ANALYSIS OF FOREIGN TRADE OF INDIA WITH USA IN THE 21ST

CENTURY

A Project submitted to

University of Mumbai for partial completion of the degree of

Bachelor of Management Studies

Under the Faculty of Commerce

SUBMITTED BY:

SHRUSHTI V. DAGLI

53002190011

Under the Guidance of

DR. SRIRAM DESHPANDE

Usha Pravin Gandhi College of Arts, Science and Commerce

Vile Parle (W),

Mumbai-400056

April 2022

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Usha Pravin Gandhi College of Arts, Science and Commerce

Bhakti Vedanta, Sahar Road, Navpada, JVPD Scheme, Vile Parle West,
Mumbai, Maharashtra, 400056.

Certificate

This is to certify that SHRUSHTI VIREN DAGLI has worked and duly
completed her Project Work for the degree of Bachelor of Management
Studies under the Faculty of Commerce in the subject of Finance and her
project is entitled,“ANALYSIS OF FOREIGN TRADE OF INDIA
USA IN THE 21ST CENTURY” under my supervision.

I further certify that the entire work has been done by the learner under
my guidance and that no part of it has been submitted previously for any
Degree or Diploma of any University. It is her own work and facts
reported by her personal findings and investigations.

Coordinator Principal

Dr. Mayur Vyas Dr. Anju Kapoor

Project Guide / Internal Examiner

DR. SRIRAM DESHPANDE

External Examiner

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 Declaration by learner

I the undersigned, SHRUSHTI VIREN DAGLI here by, declare that the
work embodied in this project work titled “ANALYSIS OF FOREIGN
TRADE OF INDIA WITH USA USA IN THE 21ST CENTURY”
forms my own contribution to the research work carried out under the
guidance of DR. SRIRAM DESHPANDE is a result of my own research
work and has not been previously submitted to any other University for
any other Degree or Diploma.

Wherever reference has been made to previous works of others, it has

been clearly indicated as such and included in the bibliography or
references.

I, hereby, further declare that all information of this document has been
obtained and presented in accordance with academic rules and ethical
conduct.

Shrushti Viren Dagli

53002190011

Certified by

Dr. Sriram Deshpande

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 ACKNOWLEDGEMENT

To list who all have helped me is difficult because they are so numerous
and the depth is so enormous.

I would like to acknowledge the following as being idealistic channels

and fresh dimensions in the completion of this project.

I take this opportunity to thank University of Mumbai for giving me

chance to do this project.

I would like to thank my Principal, Dr. ANJU KAPOOR for providing

the necessary facilities required for the completion of this project.

I take this opportunity to thank our Coordinator, Dr. MAYUR VYAS,

for his moral support and guidance.

I would also like to express my sincere gratitude towards my project

guide DR. SRIRAM DESHPANDE whose guidance and care made the
project successful.

I would like to thank my College Library, for having provided various

reference books and magazines related to my project.

Lastly, I would like to thank each and every person who directly or
indirectly helped me in the completion of the project especially my
Parents and Peers who supported me throughout my project.

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 INDEX

Chapter No. Title of the Chapter Page No.

1
INTRODUCTION
1.1 Introduction
1.2 History 7
1.3 Types of foreign trade 8
1.4 Need and Importance of Foreign Trade 9
1.5 Role of foreign trade in economic development 9
1.6 Foreign Trade Policy of India 11
1.7 Foreign Trade Policy of the United States 12
1.7.1 Generalized System Preferences (GSP) 14
1.8 India’s foreign trade with USA 15
1.9 Timeline 16
1.10 EXIM: India 17
1.10.1 Importer – Exporter Code (IEC) 25
1.11 Export Import Bank of United States 25
1.11.1 Export Credit Insurance 26
1.11.2 Working Capital Loan Guarantee 27
1.12 The United States – India Trade Policy Forum 28
1.13 Export Policies 30
1.14 Import Policies 30
1.15 Tariff & Tax Barriers 31
1.15.1 Tariffs 33
1.15.2 Taxes 34
1.16 Non - Tariff Barriers 36
1.17 Other Barriers 37
1.18 Impact of COVID – 19 on India – U.S. Trade

2 RESEARCH METHODOLOGY
2.1 Meaning 39
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 2.2 Title of the study 40
2.3 Objective of the study 40
2.4 Limitation of the study 40
2.5 Collection of Data
2.5.1 Primary Data 41
2.5.2 Secondary Data 42
2.6 Tools used for data collection 44
3 REVIEW OF LITERATURE 45
4 49
DATA ANALYSIS, INTERPRETATION AND
52
PRESENTATION
59
4.1 India’s Exports, Imports with U.S
62
4.1.1 Trade over the years
63
4.1.2 India U.S. Trade Facts
4.1.3 Impact of The global Financial Crisis on Indo –
U.S relations
4.2 Trade Balance
4.2.1 Impact of COVID – 19 on India’s Current
Account

5 CONCLUSIONS AND SUGGESTIONS

5.1 Recommendations and Suggestions 66
5.2 Conclusion 68
6 BIBLIOGRAPHY 71

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 CHAPTER 1
INTRODUCTION
1.1 INTRODUCTION
The present globalised world trade provides a gateway for countries to extend their
strategies for gaining a competitive advantage, enabling them to attempt to address
faster economic growth. The origins of the term "international business" can be traced
back to the concepts of international trade and worldwide markets. International
business, international trade, and international markets are all phrases that are used
interchangeably to describe foreign trade. Cross-border transactions, which take place
between countries by exchanging products and services as well as capital, can result
in foreign trade.

Foreign trade is the exchange of goods or services between countries throughout the
world. International trade, external trade, and inter-regional trade are some other
terms for the same phenomenon. International trade enables countries to expand their
markets and gain access to products and services that might otherwise be unavailable
in their own borders. It refers to the transfer of products and services between nations.
Foreign trade is essential and crucial to every country's prosperity. Every country
needs goods and services to meet its citizens' tastes and preferences. Because
domestic production of products and services is incapable of meeting rising customer
demand, one country can purchase goods and services from another. India also buys
and sells commodities and services to other countries. There is no such thing as a self-
sufficient country. It must rely on other countries to import goods and services that
are either inaccessible or accessible in insufficient quantities. Similarly, it can export
goods in high demand from other nations. Foreign trade facilitates the production of
goods and services that are less costly than others. It also helps to broaden the market
for domestic traders, who benefit from the overall development of their business in
both the domestic and foreign markets. Foreign trade enables manufacturers to source
various types of raw materials of the highest quality at the lowest possible cost from
all over the world.

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Definition:
i) According to Antol Marad, “International trade is a trade between nations”.
ii) According to Wasserman and Haltman, “International trade consists of transactions
between residents of different countries”.

