The recent data from the Ministry of Commerce and Industry highlights that the USA has maintained its position as India’s top trading partner for the second fiscal year in 2019-20. This statistical revelation underscores strengthening economic ties between these two countries.
Trade Ties with the USA
In the fiscal year 2019-20, the bilateral trade between the USA and India witnessed a slight increase, standing at USD 88.75 billion compared to USD 87.96 billion in the prior year. Interestingly, the USA is among the handful of countries with which India enjoys a trade surplus. According to the records, India’s trade surplus with the USA climbed to USD 17.42 billion in 2019-20 from USD 16.86 billion in the previous fiscal year. Adding another feather to its cap, the USA surpassed China in 2018-19 to secure the position as India’s top trading companion.
Trade Dynamics with China
A contrasting picture emerges when examining the trade relationship between India and China. The bilateral trade between these two regional neighbours declined to USD 81.87 billion in the financial year 2019-20, a significant dip from USD 87.08 billion recorded in 2018-19. Similarly, the trade deficit between the two nations also contracted to USD 48.66 billion in 2019-20 from USD 53.57 billion in the preceding fiscal year. It’s important to note that China was India’s leading trading partner from the fiscal year 2013-14 till 2017-18.
The United Arab Emirates (UAE) held the title of India’s largest trading nation before China took over. Currently, India is mulling over several initiatives like creating technical regulations and quality control orders for a range of items, aimed at reducing import dependence on China and elevating domestic manufacturing.
In response to the recent border tensions, India took some stern actions against China, such as banning 59 Chinese apps and imposing mandatory government approval for Foreign Direct Investment (FDI) from neighbouring countries.
Expanding Future Prospects with the USA
Given the rising wave of anti-China sentiment in both nations, there are untapped opportunities to amplify bilateral trade ties between the USA and India. This development might prompt several USA companies to explore new suppliers in countries like India to lessen their dependence on China, in turn, boosting India’s exports to the USA.
The presence of a significant Indian diaspora in the USA also plays a crucial role in bolstering bilateral trade. A balanced trade agreement can further reinforce these economic links. Currently, India and the USA are negotiating a limited trade agreement to resolve differences at the trade front and enhance commercial ties.
However, India needs to tread carefully while negotiating with the USA in areas such as agriculture, dairy, and issues related to intellectual property rights. Recently, the USA administration extended the ban on immigrant and non-immigrant visas until the end of 2020. India’s IT services exports to the USA, which heavily rely on the H-1B visa, remain an important component of their bilateral economic trade.
