REPORT

SUBJECT: BUSINESS ECONOMICS

TOPIC: INDIA TRADE WITH U.S

SUBMITTED TO: SUBMITTED BY:

PROF. TAPAN KUMAR NAYAK ATIN GARG (09051)ATUL SAFFAR (09052)ATUL YADAV (09053)

AVANEE TYAGEE (09054)BHUMIKA ROHTAGI (09055)

Acknowledgement

With the ocean of gratitude we would especially like to

express our sincere thanks and appreciation to our faculty,

Dr. Tapan Kumar Nayak. His insightful advice,

encouragement, and mentoring have played a major part in

our project. His concern for us meant a great deal to us. We

take this opportunity to express our gratitude to Mr.

Sanjay Kumar Mangla for providing the best guidance at

all time. Special thanks to our college's library faculty for

their cooperation in providing us with the information.

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DECLARATION

We here by declare that the project work entitled: “India's trade with United States” is an original work done by us for the fulfillment of academic project work of Ist semester under the guidance and supervision of Prof. Tapan Kumar Nayak from IMS, Ghaziabad and have submitted to college.

SUBMITTED BY-

ATIN KUMAR GARG (09051)ATUL SAFFAR (09052)ATUL YADAV (09053)

AVANEE TYAGI (09054)BHUMIKA ROHATAGI (09055)

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To Whom It May Concern

This is to certify that this work entitled “India’s Trade With United States” has been carried out by Atin Kumar Garg, Atul Saffar, Atul Yadav, Avanee Tyagi, Bhumika Rohatagi in partial fulfillment for the project work of Business Economics of first year. This work is original and has not been submitted in part or full to any other university for any other degree or diploma.

(SIGNATURE: -)

Dr. Tapan Kumar NayakFaculty of Business Economics

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Table of Content: -

1. Introduction……………………… 82. Literature Review………………... 103. India’s Economic Condition……... 124. Merchandise Trade….…………… 135. Sectoral Shift to Services………... 146. India-US Trade……..……………. 167. Rapid growth in trade……………. 188. Exports to India………………….. 199. Imports from India……………….. 2310. Trade Balance………………… 2711. Investment……………………. 3012. Initiatives……………………... 3113. Trade Fairs……………………. 3414. Conclusion……………………. 3715. Refrences……………………... 39

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Abstract

Trade and commerce forms a crucial component in the rapidly expanding and multi-faceted relations between India and United States of America. It is the significant aspect of the global and strategic partnership existing between the two countries, United States and India.

We here will discuss what is the trade relation, the significant features of the India and US trade relations.We would also like to present the data related to trade relations between two countries with respect to both imports and exports. And how both the countries are working for enhancement in the high-tech trade between the two countries.

At last we would like to add few suggestions for better functioning of trade between the two countries.

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List of Graphical TablesTables

Table 1. Sectoral Shift……………………… 14

Table 2. Merchandise Exports……………… 20

Table 3. Merchandise Imports……………… 24

Figures

Figure 1. GDP of India…………………….. 12

Figure 2. Increase in Trade………………… 18

Figure 3. India’s Trade Balance…………… 27

Figure 4. India’s Export…………………… 21

Figure 5. India’s Import…………………… 25

Charts

Chart 1. Advance Release calander……….. 13

Chart 2. % Change in Trade………………. 17

Chart 3. Export pie-chart…………………. 20

Chart 4. Import pie-chart…………………. 24

Chart 5. Current Trade…………………….. 28

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IntroductionEconomic and trade relations between the United

States and India have experienced a number of ups and downs since India’s independence in 1947. During much of the 1950s and early 1960s, the United States was a leading trading partner for India, providing the nation with about a third of its imports.

For the next 40 years, political and economic relations between India and the United States were rather cool.Since 2004, Washington and New Delhi have been pursuing a “strategic partnership” based on numerous shared values and improved economic and trade relations. India is in the midst of a rapid economic expansion, and many U.S.