1.2 HISTORY

Prior to 1947, India's international business was largely governed by the geopolitical
needs of the British colonial powers. India, like other colonies, provided raw materials
and agricultural commodities to Britain and several other industrial countries, along
with obtaining manufactured goods from the United Kingdom. The colonial India's
dependency on Britain for manufactured goods slowed the modernization process and
wiped out the indigenous handicraft and cottage industries. Prior to World War II,
India had to export more than it imported in order to effectively meet the unilateral
transfer of payments to Britain in the form of salaries and pensions for British
officers, both military and civil, dividends on British capital invested in India, and
interest on sterling loans as part of the British strategy. India was able to maintain a
favourable trade balance as a result of this. Even after paying off its sterling debt,
India was able to build a significant sterling balance of Rs. 17.33 billion in April
1946. However, raw materials' contribution in India's exports dropped from 45
percent in 1938-39 to 31 percent in 1947-48, while manufactured goods' share jumped
from 30 percent in 1938-39 to 49 percent in 1947-48. India's trading patterns started
to evolve only after independence, in response to the country's developmental
demands. In order to create new industrial capacity and build infrastructure, India, as
a newly independent nation, had to import equipment and machinery that could not be
made domestically, known as developmental imports. Furthermore, as a new
developing country, it was forced to import consumer products like food grains that
were in low supply domestically in order to keep inflation at bay. A country's balance
of commerce suffers as a result of its high reliance on imports. It demands the
expansion of exports in order to fund its purchases.

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1.3 TYPES OF FOREIGN TRADE:

1. Import Trade: Import trade refers to a country's procurement of goods and services
from another country.

2. Export Trade: Export trade refers to the sale of goods and services from one
country to another.

3. Entrepot Trade: It is also called as Re-export of goods and services. It refers to

purchase of goods from one country then selling them to another country after some
processing operations.

1.4 NEED & IMPORTANCE OF FOREIGN TRADE:

1) Division of Labour and Specialisation:

Globally, international trade leads to the division of labour and specialisation. Natural
resources are plentiful in several countries. They should export raw resources and
import completed items from countries with well-educated workforces. This benefits
all countries, resulting in the division of labour and specialisation of skills.

2) Optimal Resource Allocation and Utilisation:

Specialisation allows for the elimination of ineffective lines and the avoidance of
resource waste. In other words, resources are channelled solely for the creation of
commodities with the largest profit margins. As a result of international trade, there is
a sensible allocation and usage of resources.

3) Equality of Prices:

Foreign trade can help to keep prices stable. It aids in the stabilisation of demand and
supply, which in turn helps to stabilise prices, making allowances for transportation
and other marketing costs.

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4) Availability of Multiple Choices:
Foreign trade allows customers to have more alternatives. It contributes to the global
availability of various kinds for customers.
5) Ensures Quality and Standard Goods - International trade is fiercely competitive.
Exporting countries must maintain and raise the quality of their commodities to
sustain and boost demand. As a result, commodities of high quality and uniformity are
created.

6) Raises Standard of Living of the People:

Imports can help people improve their standard of living. This is because individuals
will be able to choose from a wider range of new and improved goods and services.
People can raise their standard of living by purchasing new and better sorts of things.

7) Generate Employment Opportunities:

By enhancing the mobility of labour and resources, foreign trade contributes in the
creation of job opportunities. It creates direct jobs in the import industry as well as
indirect jobs in other areas of the economy. Such as Industry, Service Sector
(insurance, banking, transport, communication), etc.

8) Facilitate Economic Development:

Imports boost a country's economic progress. This is because a country may develop
growth in all areas of the economy, including agriculture, manufacturing, and the
service sector, by importing capital goods and technology.

9) Assistance During Natural Calamities:

During natural disasters such as earthquakes, floods, famines, and other natural
disasters, the afflicted countries confront a lack of vital supplies.
Foreign trade allows a country to import food and medicines from other countries in
order to assist the affected people.

10) Maintains Balance of Payment Position:

Every country must keep its balance of payments in satisfactory condition.
Since each country must import, resulting in a foreign exchange outflow, it must also
engage in export, resulting in a foreign exchange inflow.
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11) Brings Reputation and Helps Earning Goodwill:
Exporting wins a country goodwill in the international market.
Japan, for example, has built a strong reputation in international markets as a result of
its exports of high-quality technological items.

12) Promotes world peace:

International trade brings countries closer together. It makes it easier for advanced
economies to transfer technology and other forms of aid to poor countries. It pulls
various countries closer together because of economic ties established through trade
agreements. As a result, foreign trade fosters a cooperative environment that helps to
prevent wars and conflicts. It promotes international peace by encouraging countries
to maintain amicable relations with one another.

1.5 ROLE OF FOREIGN TRADE IN ECONOMIC

DEVELOPMENT

Foreign trade expands a country's market for its products. Exports have the potential
to boost national output and serve as a growth engine. Expansion of a country's
foreign trade may significantly boost an otherwise dormant economy and lead it down
the road to wealth and growth.

Increased overseas demand may result in large-scale production and lower unit costs
as a result of economies of scale. Increased exports may lead to better utilisation of
current capacity and hence lower costs, which could lead to even more export growth.
Expanding exports may result in more job possibilities. The potential for increased
exports may also indicate the fundamental investment in a country, assisting in its
economic growth.

i. The basic function of international trade is to find ways to obtain capital goods
imports, without which no development process can begin;

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ii. Trade facilitates the flow of technology, resulting in increased production and a
short-term multiplier impact;

iii. Foreign trade creates pressure for dynamic change through:

(a) competitive import pressure,
(b) competitive export market pressure, and
(c) better resource allocation;

iv. Exports allow for greater capacity utilisation, resulting in economies of scale, as
well as the separation of production patterns from domestic demand and increased
experience with the use of new technologies.

v. Foreign trade improves the well-being of most workers. It does so in at least four
ways: (a) higher exports certainly translates into higher wages; (b) because workers
are also consumers, trade provides them with immediate benefits through imports; (c)
trade allows workers to become more productive as the value of the goods they
produce rises; and (d) trade increases technology transfers from industrial to
developing countries, resulting in a demand for more skilled labour in the recipient
countries.
In most developing nations, increased trade openness has been closely linked to
poverty reduction.
Therefore, trade stimulates more efficient utilisation of different regions' factor
endowments and allows consumers to get things from effective and reliable sources of
supply, hence improving economic welfare.

1.6 FOREIGN TRADE POLICY OF INDIA

Foreign trade policy is essentially a set of rules that govern the import and export of
goods and services. These are developed by the Directorate General of Foreign Trade
(DGFT), the Ministry of Commerce and Industry is the regulating body for the
promotion and facilitation of exports and imports. The policy is notified for a five-
year period. Every year on March 31, it is updated, and the modifications take effect
on April 1.

