhi on 7 July 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.

Bilateral Trade and Economic Relations

Rapidly expanding trade and commercial linkages between India and the U.S. 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 U.S.-India bilateral trade in goods and services reached a record US$ 157 billion.

Many U.S. companies view India as a critical market and have expanded their operations. Likewise, Indian companies seek to increase their presence in the U.S. markets and at the end of 2020, Indian investment in the United States totalled US$ 12.7 billion, supporting over 70,000 American jobs. Nearly 200,000 Indian students in the United States contribute US$ 7.7 billion annually to the U.S. economy.

U.S.A is the 3rd largest investor in India, with cumulative FDI inflows of US$ 56,753 million from April 2000 to September 2022. The US is one of the most favored destinations for Indian students for higher education. As per the annual Open Doors report issued in November 2022 almost 21% of total international students in the U.S. are Indians. In 2022, around 82,000 student visas were issued in India, mostly for graduate (Masters) programs.

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
Taranjit Singh Sandhu (Ambassador) - psamb.washington@mea.gov.in
Ms. Sripriya Ranganathan (Deputy Chief of Mission) – psdcm.washington@mea.gov.inn
Ms. Suja K. Menon (Minister – Commerce) mincom.washington@mea.gov.in
USA Embassy in India
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