Companies view India as a lucrative market and a candidate for foreign investment. Despite the growth in bilateral trade and the improvement in trade relations, there are still a number of economic and trade issues between India and the United States. Both nations seek greater market access to the other’s domestic markets, as well as the lowering of perceived trade barriers. In addition, both India and the United States would like to see changes in the other nation’s legal and regulatory policies to help protect and promote exports and foreign direct investment. For Congress, resolution of some of the key economic and trade issues may involve alterations in current federal law.

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This report provides a summary of India’s current political climate (with a focus on its effects on the nation’s economic and trade policies), its economic condition and policies, the recent trends in bilateral trade and foreign direct investment, and key economic and trade issues between India and the United States. Where suitable, the report also compares India to other nations to provide a different perspective on U.S. relations with both nations.

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Literature review

We had gone through different articles given in different newspapers on different dates and different books from different authors and we also managed to go through data from some Internet sites. We had then correlated different things in a sequential manner to make it clear in our project work.

We had used secondary sources of data for our study and suggestions given as the conclusion of the report. Since the topic of this report is an exhaustive one and ever changing which does not allow us to get to a final conclusion as a sure and certain happening. But with the help of our faculty, ‘Dr. Tapan Kumar Nayak’, we are at some logical conclusion

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Objective

1. To understand the trade relations.

2. To know the factors that helps India in its economical growth.

3. To see various Imports and Exports of Trade and Trade balance between India and US.

4. To know investments and initiatives between the India and US.

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Scenario/Data analysisIndia’s Economic Condition

Over the last five years, India has been one of Asia’s fastest growing economies.Figure 1. (GDP) for the years 2002 to 2007. In nominal terms, India’s GDP grew from 24.5 trillion rupees in 2002 to 40.3 trillion rupees in 2006 — an increase of 64% in four years — and is projected to reach 45.6 trillion rupees in 2007. When converted into “real” GDP using a purchasing power parity conversion, India’s GDP rose from $3.2 trillion in 2002 to $4.4 trillion in 2006, and is projected to increase to $4.7 trillion in 2007.

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Merchandise TradeExports and imports of goods between two or more nations.

Current Stats related to Merchandise Trade

Chart 1. Advance Release Calendar

SDDS  Data Category Component

Unit of Description

Period of Latest Data(1)

Latest Data(2)

*Data for Previous period(3)

Percentage Change from previous to

latest period

External Sector-Merchandise TradeTotal US $ Million July, 13623 19036 -28.4

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Exports (f.o.b)

2009

Total Imports (c.i.f)

US $ Million July, 2009

19621 31189 -37.1

Total trade balance

US $ Million July, 2009

-5998 -12153 -50.6

(1) Reference Month (2) Provisional data reported in the Press Note of the Current Month (3) Latest revised figures of the Previous year reported in the Press Note of the Current Month

Sectoral Shift to ServicesMuch of India’s economic growth has been the result of

the expansion of its manufacturing and service sectors.

Table 1 provides a sectoral breakdown of India’s real GDP for fiscal years 1996, 2001, and 2006. Although the value of all three sectors increased, growth in the services sector exceeded that of the manufacturing sector, and the manufacturing sector grew faster than the agricultural sector. As a result, the portion of GDP contributed by the agricultural sector fell, the share of the manufacturing sector declined slightly, and the contribution of the services

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sector rise. The dominance of the services sectors in India’s GDP hides the continued importance of agriculture to the Indian population. An estimated 71% of India’s population in 2006 lived in rural areas, with over half of those people living in villages of less than 5,000 people. While there has been growth in non-agricultural employment in India, about two-thirds of India’s male population in 2004 continued to work primarily in agricultural activities.

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Another worrying aspect of the recent restructuring of India’s economy has been a surprising lack of job creation. In other nations, when the economy exhibited rapid economic growth, along with a shift from agriculture to manufacturing to services, there was a corresponding rise in manufacturing and service employment. However, in India’s case, the level of job creation has been low. According to a recent International Monetary Fund country study of India, “employment in the organized sector has remained roughly unchanged at about 27 million over the past decade and a half.”

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Some analysts attribute this to the nature of the manufacturing and services that dominate India’s economic growth, claiming that they are typically higher-skilled, professional jobs in contrast to the low-skill work generated in nations that previously experienced rapid economic growth. Others point to India’s restrictive labor laws as being a major barrier to job creation.