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While the trade policy encompasses both imports and exports, its major goal is to
make commerce more efficient by lowering transaction costs and time, making Indian
products more competitive globally. India's Foreign Trade Policy envisions assisting
exporters in maximising the benefits of GST, closely monitoring export performance,
boosting cross-border trading ease, raising revenue from agriculture-based exports,
and promoting exports from MSMEs and labor-intensive industries. The Department
of Commerce has also worked to make states active export partners. As a result, state
governments are actively formulating export strategies based on their particular
sectors' capabilities.
The Foreign Trade Policy aims to:
• Increase economic activity and take advantage of global market opportunities.
• Encourage long-term economic growth by making raw materials, components,
intermediates (goods used as inputs in the production of other goods),
consumables, and capital goods available.
• Improve Indian agriculture, industry, and services.
• Create employment opportunities
• Encourage stakeholders to strive for international quality standards.

While the external environment plays an important role in the success of export
policies, it is also important to address internal constraints such as infrastructure
bottlenecks, high transaction costs, complex procedures, manufacturing constraints,
and insufficient diversification in India's services exports. India is a party to the
World Trade Organization's (WTO) Trade Facilitation Agreement (TFA), which
would help to simplify and cut transaction costs.

Around 70% of India's exports are made up of products that only account for 30% of
world trade. Defence equipment, medical gadgets, agro-processing, technical textiles,
and chemicals are among the more potential product groups under consideration by
the government.

Shri Suresh Prabhu, then-Minister of Commerce and Industry, proposed a strategy to

double India's exports by 2025 in 2018. Commodity-specific strategies were

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developed for key sectors such as gems and jewellery, leather, textiles and apparel,
engineering, electronics, chemicals and petrochemicals, pharma, agri and allied
products, and marine products, among others. The North American Free Trade
Agreement (NAFTA), Europe, North East Asia, ASEAN, South Asia, Latin America,
Africa and WANA, Australia, New Zealand, and the Commonwealth of Independent
States would all be covered by the territory-specific approach.

1.7 FOREIGN TRADE POLICY OF THE UNITED STATES

The United States' foreign trade consists of the country's international imports and
exports. The country is one of the world's top three importers and exporters. The
United States Congress has constitutional authority over trade regulation. Following
the Great Depression, the country rose to prominence as a major player in global trade
policy, and it is currently a signatory to a number of international trade accords,
notably the General Agreement on Tariffs and Trade (GATT) and the World Trade
Organization (WTO) (WTO). As of the end of 2006, foreigners' total assets in the
United States totaled $16.3 trillion (over 100 percent of GDP).

Trade policy in the United States has shifted dramatically over the course of the
country's history and industrialization. As a major developed country, the United
States has resorted heavily on raw material imports and finished goods exports.
Because of the importance of trade policy to the American economy and industry,
elected officials and business leaders have placed a high value on it.

According to US Census data covering nearly all economic activity in the United
States, international trade also influences the U.S. presidential election because voters'
exposure to trade influences who wins the presidency. Furthermore, workers in the
high-wage tradable goods and services sectors are more likely to support incumbent
presidents and parties, whereas those in low-wage manufacturing jobs are more likely
to support the opposition.

The United States experienced a decade of economic growth in the 1920s as a result
of a Classical supply-side policy. President Warren Harding's regulations reduced
taxes while also protecting American business and agriculture. Following the Great
Depression and World War II, the United Nations Monetary and Financial Conference

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established the Bretton Woods currency agreement, which was followed by the 1950s
and 1960s economy. President Richard Nixon cut ties with Bretton Woods in 1971,
leaving the United States with a floating monetary system. During the 1970s
stagflation, the US economy experienced slower GDP growth.

Over time, countries with trade surpluses are more likely to have a savings surplus.
The United States has historically had lower savings rates than its trading partners,
who have continued to run trade surpluses.

Warren Buffett, the founder of Berkshire Hathaway, proposed Import Certificates as a

solution to the United States' dilemma and to assure balanced trade in both a 1987
guest editorial and a more extensive 2003 Fortune article. "The rest of the world owns
a staggering $2.5 trillion more of the U.S. than we own of other countries. Some of
this $2.5 trillion is invested in claim checks—U.S. bonds, both governmental and
private—and some in such assets as property and equity securities."

1.7.1 Generalized System of Preferences (GSP)

The Generalized System of Preferences (GSP) is the United States' largest and oldest
trade incentive programme that provides preferred duty-free entry for up to 4,800
products from 129 designated beneficiary countries and territories, with the goal of
promoting economic growth in developing countries by removing tariffs on the
products. The GSP was established by the 1974 Trade Act on January 1, 1976.

Many of the world's poorest countries can employ trade preference schemes like the
Generalized System of Preferences to build their economies and lift themselves out of
poverty. The GSP Guidebook contains fundamental programme information.

1. GSP ncourages economic development and prosperity in poorer countries.

GSP fosters long-term growth in recipient nations by assisting them in expanding and
diversifying their trade with the US. For items from least developed nations, the GSP
programme gives significant benefits.

2. GSP helps keep American businesses competitive and supports American

jobs.

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GSP imports sustain tens of thousands of jobs in the United States by moving them
from the docks to consumers, farmers, and manufacturers. GSP also improves
American competitiveness by lowering the cost of imported inputs used by American
businesses to produce goods in the country. GSP is especially crucial to small firms in
the United States, as many of them rely on duty savings to stay competitive.

3. GSP reinforces American principles.

The GSP programme not only promotes economic opportunities in developing

nations, but it also helps beneficiary countries advance in providing worker rights,
enforcing intellectual property rights, and promoting the rule of law. In response to
requests from interested parties, USTR conducts in-depth reviews of beneficiary
countries' procedures as part of the GSP Annual Review.

1.8 INDIA’S FOREIGN TRADE WITH USA

The United States is home to some of the world's most productive farms. The current
state of the US economy is the outcome of a long and rich history of global resource
utilisation. They consumed 25% of all the world's resources. Large amounts of oil,
natural gas, coal, base and precious metals have been discovered in their bowels. The
fertile soil and pleasant temperature of the country's key agricultural areas contribute
to agriculture's continued success. The economic dominance of the United States has
a substantial impact on the global economy, affecting the economic cycle and the
situation in other nations, as well as the structure of international economic exchange.
The growth of reproductive processes in the US economy is influenced not just by
increasing exports of products, services, and capital, but also by a massive influx of
foreign specialists, goods, services, and capital into the country.

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1.9 TIMELINE
October 13, 1949 - Prime Minister Nehru Visits U.S.

On a multi-week trip to the United States, Prime Minister Pandit Jawaharlal Nehru
talks with US President Harry S. Truman. The tour occurs before of India's formal
declaration of neutrality in the emerging Cold War, in which it would assume
leadership of the Non-Alignment movement. This sets the tone for US-India relations
throughout the Cold War, establishing both limits and opportunities for amity between
Delhi and Moscow.

