The strategic partnership between the United States and India has grown stronger recently. With bilateral commerce reaching a record US$191 billion in two-way goods and services trade in 2022 and the US emerging as top destination for India's export in FY 2023, the two countries' trade relations have improved significantly. Forging key new partnerships like the Indo-Pacific Economic Framework (IPEF) proved beneficial for both nations. Today, we will briefly discuss the foreign trade policies signed between India and the USA.
India and the United States are the world's two largest democracies and have a long history of economic and political cooperation. Bilateral trade between the two countries has grown significantly, with $113.9 billion in 2022, as per Indian export import data.
On June 21, 2023, Prime Minister Narendra Modi made his first official state visit to the US. The main objectives of Prime Minister Modi's visit were to promote interaction with business executives, establish ties with the Indian community, and engage with thought leaders from all disciplines. The focus was on strengthening bilateral ties between the US and India in important areas including trade, business, innovation, and technology.
The day before the visit, on June 20, a news agency reported that India had signed an MoU with Micron to establish a semiconductor assembly testing, marking, and packaging (ATMP) unit (also known as OSAT) in Gujarat and Production-related incentives.
There are key strategic outcomes of PM Modi's Visit:
Presently, the USA is India's top trading partner and also one of the few countries with which India had a trade surplus in 2021-22. Let’s explore the statistics:
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Here are some of the key points to keep in mind:
It is still too early to say whether the settlement talks will be successful, but they are a step in the right direction. Both India and the US have expressed willingness to compromise, and they are working hard to reach a mutually agreeable solution.
Here are the key foreign trade policies signed between India and the USA:
General System of Preferences (GSP):
The GSP is a program that allows the United States to grant duty-free treatment to certain imports from developing countries. India was a beneficiary of the GSP until March 2019, when the United States revoked its status due to concerns about India's compliance with the program's eligibility criteria.
Trade Policy Forum (TPF):
The TPF is a discussion forum for issues relating to trade and investment between India and the US. The TPF was launched in 2020 and has held several rounds of talks. The TPF has made some progress on issues such as tariff reduction and regulatory cooperation.
Investment Incentive Agreement (IIA):
The IIA is an agreement between India and the United States that provides for the protection of investments made by each country's investors in the other country. The IIA was signed in 1995 and came into force in 2000.
Bilateral Investment Treaty (BIT):
The BIT is a similar agreement to the IIA, but it provides a more comprehensive set of protections for investors. The BIT between India and the United States is still under negotiation.
Indo-Pacific Economic Framework (IPEF)
The IPEF is a new economic framework that aims to promote economic growth, resilience, sustainability, and fairness in the Indo-Pacific region.
Technology Innovation Hubs (TIH):
The Technology Innovation Hubs are a new initiative that aims to promote collaboration between the United States and India on emerging technologies.
According to Indian export import data, the major commodities traded between India and the US are:
Exports from India to the US:
Imports from the US to India:
Based on India Export Data, the value of all bilateral commerce between India and the US in 2021 was $100.3 billion. According to a report released by the US Importer Database, India exported goods and services worth $71.2 billion to the US in 2021 while bringing in $39.1 billion in imports.
In conclusion, the trade relationship between India and the United States is strong and growing. The two countries have signed a number of important trade agreements, including the Indo-Pacific Economic Framework and the Investment Incentive Agreement. These agreements have boosted the trade and investment relationship between the two countries and resolved some of the major trade disputes that had arisen in the past. The future of the India-US trade relationship is bright, and the two countries are well-positioned to continue to grow their economic ties.
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