Trade in Services. The rapid rise in India’s merchandise trade has been outdone by even faster growth in trade in services. The value of India’s services exports increased 250% between 2000 and 2005, while the value of its services imports increased 176%. In 2005, the total value of India’s services trade was $108.3 billion, or nearly half the size of its total merchandises trade. India’s services trade surplus in 2005 was $3.9 billion.

India – US Trade (Bilateral trade)Trade and commerce form a crucial component of the

rapidly expanding and multi-faceted relations between India and US. From modest $ 5.6 billions in 1990, the bilateral trade in merchandise goods has increased to $ 43.38 billion in 2008 representing an impressive 675% growth in a span of 18 years.

India’s merchandise exports to the U.S.A. declined by 19.7% from $ 14.88 billion during the period Jan-July 2008 to $ 11.95 billion in the corresponding period of 2009. US exports of merchandise to India also declined by 7.6 %,

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from $ 9.92 billion during the period Jan – Jul 2008 to $ 9.17 billion in the corresponding period of 2009. 

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Chart 2. Percentage Change

2006 2007 2008 2009     (Jan-July)

India’s exports to US 

16.1 10.3 6.8 - 19.7

India’s imports from US 

22.2 54.7 18.1 - 7.6

U.S.-India Trade Facts (Source: WTO)

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U.S. Goods and services trade with India totaled $61 billion in 2007 (latest data available). Exports totaled $28 billion; Imports totaled $35 billion. The U.S. goods and services trade deficit with India was $7 billion in 2007.

India is currently our 18th largest goods trading partner with $43.4 billion in total (two ways) goods trade during 2008. Goods exports totaled $17.7 billion; Goods imports totaled $25.7 billion. The U.S. goods trade deficit with India was $8.0 billion in 2008.

Trade in services with India (exports and imports) totaled $19.0 billion in 2007 (latest data available). Services exports were $9.4 billion; Services imports were $9.6 billion. The U.S. services trade deficit with India was $251 million in 2007.

Rapid Growth in TradeThe sectoral shift of India’s domestic economy is

partially driven by the rapid growth in the nation’s trade in goods and services. Figure 2 shows the increase in both merchandise and service trade from 1990 to 2005. Between 1990 and 1999, India’s total merchandise trade doubled in value and its trade in services trebled in value. Since 1999, India’s international trade growth has accelerated. Between 1999 and 2005, India’s total merchandise trade and imports of services nearly tripled in value, and its exports of services quadrupled in value.

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Exports to IndiaIndia was the United States' 17th largest goods export

market in 2008.

U.S. goods exports to India in 2008 were $17.7 billion, up 0.5% ($94 million) from 2007, and up 671% from 1994 (the year prior to Uruguay Round). U.S. exports to India account for 1.4% of overall U.S. exports in 2008, up from 0.5% in 1994.

The top exports categories (2-digit HS) in 2008 were: Fertilizers ($2.8 billion), Precious Stones (diamonds) ($2.5 billion), Machinery ($2.3 billion), Aircraft ($1.8 billion),

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and Electrical Machinery ($1.3 billion).

U.S. exports of agricultural products to India totaled $489 million in 2008. Leading categories include: tree nuts ($187 million), cotton ($103 million), and pulses ($63 million).

U.S. exports of private commercial services (i.e., excluding military and government) to India were $9.4 billion in 2007 (latest data available), 37.1% ($2.5 billion) greater than 2006, and 664% ($8.1 billion) greater than 1994 levels. The other private services (education), and travel categories accounted for most of the U.S. exports in 2007.

Export %age in different sectors shown by pie chart

Chart 3.

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Figure 4 shows the sharp increase in India’s services exports from 1990 to 2005. Although both transportation and travel services experienced strong growth over this

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time period, much of the rapid expansion in services exports occurred in other service sectors. Over the 15 years in question, India’s services exports increased from $4.6 billion in 1990 to $56.1 billion in 2005 — more than a 12-fold increase in size.