Indian Prime Minister Jawaharlal Nehru and U.S. president Harry Truman wave at the
Washington, DC airport. (AP photo)
December 9, 1959 - President Eisenhower Visits India

President Dwight D. Eisenhower, the first serving president of the United States to
visit independent India, did so during the Cold War, when India chose to stay neutral.
The two nations had been alienated until then due to India's leadership in the Non-
Aligned Movement, which pledged the country not to take sides between the US and
the Soviet Union.
Eisenhower spoke to both houses of the Indian Parliament and toured the Taj Mahal
with Prime Minister Jawaharlal Nehru during his visit. Many in Washington, who had
previously thought of India as being close to the communist Soviet Union, changed
their minds after the tour.

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 President Dwight D. Eisenhower at the Taj Mahal. (AP Photo)

October 20, 1962 – India China Fight Border War

War erupts between India and China over a disputed border. Prime Minister
Jawaharlal Nehru writes to President John F. Kennedy, requesting American
assistance. Washington backs India in the conflict, recognizing the McMahon line as
the border and providing air support and weapons. Until the 1965 India-Pakistan war,
Washington and Delhi maintained close strategic and military ties.

Refugees from Northeast India evacuate their homes after Chinese troops attack.
(AP Photo)

1963 – U.S Agronomist spurs Food Revolution

Norman Borlaug travels to India to initiate testing high-yielding wheat varieties. His
collaboration with Indian scientist Dr. M.S. Swaminathan results in the "Green
Revolution," in which India goes from food scarcity to self-sufficiency in less than a
decade.
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Nobel Peace Prize Winner Norman Borlaug looks at selected wheat stocks (AP Photo)

May 18, 1974 – India completes First Nuclear Test

India blew up its first nuclear bomb, making it the first country outside of the UN
Security Council's five permanent members to proclaim nuclear weapons
capability. The decision adds to a two-decade-long phase of hostility between the
US and India.

Indian Prime Minister Indira Gandhi examines the nuclear test site. (AP Photo)

March 10, 1978 – U.S enacts Nonproliferation Act

The Nuclear Nonproliferation Act is signed into law by the Carter administration,
requiring countries that are not signatories to the Nonproliferation Treaty, such as
India, to accept inspections of all nuclear installations by the International Atomic
Energy Agency. When India refuses, the US cuts off all nuclear aid to the country.

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 President Jimmy Carter signs the Nuclear Nonproliferation Act (AP Photo)

July 28, 1982 – Indira Gandhi mends Ties during U.S Visit

During a state visit, Prime Minister Indira Gandhi meets with President Ronald
Reagan to try to mend the sour ties between the two countries. In a speech to the
White House, Gandhi notes the contrasts between the US and India, but says they
should " find a common area, how so ever small.” Four years after the United States
halted shipments of low-enriched uranium fuel needed for India's Tarapur power
project, the leaders agree to boost collaboration and resolve a nuclear power conflict.
Vice President George H.W. Bush leads a high-level visit to New Delhi two years
later.

Prime Minister Gandhi toasts President Reagen during a state dinner at the White
House (Bettmann/Getty Images)

July 24, 1991 – India Launches Economic reforms

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Prime Minister P.V. Narasimha Rao's government implements broad economic
changes to strengthen economic links with the United States. Manmohan Singh,
India's Finance Minister, is in charge of opening the country's economy to
international trade and investment, deregulation, privatisation, tax reforms, and
inflation-control measures, all of which have fueled decades of rapid growth.

Indian brokers monitor indices at a firm in Mumbai. (Punit Paranjpe/Reuters)

March 1, 2006- President Bush visits India

President Bush travels to India to finalise the framework of the civil nuclear
agreement and strengthen security and economic ties with Indian Prime Minister
Manmohan Singh. The nuclear agreement, which was signed in July 2007, makes
India the only country outside of the Nonproliferation Treaty with nuclear weapons
and access to nuclear trade.

President Bush greets people after a speech in New Delhi (Jim Young/Reuters)

April 27, 2004 - Mangoes-for-Motorcycles Deal signals deepening Trade Ties

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The first shipments of Indian mangoes arrive in the United States, bringing an end to
an eighteen-year restriction on the fruit's import. The prohibition has been abolished
as part of a 2006 deal between President Bush and Prime Minister Singh to double
bilateral trade in three years. India has responded by announcing that it will lift import
restrictions on Harley-Davidson motorcycles from the United States. According to the
US Bureau of Economic Analysis, bilateral trade in products and services totaled over
$45 billion in 2006 and more than $70 billion in 2010.

Secretary Rice holds a basket of mangoes given to her by an Indian Official in June
2007 (Joshua Roberts/Reuters)
September 6, 2008 – Nuclear Energy Regulator allows Indian Nuclear Trade

For the first time in three decades, the Nuclear Suppliers Group (NSG), an
intergovernmental body that sets criteria for nuclear exports, has granted an
exemption to its rules, allowing India to engage in nuclear trade. The waiver was
granted after the Bush administration made extensive diplomatic efforts dating back
to 2005, when Washington and New Delhi signed the Civil Nuclear Cooperation
Initiative. Secretary Rice makes more than two dozen phone calls to foreign
counterparts ahead of the NSG negotiations to persuade them to approve the waiver.
According to analysts, the agreement is important for India's economic growth and
meeting rising energy demands.

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Secretary Rice and Indian External Affairs Minister Pranab Mukherjee shake hands at
the State Department in Washington, D.C. (Tim Sloan/AFP/Getty Images)

September 26, 2014 – Modi makes High-Profile U.S. Visit

Modi made his first trip to the United States as Prime Minister, with the goal of
attracting investment and strengthening the strategic cooperation between the two
countries. Modi's schedule includes a sold-out address at Madison Square Garden
in New York and meetings with American business leaders. Modi and President
Obama sign a deal in Washington on a memorandum of understanding between
the Export-Import Bank and an Indian energy agency that gives up to $1 billion in
funding to help India develop low-carbon energy alternatives and boost US
renewable energy exports to India.

Prime Minister Narendra Modi speaking at Madison Square Garden in New York.
(Lucas Jackson/Reuters)

June 5, 2019 – Trump ends India’s Special Trade Status

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The Trump administration has ended India's preferential trade status, which dates
back to the 1970s and permits developing-country items to enter the US market
duty-free. India has not allowed "equitable and reasonable access" to its own
market, according to Trump. Following the imposition of steel and aluminium
tariffs by the United States in 2018, India imposes tariffs on twenty-eight US
products. New Delhi had already prepared the retaliatory tariffs but had
postponed their implementation due to ongoing trade talks.