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Exports to India (current Figures) Exports during July, 2009 were valued at US $ 19621

million (Rs. 95118crore) representing a decrease of 37.1 per

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cent in dollar terms (minus 28.8 per cent in Rupee terms) over the level of imports valued at US $ 31189 million (Rs. 133609 crore) in July, 2008. Cumulative value of imports for the period April- July 2009 was US$ 78564 million (Rs. 382422 crore) as against US$ 116382 million (Rs. 488668 crore) registering a negative growth of 32.5 per cent in Dollar terms and 21.7 per cent in Rupee terms over the same period last year.

Imports from IndiaIndia was the United States' 18th largest supplier of

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goods imports in 2008.

U.S. Goods imports from India totaled $25.7 billion in 2008, up 6.8% ($1.6 billion) from 2007, up 385% over the last 14 years. U.S. Imports from India account for 1.2% of overall U.S. imports in 2008, up from 0.8% in 1994.

The five largest import categories in 2008 were: Precious Stones (diamonds) ($5.6 billion), Woven Apparel ($1.8 billion), Iron and Steel ($1.7 billion), Organic Chemicals ($1.5 billion), and Machinery ($1.4 billion).

U.S. imports of agricultural products from India totaled $1.6 billion in 2008, the 16th largest supplier of Ag imports. Leading categories include: tree nuts ($243 million), spices ($179 million), and essential oils ($146 million).

U.S. imports of private commercial services (i.e., excluding military and government) were $9.6 billion in 2007 (latest data available), up 25.6% ($2.0 billion) from 2006, and up 1,162% ($8.8 billion) from 1994. The other private services (business, professional, and technical services) and the travel categories accounted for most of U.S. services imports from India.

Import %age shown by Chart 4.

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Figure 5 presents the growth in India’s services imports

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between 1990 and 2005. The sectoral composition of growth for services imports is similar to that of exports — transportation services and travel services both increased, but the greatest growth was in the import of other commercial services. Between 1990 and 2005, the value of India’s services imports grew almost nine-fold, from $5.9 billion in 1990 to $52.2 billion in 2005.

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Imports from India including re-exports (Current figures) Imports during July 2009 were valued at US $

13623 million (Rs 66041 crore), which was 28.4 per cent lower in dollar terms (minus 19.0 per cent in Rupee terms) than the level of US$ 19036 million  (Rs. 81548 crore) during July, 2008. Cumulative value of exports for the period April- July, 2009 was US$ 49651 million (Rs. 241735 crore) as against US $ 75289 million (Rs. 315978 crore) registering a negative growth of 34.1 per cent in Dollar terms and 23.5 per cent in Rupee terms over the same period last year.

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Trade BalanceThe U.S. goods trade deficit with India was $8.0

billion in 2008 a 23.7% increase ($1.5 billion) over 2007.

The United States has a services trade deficit of $251 million with India in 2007 (latest data available).

Balance of Trade. The overall growth of international trade has also created a potential economic problem — a growing trade and current account deficit (see Figure 3). From fiscal year (FY) 1997 to 2004, India’s merchandise trade balance — exports minus imports — generally ran a deficit of less than $20 billion. However, since FY2004, India’s merchandise trade deficit has grown from $13.7 billion to a projected $63.7 billion in FY2007. Along with this rise in India’s balance of trade deficit, its current account balance has gone from a surplus of $14.1 billion in FY2004 to an estimated deficit of $14.1 billion in FY2007.

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TRADE BALANCE (Current Figures)

 

The trade deficit for April- July 2009 was estimated at US $ 28913 million, which was lower than the deficit of US $ 41093 million during April-July, 2008.

(US $ Million)

Chart 5.

DEPARTMENT OF COMMERCEECONOMIC DIVISION

EXPORTS & IMPORTS : (PROVISIONAL)

  JULY APRIL-JULY

EXPORTS (including re-exports)

2008-2009 19036 75289

2009-2010 13623 49651

%Growth 2009-2010/ 2008-2009 -28.4 -34.1

IMPORTS

2008-2009 31189 116382

2009-2010 19621 78564

%Growth 2009-2010/ 2008-2009 -37.1 -32.5TRADE BALANCE

2008-2009 -12153 -41093

2009-2010 -5998 -28913

*Figures for 2008-09 are the latest revised whereas figures for 2009-10 are provisional.