Prime Minister Modi and President Trump talk during the G20 Summit in June 2019
(Brendan Smialowski/AFP/Getty Images)

February 24, 2020 – Trump makes first visit to India

Since 2018, negotiators from both nations have been working on a deal that would
remove Indian barriers to some American products and restore India's access to a
tariff-free trade program with the US. However, the breakdown in discussions
demonstrates how difficult it is to establish a trade agreement between two countries.
Since the start of the trade discussions, both the US and India have increased tensions
by raising tariffs and trade barriers rather than decreasing them.

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 President Trump with Prime Minister Narendra Modi at Motera Stadium
(Doug Mills/ The New York Times)

1.10 EXIM (EXPORT IMPORT BANK): INDIA

The Directorate General of Foreign Trade (DGFT), which is part of the Ministry of
Commerce and Industry, promotes and facilitates international trade (MoCI). The
DGFT gives the authorization to exporters and supervises their corresponding
requirements through a channel of 38 regional offices. The DGFT is also in charge of
enforcing the Foreign Trade Policy. The Overseas Commerce Policy (FTP) is the
primary policy that establishes straightforward and transparent procedures that are
simple to follow and administer for the efficient management of India's foreign trade.
The Policy aims at boosting the country’s commerce for economic growth and job
creation. The Customs Tariff Act and the Central Excise Tariff Act are the other two
main Acts that regulate how Customs and Excise charges are applied to trade. EXIM
aims to increase export potential, improve export performance, promote foreign trade,
and create a favourable balance of payments position (AICAR Business School)

1.10.1 Importer – Exporter Code (IEC)

The Importer-Exporter Code (IEC) is a necessary corporate identifying number for
exports and imports. No one may import or export without first obtaining an IEC
Number from the DGFT. The IEC will be necessary only when the service or
technology provider is taking advantage of the Foreign Trade Policy or dealing with
specific services or technologies while importing or exporting services or technology.

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The type of company that applies for an IEC might be "Proprietorship, Partnership,
LLP, Limited Company, Trust, HUF, and Society." The IEC number is the same as
the firm's PAN as a result of the adoption of GST. The IEC would be issued
separately by DGFT.

1.11 EXPORT IMPORT BANK OF UNITED STATES

The Export-Import Bank of the United States (EXIM) is the country's official export
credit agency. EXIM is an autonomous Executive Branch organisation tasked with
promoting American employment by facilitating the export of goods and services
from the United States. When private lenders are unable or unwilling to offer
financing, EXIM steps in to help American companies compete for worldwide sales
by providing them with the finance tools they need. As a result, the agency levels the
playing field for American goods and services competing in international markets
against foreign competition, allowing American businesses to create more well-
paying jobs in the United States.

EXIM assumes credit and nation risks that the private sector fails to or refuses to
accept because it is backed by the United States' full faith and credit. According to the
agency's charter, all transactions it approves must have a reasonable guarantee of
repayment; EXIM has a low default record and regularly monitors credit and other
risks in its portfolio.

1. Protection against Buyer Nonpayment - EXIM offers U.S. firms alternatives to

protect against nonpayment by overseas buyers and to promote the export of
goods and services created in the United States. Export credit insurance is a
popular product that helps businesses to protect themselves against
nonpayment by international buyers.

2. Borrow against inventory and accounts receivable – It allows firms in the

United States to convert assets into much-needed cash flow. When it comes to
obtaining asset-based loans, U.S. exporters confront unique obstacles.
Exporters may have cash flow issues since private lenders are reticent to lend

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 against export-related assets.

3. Get Financing - A shortage of capital can hinder global growth for many
American exporters.
4. Services exports – Service exports account for one-third of total exports in the
United States. As America's economy shifts to a more service-oriented model,
this sector is emerging as a significant source of value-added growth and
employment creation. When commercial finance is unavailable, EXIM gives
assistance to US enterprises providing services worldwide. Engineering and
consulting, information technology and telecommunications, and services
connected to oil and gas, as well as mining are all examples of service support.
EXIM can fund services that are provided in conjunction with the sale of U.S.-
made products (such as equipment) as well as stand-alone services such as
architectural and engineering services and freight forwarding services.

1.11.1 Export Credit Insurance

Multi-Buyer Credit Insurance is a policy offered by EXIM that protects an exporter's
accounts receivable and has a number of advantages. A policy's protection gives firms
the assurance they need to enter new markets, grow sales in existing ones, and map a
route forward with predictable margins. Companies can boost their global
competitiveness by giving open account credit terms, which are required to compete
and win sales, with this security in hand. Furthermore, EXIM assistance enables
exporters to solve cash flow problems by borrowing against their insured receivables.
• BENEFITS:
i. Risk Reduction:
Reduce the risk of catastrophic losses due to nonpayment by buyers. It can
cover up to 95% of all sales invoices.
ii. Increased competitiveness:
Increase your capacity to provide buyers the loan terms they need to expand
into new markets and confidently increase sales with existing clients. As a
result, buyers are relieved of the requirement to pay cash up front, which
would otherwise stifle their cash flow.

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 iii. Improved liquidity:
Borrow against foreign receivables to increase cash flow.

iv. Credit management knowledge:

Leverage EXIM's international expertise to reduce the burden of credit risk
management.

1.11.2 Working Capital Loan Guarantee

Exporters can use EXIM's Working Capital Loan Guarantee to free up cash flow so
they can complete sales orders and embark on new business overseas. Exporters can
borrow more with the same collateral with EXIM help, secure the performance and
bid bonds needed to win projects, and improve their global competitiveness.

• USES:
i. Pay for materials, equipment, supplies, labour, and other inputs to fulfil
export orders with an EXIM Working Capital Loan Guarantee.
ii. Post bid bonds, performance bonds, or payment assurances in the form of
standby letters of credit.
iii. Obtain finished goods for export.

1.12 The United States–India Trade Policy Forum

VISION:
The Trade Policy Forum (TPF) was founded by the United States and India in July
2005, and an agreement was signed in March 2010 that formally established the TPF
as the primary platform for talks on trade and investment issues between the two
countries. It reaffirms the strategic partnership and reflects the shared belief that
democracy, political and economic freedom, the rule of law and security are the
foundations of economic opportunity. The US-India Trade Policy Forum is an
important component of the Strategic Dialogue, advancing our two countries' efforts
to strengthen economic ties.

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The United States and India recognise that each benefits from the success of the other
in expanding economic opportunity, creating jobs, reducing poverty, and improving
the well-being of its citizens. Bilateral trade between the United States and India has
more than doubled, and commercial ties between US and Indian firms have grown
significantly since the Trade Policy Forum's establishment in 2005. However, there is
enormous potential for increased trade and investment between our countries, and
participation in the Trade Policy Forum should help realise that potential.