 

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DEPARTMENT OF COMMERCEECONOMIC DIVISION

EXPORTS & IMPORTS : (PROVISIONAL)

  JULY APRIL-JULY

EXPORTS (including re-exports)

2008-2009 81548 315978

2009-2010 66041 241735

%Growth 2009-2010/2008-2009 -19.0 -23.5

IMPORTS

2008-2009 133609 488668

2009-2010 95118 382422%Growth 2009-2010/2008-2009 -28.8 -21.7

TRADE BALANCE

2008-2009 -52061 -172690

2009-2010 -29077 -140687

*Figures for 2008-09 are the latest revised whereas figures for 2009-10 are provisional.

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Bilateral Investment with USU.S. foreign direct investment (FDI) in India was

$13.6 billion in 2007 (latest data available), a 47.8% increase from 2006.

U.S. direct investment in India is primarily concentrated in the information, manufacturing, and banking sectors.

India FDI in the United States (stock) was $3.0 billion in 2007 (latest data available), up 106% from 2006.

India direct investment in the U.S. is primarily concentrated in the professional, scientific, and technical services sector.

Sales of services in India by majority U.S.-owned affiliates were $4.2 billion in 2006 (latest data available), while sales of services in the United States by majority India-owned firms were $3.1 billion.

Most important is the flow of investment between the United States and India. While the U.S. is one of India's top investors, India also is a noteworthy source of investment into the United States. In 2007, U.S. foreign direct investment (FDI) in India was $13.6 billion (a 48% increase over 2006) and Indian FDI in the U.S. totaled $3 billion (a 106% increase from 2006).

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InitiativesSince Indian Prime Minister Singh's visit to the United

States in July 2005, during which a number of trade and economic initiatives were announced, United States has engaged with India on trade and investment matters through a number of venues.

U.S. -India Trade Policy Forum (TPF)

An interagency collaboration, the USTR-led TPF is the principal trade dialogue between the United States and India. It has five Focus Groups namely Agriculture, Investment, Innovation & Creativity (intellectual property rights), Services, and Tariff & Non-Tariff Barriers. U.S.A and Indian Focus Group heads meet periodically to work towards resolution of issues that could better trade and investment flows. Five ministerial-level meetings were held between 2005 and 2008, and success was achieved bringing stability in U.S. apple and almond exports to India and Indian mango exports to the United States; and increase in the capital on FDI in the Indian telecommunications sector.

The India-US Trade Policy Forum set up in 2005. It meets regularly at the Ministerial and Senior Official level. At the third Ministerial meeting of the Trade Policy Forum in June, 2006 in Washington the two sides agreed to create a senior-level Private Sector Advisory Group (PSAG) as an adjunct to the Trade Policy Forum that will provide strategic direction, input and support to the forum. 

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The fifth Ministerial level meeting of the India-USA Trade Policy Forum took place on 19 February 2008 at Chicago, USA at the level of Commerce and Industry Minister of India and United States Trade Representative. A range of issues were discussed including the Social Security Agreement and Bilateral Investment Treaty between the two countries and providing market access for items of interest to both sides. 

Private Sector Advisory Group (PSAG)

Composed of leading trade experts in the United States and India, the PSAG was created in 2007 to provide strategic recommendations to the Trade Policy Forum. The groups outlined issues including financial sector reform, energy co-operation, higher education, and globalization & inclusiveness, all with a mind to enhance the bilateral trade relationship.

U.S.-India Economic Dialogue and CEO Forum

The Economic Dialogue led by white house served as the government-to-government forum on bilateral economic issues and was the umbrella mechanism for the Trade Policy Forum and several other bilateral dialogues led by other top national agencies.

The CEO Forum comprised CEOs from the U.S. and India - representing a cross-section of sectors - who exchanged business community views on a number of key economic priorities and presented recommendations to the U.S. and Indian governments designed to improve the commercial climate between the two countries.

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The recommendations covered the length and breadth of the U.S. -India economic relationship and aimed to enhance economic growth, job creation, and to promote bilateral trade and investment. The U.S. Trade Representative, the Commerce and Treasury Secretaries and the National Economic Council Chairman participated in both discussions as did India's Deputy Chairman of the Planning Commission and Ministers of Finance and Commerce.

High Technology Cooperation Group (HTCG) Meeting

The High Technology Cooperation Group (HTCG), created in 2002, seeks to address two broad agendas: i) to promote strategic trade i.e. access to dual use items through easing of controls on exports of such goods to India, this has to be accomplished while meeting the US concerns on valid end use, diversion and proliferation, and ii) to promote and facilitate bilateral high technology commerce in its broadest sense, inter alia, through steps to be taken by the two Governments to create an appropriate environment for successful high technology commerce in partnership with private sector. Since the commencement of the HTCG dialogue in 2003, six plenary meetings have taken, alternatively in the USA and India. The sixth High Technology Cooperation Group meeting took place in New Delhi in Feb 2008. The HTCG format involves active participation of the private sector of both sides and works through four working groups; one each on Nanotechnology, Defense and Strategic Trade, Information technology and Biotechnology and Life science.

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Trade FairsHere is a list major trade fairs to be held in India during

2009 to 2011. The venue of most of these fairs is Pragati Maidan in New Delhi.

2009 

Smartcards Expo 2009 – September 10-12, 2009  India Electricity 2009 – September 10 – 12, 2009 Expocomm India 2009 – September 17 – 19, 2009 International Arogya Fair, New Delhi – Sept. 18 – 21, 2009 Jewellery Wonder 2009 – September 19 – 21, 2009    Inter-Airport India 2009 – September 19-21, 2009 Pro-Pack India 2009 – September 28-30, 2009 Delhi International Leather Fair, New Delhi – October 2009 Ind. Houseware Gift Show 2010 – October 2009 Mobile Asia 2009 – October 2-5, 2009 Fire Engineering India 2009 – October 5 – 7, 2009 Sports Goods & Physical Fitness Equipment Exhibition, New

Delhi – Oct. 5 – 9, 2009 Wills Lifestyle India Fashion Week 2009 – October 20-24,

2009   Expo-Rail 2009 – October 21 – 23, 2009 IFSEC 2009 – October 29 – 31, 2009  VIV India 2009 – November 3-5, 2009  India International Trade Fair, New Delhi – Nov. 14 – 27,

2009 India Tech (Technology Trade Pavilion), New Delhi – Nov.

14 – 27, 2009 Enviro Tech, New Delhi – Dec. 14- 17, 2009  IFE 2009 – December 2-4, 2009 PHD - Punjab International Trade Expo 2009 Amritsar,

December 2-6, 2009 India Telecom 2009 – December 3 – 6, 2009 

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Paperex 2009 – December 4 – 7, 2009 FESPA World Expo India 2009 – December 7 – 9, 2009 Water Asia 2009 – December 9 – 11, 2009 Acetech 2009 – December 17 – 20, 2009 Expodent Int’l. India 2009 – December 18 – 20, 2009 Energy Tech, New Delhi – Dec. 14 – 27, 2009

2010    

BevIndia 2010- January 23-24, 2010 Signages, New Delhi – January 2010 Auto Expo 2010 – January 6 – 13, 2010 India International Garment Fair – January 20-22, 2010 India International Security Expo, New Delhi – Jan. 27 – 30,

2010 19th New Delhi World Book Fair 2010 – Jan 27 – Feb 7,

2010 Arogya, Thrissur (Kerala) – Jan. 28 – Feb. 1, 2010 India International Leather Fair, Chennai – Jan. 31 – Feb. 3,

2010 AMTEX 2010 – Jan/Feb 2010 Globalcom India 2010 – February 3-5, 2010 Defexpo India 2010 – February 15 – 19, 2010 Componex Nepcon India 2010 – February 17 – 19, 2010 Tex-Styles India, New Delhi – Feb. 24 – 27, 2010 International Leather Goods Fair, Kolkata - February 26 – 28,