The United States and India share a vision of creating an environment that supports
expanding trade and investment while also strengthening ties between US and Indian
businesses, with the global rules-based trading system as its foundation.

PURPOSE:
1. Encouraging trade and investment between the United States and India

2. Creating and implementing trade policies in accordance with international

obligations.

3. Creating an environment that encourages technological collaboration and

innovation

4. Encouraging inclusive economic growth and job creation in the United States
and India

STRUCTURE:
A. TPF continues to be the key bilateral framework for the United States and
India to pursue their common trade and investment goals. TPF is co-chaired
by the Ministry of Commerce and Industry and the United States Trade
Representative.

B. The United States and India have confirmed that the Secretary of Commerce
for India and the Deputy United States Trade Representative for the United
States will continue to serve as deputy chairs, overseeing the work of the

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 TPF's Focus Groups on Agriculture, Investment, Services, and Tariff and Non-
Tariff barriers.

C. The chairs will assemble the TPF once a year for a review of the work done by
the Focus Groups and for any other purpose that have been agreed upon. The
deputy chairs will meet to review the work of the Focus Groups, identify
potential new initiatives, address any issues that arise, and plan for the annual
TPF meeting. Meetings and consultations can take place in person, via digital
video conference (DVD), or any other method agreed upon by the participants.

D. The chairs may make agreed – upon changes to:

i. Structure and frequency of TPF meetings.
ii. The focus groups, which may include creation or elimination groups
iii. The work plan to ensure that the TPF continues to be an effective
mechanism for advancing US-India cooperation.

1.13 EXPORT POLICIES

India imposes export duties on a variety of raw materials used in the production of
metals, most notably steel and aluminium. These include a 30% duty on iron ore and
concentrate with iron content greater than 58 percent, a 15% duty on aluminium ore
exports, and a 30% duty on chromium ore exports. These various duties, as well as
other export measures, benefit India's domestic metals producers while distorting
international markets for key raw materials used in steel and aluminium production.

1.14 IMPORT POLICIES

The US has actively pursued bilateral and multilateral possibilities to expand its
market access in India. Despite this, U.S. exporters continue to face considerable tariff
and non-tariff impediments to their products being imported into India. While the
Indian government continues to push for economic reforms, it also promotes
programmes like "Make in India," which prioritise indigenous production above
imports. Prime Minister Narendra Modi also unveiled the "Self-Reliant India"

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(Atmanirbhar Bharat) project in May 2020, which aims to boost self-sufficiency by
supporting domestic manufacturing and minimising dependency on foreign suppliers.

1.15 TARIFFS & TAX BARRIERS

1.15.1 TARIFFS
A tariff is a fee imposed on products and services imported from another country by
one country. Tariffs are imposed by governments to increase revenue, safeguard
native businesses, or exert political influence over foreign countries and frequently
have undesired consequences, such as higher consumer pricing as the tariff imposed
has an indirect effect on the exporting country because the domestic consumer may be
hesitant to buy their goods due to the price increase. If the domestic consumer
continues to prefer the imported goods, the tax has effectively increased the domestic
consumer's cost.
In 2019, India's average Most-Favored-Nation (MFN) tariff rate was 17.6 percent. In
2019, India's average MFN applied tariff rate for agricultural products was 38.8
percent and 14.1 percent for non-agricultural products). In the World Trade
Organization (WTO), India has bound 74.3 percent of its tariff lines, with an average
WTO bound tariff rate of 50.8 percent.

In addition to tariffs, India imposed a 10% social welfare surcharge on imports in

2018, with the exception of certain products exempted by an official customs
notification. India assesses the surcharge based on the value of other duties (rather
than the customs value of the imported product), lowering the levied value.
Unless specifically exempted through separate notification, all imported products are
subject to a 1% landing fee.

India continues to have the highest average MFN applied tariff rate of any major
world economy, at 17.6 percent.
Since 2014, the Indian government, led by Prime Minister Narendra Modi, has
promoted the "Make in India" campaign, a drive to increase the country's
manufacturing capacity by, among other things, lowering barriers to foreign

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investment and instituting regulatory reforms. As part of the campaign, India has
pushed duties on two broad groups of products to stimulate domestic production: (1)
an assortment of labor-intensive products (2) electronics and communication devices,
including mobile phones, televisions, and associated parts and components.

Given the large disparity between WTO bound and applied tariff rates, India has
considerable liberty to change tariff rates at any time, creating significant uncertainty
for US exporters. The Indian government took advantage of this tariff flexibility in
both the 2019/2020 and 2020/2021 budgets, increasing tariffs on approximately 70
product categories in each budget, including key US exports in the agricultural,
information and communications technology, medical device, paper products,
chemicals, and automotive parts sectors, with no warning or public consultation
process. Prior to the beginning of tariff increases in 2014, certain information and
communication technologies, such as smartphones and related parts, as well as
network switches, were imported duty-free.

TARIFF WAR BETWEEN INDIA & U.S.

Following the United States' withdrawal of preferential tariff benefits granted to India
under the Generalized System of Preferences (GSP) programme in June 2019, India
imposed retaliatory tariffs ranging from 1.7 percent to 20% on 28 different products
imported from the US, including almonds, apples, walnuts, chickpeas, lentils,
phosphoric acid, boric acid, and others. While the duties were imposed in response to
the United States' GSP move, India first declared its plan to impose them in June 2018
in retaliation for the United States' decision to modify steel and aluminium imports
under Section 232 of the Trade Expansion Act of 1962, as amended.

The United States has urged India to work together to address the global problem of
excess capacity in the steel and aluminium sectors, rather than engaging in unjustified
retaliation aimed at punishing American workers and businesses. On July 3, 2019, the
United States initiated a World Trade Organization dispute settlement proceeding
against India, challenging India's retaliatory tariffs. In October 2019, a WTO panel
was formed, and the panel proceeding is still ongoing.

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Obama had asked India to lower trade and investment restrictions in order to
strengthen economic ties between the world's two most powerful democracies.
He stated that the relationship between the United States and India should be
beneficial to both parties, while addressing American worries about outsourcing.
"Back offices in India cost American jobs; we don't want one-way traffic in trade; it's
a dynamic two-way relationship for jobs and higher living standards," Obama said.

Bilateral trade disputes again rose during the Trump administration. A trade
agreement to address certain market access difficulties was said to be close to
completion in 2020, but it never materialised.

During the Biden administration, trade relations between the United States and India
appear to be less tense; the two countries committed to resolve remaining bilateral
trade concerns and seek methods to strengthen economic ties. They held the first
ministerial-level meeting of the bilateral Trade Policy Forum (TPF) in four years in
November 2021. They've also talked about agricultural market access and India's
digital services tax in recent months (DST). However, President Biden had threatened
to raise import tariffs on everything from prawns and Basmati rice to furniture and
jewellery in retribution for New Delhi's imposition of the Digital Services Tax (DS)
on IT companies.

However, there are still conflicts, like as over India's eligibility for the United States'
Generalized System of Preferences (GSP) being terminated, and the occasionally
divergent views of the United States and India in the World Trade Organization
(WTO).

1.15.2 TAXES
Prior to the implementation of the Goods and Services Tax (GST) system in July
2017, India had a challenging and opaque tax, excise duty, and other charge system.
State-level value-added or sales taxes, the Central Sales Tax, and other local taxes and
charges are applied on imports. By integrating India into a single market and boosting
the ease of conducting business, the GST streamlined the tax system. The GST is
made up of three primary taxes:

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 i. The Central GST is a charge levied by the Central Government on all sales
in all states;
ii. The State GST is a fee levied by each state on sales within its borders; and
iii. The Integrated GST is a fee levied by the central government on interstate
and imported goods sales.
The impact of customs tariff rate rises is amplified by the IGST on
imports, which is calculated on the total of the customs value of the items
and the customs charges imposed on such commodities.

Goods and services are taxed at four basic rates under the new system: 5%, 12%,
18%, and 28%. Bread, fresh fruits and vegetables, and certain dairy goods are exempt
from the GST, but they are still subject to pre-existing taxes. While there are still
issues with implementation, India's GST council meets on a monthly basis to alter
GST rates and provide clarifications and updates to GST policy.

1.16 NON TARIFF BARRIERS

Non-tariff regulations apply to three types of products in India: banned or prohibited

items that are not allowed into the country (e.g., tallow, fat, and oils of animal origin);
restricted items that require an import license (e.g., livestock products and certain
chemicals); and "canalized" items (e.g., some pharmaceuticals and corn under a tariff-
rate quota) that can only be imported by government trading monopolies and are
subject to cabinet approval.

While the Ministry of Commerce and Industry's (MOCI) Directorate General of

Foreign Trade (DGFT) maintains a list of restricted items on its official website, India
frequently fails to comply with other transparency requirements, such as publishing
timing and quantity restrictions in the Gazette of India and notifying relevant WTO
committees.

1. Import Restrictions:
India has strong limitations on boric acid imports, including arbitrary import quantity
approval restrictions and other conditions that solely apply to imports, and extended

~ 34 ~
periods of time cannot pass without any import licences being issued. Before an
application for an import permit can be submitted to the Ministry of Agriculture and
Farmers Welfare's (MAFW) Central Insecticides Board and Registration Committe
(CIBRC), a certificate from the Central Excise Authority and No Objection
Certificates (NOCs) from the relevant government ministry are required.
Furthermore, the Indian government issued quantitative restrictions on all pesticides
and insecticides in August 2017. While India later lifted the limits due to its inability
to deploy the necessary software to support the move, there is still question about how
these restrictions would be implemented in the future.

In discussions of the WTO Committee on Import Licensing and through the TPF, the
US has pressed India to abolish its import licensing rules.

2. Import Licensing:
When determining whether licenses are required, India distinguishes between new
and used items, as well as those that have been remanufactured, refurbished, or
reconditioned. India enables end users to import used capital goods without obtaining
an import license as long as the commodities have a residual life of 5 years. Because
India does not accept that remanufactured goods have typically been returned to
original operating state and meet the technical and safety criteria required to items
built from new materials, it requires import licenses for all remanufactured goods. As
a result, stakeholders in the United States claim that obtaining an import license for
remanufactured items has been difficult.

Excessive data necessary in the licensing application, quantity constraints put on

certain part numbers, and extended delays between application and license award are
among the issues raised by stakeholders. Importing both refurbished and secondhand
manufactured items necessitates a Chartered Engineer's Certificate. Used things must
be no older than 5 years, while restored items must be no older than 7 years old and
have at least a five-year remaining life expectancy.

3. Customs Barriers and Trade Facilitation:

India's customs department requires significant clearance documents, resulting in
frequent and lengthy processing delays. India's complicated tariff structure, which
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includes many exemptions that vary by product, user, or intended use, adds to the
ambiguity and causes delays in customs approvals.

Concerns have been expressed by US exporters over India's application of customs

valuation criteria to import transactions. If the claimed transaction value of an import
is assessed to be less than the usual competitive price, Indian customs officers may
reject it, potentially raising the cost of selling to India over the cost of imposed tariff
rates.

1.17 OTHER BARRIERS

1. Services:

The temporary visa policies of the United States, which affect Indians working in the
United States, are a major concern for India. In addition, India continues to seek a
"totalization agreement" to coordinate social security protection for workers who
work in both nations.

2. Agriculture:

India's sanitary and phytosanitary (SPS) obstacles impede agricultural exports from
the United States. Each side views the other's agricultural support schemes as
distorting the market.

3. Intellectual Property (IP):

The two parties disagree on how to strike a balance between IP protection and other
policy goals like access to medicines. India is still on the "Special 301" Priority
Watch List for 2020, owing to concerns about its patent handling, infringement rates,
and trade secret protection.

4. "Forced" Localization:

The US continues to press India on its practises of "forced" localization.

Requirements for in-country data storage, domestic content (such as rules
safeguarding India's solar sector), and domestic testing in some industries are among
the initiatives to expand India's manufacturing base and sustain jobs. New data

~ 36 ~
localization rules for electronic payment service providers like MasterCard, Visa, and
others in India.

5. Defense Trade:

More modifications in India's defence offsets policy and greater Foreign Direct
Investment (FDI) limitations in the defence sector are being pushed by the US.

6. Investment:

Despite new Indian rules on how e-commerce platforms such as Amazon and
Walmart-owned Flipkart conduct business, US concerns about investment hurdles
remain.

1.18 IMPACT OF COVID – 19 ON INDIA- U.S. TRADE

In light of the unprecedented situation caused by the coronavirus pandemic, the

world's foreign trade is facing a serious problem. The disease has spread rapidly,
beginning in China and then spreading to 216 other countries, alarming public health
officials around the world. The countries with the most cases and deaths are the
United States, Russia, Brazil, India, Spain, Italy, the United Kingdom, Germany, Iran,
Mexico, South Africa, Chile, Pakistan, Turkey, China, and Peru, among others.

There is a decline in exports and imports due to the global slowdown, which has been
largely caused by the current Covid-19 crisis. This crisis disrupts the global supply
chain and has an impact on demand as a result. The IHS Markit India Manufacturing
Purchasing Managers' Index (PMI), an indicator of the manufacturing sector's
economic health, fell to an all-time low of 27.4 in April 2020, down from 51.8 in
March 2020 (Economic outlook, CMIE). The pandemic and its subsequent lockdown
have impacted a wide range of industries, including MSME, hospitality, civil aviation,
agriculture, tourism, foreign trade, and allied sectors.