2010 Ind. Houseware Gift Show 2010 – March 1 – 3, 2010 Intex 2010 – March 1 – 3, 2010 World of Franchising in India 2010 – March 17 – 19, 2010 Convergence India 2010 – March 2010 Nakshatra, New Delhi – March 5 – 9, 2010 Ahar – The Int’l. Food Fair (Twin events: ‘Food India’ &

‘Hospitality India’), New Delhi – March 10 - 14, 2010

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IT India Fair, New Delhi – March 26 – 29, 2010 Delhi Spring Lifestyle Show (Furniture & Interior Show),

New Delhi – March 26 – 29, 2010 Ahar – The Int’l. Food Fair (Twin events: ‘Food India’ &

‘Hospitality India’), Shilling – April 2010 India Int’l. Maritime Logistics Expo, Mumbai – April 10 –

12, 2010 Ahar – The Int’l. Food Fair (Twin events: ‘Food India’ &

‘Hospitality India’), Chennai – August 27 – 29, 2010 International Arogya Fair, New Delhi – Sept. 18 – 21, 2010 Delhi International Leather Fair, New Delhi – October 2010 India International Trade Fair, New Delhi – Nov. 14 – 27,

2010 India Tech (Technology Trade Pavilion), New Delhi – Nov.

14 – 27, 2010 Delhi Book Fair, New Delhi – Dec. 11 – 19, 2010 Stationery Fair, New Delhi – Dec. 11 – 19, 2010 Energy Tech, New Delhi – Dec. 14 – 27, 2010 Enviro Tech, New Delhi – Dec. 14- 17, 2010

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ConclusionAfter decades of strained political relations, the U.S.

and Indian governments are currently pursuing a “strategic partnership” based on numerous overlapping interests, shared values, and improved economic and trade relations. India is in the midst of a rapid economic expansion, and many U.S. companies view India as a lucrative market for foreign investment. For its part, the current Indian government sees itself continuing the economic reforms started in 1991, aimed at transforming a quasi-socialist economy into a more open, market-oriented economy. However, the U.S. government is concerned that India’s economic reforms are progressing too slowly and unevenly. Bilateral merchandise trade has grown from $6 billion in 1990 to $33 billion in 2006. Although India was only the 21st largest export market for the United States in 2006, the United States has become India’s leading trading partner, mostly due to the growth in India’s exports to the United States.

However, recent increases in trade with China have made it a close second to the United States. In 2006, the U.S. bilateral trade deficit with India totaled $13 billion. In 2006, India’s gross domestic product (GDP) grew by 9.2%, a growth rate second only to China among Asian nations. India’s economic growth has also brought about the emergence of a sizeable “middle class” and the largest number of billionaires in Asia, but the country’s mostly rural population remains comparatively poor and largely isolated from the benefits of growth.

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In addition, there is growing concern that the economy is “overheated,” as evidenced by rising rates of inflation. Moreover, despite several years of strong growth, investment in infrastructure is lagging, creating a potential attempts at additional economic reforms aimed at resolving these and other economic problems are constrained by India’s political dynamics. Despite the significant liberalization of India’s trade and foreign investment policies, there remain a number of bilateral and multilateral trade issues between the United States and India.

The United States seeks greater market access to India’s agricultural market and key service sectors for its exports and for foreign direct investment. The United States is also concerned about “outsourcing,” and would also like to see improvements in India’s intellectual property rights protection. India, for its part, calls for the lowering of perceived U.S. barriers to agricultural and service imports, as well as an expansion of the H-1B visa program. Many of the more prominent Indo-U.S. trade issues may have indirect implications for Congress. The growth of India’s services exports to the United States has contributed to congressional consideration of possible legislation to provide greater assistance to displaced U.S. workers. Also, India’s growing demand for crude oil has raised the possibility of boosting bilateral energy cooperation. Finally, the passage of the Hyde Act in 2006 has led to the negotiations of a bilateral peaceful nuclear cooperation (“123”) agreement, which cannot go into effect without congressional approval.

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References

http://www.indianembassy.org

www.indiatradefair.com

http://www.commerce.nic.in

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