The impact of the coronavirus pandemic began to be seen in India's foreign trade
figures. According to estimates published by the United Nations Conference on Trade
and Development (UNCTAD), the slowdown in manufacturing in China caused by

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the coronavirus (COVID-19) outbreak is disrupting world trade and could result in a
$50 billion drop in exports across the global value chain. According to UNCTAD,
because China has become the central manufacturing hub for many global business
operations, a slowdown in Chinese production has ramifications for any given
country, depending on how dependent its industries are on Chinese suppliers
(Economic Times).

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 CHAPTER 2

RESEARCH METHODOLOGY

2.1 MEANING

A. Research -

The systematic investigation and study of materials and sources in order to establish
facts and reach new conclusions is known as research. It can aid in the discovery of
previously unknown answers. This entails gathering, analysing, and organising
information in order to gain a better understanding of a specific topic. Research can
aid in the collection of fresh information. This knowledge can be the creation of new
concepts or the advancement of existing theories and information. Documentation,
discovery, and research and development are the fundamental goals of research
(R&D). Original research, scientific research, humanistic research, and artistic
research are the four types of research.

John W. Creswell defines research as “Research is a process of steps used to collect

and analyse information to increase the understanding of a topic or an issue”. It is also
the careful consideration of research into a specific subject using scientific
methodologies.

B. Methodology –

Methodology refers to how we approach the research process, which includes the
theoretical underpinnings, the various sources of data collection, how we analyse the
data, and so on. To a large extent, the researcher's approach determines the research
process. The research design is the strategy for achieving the research's predetermined
objectives. Methodology is the process by which we give logic to our interpretations.
Because of the nature of the research, the primary focus has been on gathering
secondary data that is required for the analysis that is being performed. The following
chapter describes the various methods used to collect data.

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C. Research Design –

The fundamental technique used to carry out research efficiently is referred to as

research design. It is a framework designed to help researchers find answers to
research questions. There are five types of research designs: descriptive, correlational,
experimental, review, and meta-analytic.

2.2 TITLE OF THE STUDY

Based on increased economic cooperation and shared democratic ideals, India and the
United States have strong, healthy, and rising bilateral relations throughout the whole
spectrum of trade and commerce. Through trade, investments, and connectivity, the
two countries have a common interest in fostering global economic growth. Both
India and the United States see each other as vital strategic allies in promoting
regional and global peace and security. Over the years, the two countries have
collaborated to provide a good and forward-looking vision for their growing bilateral
relationship. Cultural interactions and people-to-people relationships between India
and the United States have played an essential role in developing bilateral ties
throughout the years.

2.3 OBJECTIVE OF THE STUDY

The research objectives describe what we intend to achieve with a project.

1. To study trade relations between India and USA

2. To interpret the import and export between India and US
3. To evaluate the evolution of Indo-US foreign trade in the 21st century

2.4 LIMITATION OF THE STUDY

- The research paper is from India’s perspective only.

- The tools used for data collection are limited to the 21st century only.

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2.5 COLLECTION OF DATA

2.5.1 Primary Data –

Primary data is the most basic information that can be gathered during the data
collection process. This was the absolute basic of all data types.

The primary data is gathered directly from the main source, with the research goal in
mind.

Prior to deciding on a primary data source, the research goal and target population
must be determined.

Primary data sources are frequently chosen and adjusted especially to match the needs
of the research topic in question.

Interviews, surveys, and questionnaires are examples of primary data collection

techniques.

• Advantages of Primary data –

1. Specific issues are addressed – Detailed information on specific issues can be

obtained. As a result, precise information can be gathered from the sources.

2. Better data interpretation – Data collected can be analysed and interpreted

based on the researcher's needs.

3. Data recency – When it comes to gathering recent and specific data, primary
data becomes an accurate tool.

4. Proprietary concerns – The person collecting the data is the owner of that
information and does not need to share it with anyone else.

5. The samples are controllable.

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 Disadvantages of Primary Data –

1. High cost – Data collection using primary data is very expensive. The marketer
must be present throughout the process and design everything.

2. Time consuming – Because of the exhaustive nature of this method, gathering

accurate data takes a long time.

3. Inaccurate feedback – When conducting research, there is a high possibility that

the feedback received will be inaccurate. At times, feedback can be biassed or
given simply for the sake of giving it.

4. A large amount of resources are required – In addition to the high cost and time,
other resources such as human resources and materials are required in large
quantities to conduct surveys and interviews.

5. Feasibility – Because of the requirements and unrealistic demands, conducting

primary data research is not always feasible.

2.5.2 Secondary Data –

Secondary data is information that has already been gathered from primary sources
and has been made available to other researchers. This information has already been
gathered in the past. The data that is secondary for one study may have been primary
for another, or the data may have been gathered for general use and made public for
others. Secondary data is known to be more readily available than primary data.
Finding secondary data requires very little manpower and other resources. And, with
the help of internet, secondary data is now more easily accessible.

• Sources of secondary data –

i. Books
ii. Published sources
iii. Public sector records
iv. Government records
v. Unpublished personal sources
vi. Journal
vii. Newspapers

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viii. Websites
ix. Blogs
x. Podcasts
xi. Radio stations
xii. Letters

• Advantages of Secondary data –

1. Comparitive studies – Because all of the data is openly accessible
whenever it is needed, secondary data makes it simple to conduct
comparative studies. There is no need to wait years to draw conclusions
because recent data, as well as data from 10 or 5 years ago, is available
with a single click.

2. Economicial – Secondary data collection is very low or free. The majority

of the sources are freely available in libraries or on the internet.

3. Time Saving– Collecting secondary data takes very little time. The only
investigation required is to locate the appropriate sources in order to obtain
relevant information. It saves a significant amount of time.

4. Accessibility – The majority of secondary data sources are easily

accessible to all. Individuals who do not have internet access can obtain
this information through print media.

5. Forming fresh perspectives – During data revaluation, it is possible that the

new researcher will discover some new information that the previous
researcher did not. This results in the generation of new insights and
information. As a result, it is a progression in the research study that will
be useful to other users.

~ 43 ~
 • Disadvantages of Secondary data –

1. Content quality – Because there are no regulatory bodies to monitor the

information, the data collected may not always be authentic.

2. Irrelevant data – Researchers may have to sift through a large amount of

irrelevant data before arriving at the correct information. However, it is not
uncommon for the exact data to be unavailable, forcing the researcher to settle for
the next best alternative.

3. Distorted data – Certain information may be biassed because the original

researcher wanted to maintain a positive image. They would be superficial and
incorrect.

4. Outdated data – Some data sources are obsolete, and no new substitute has
been found. This type of out-of-date information has an impact on the research
study.

5. Not Objective – centric - When compared to primary data, this is one of the
most significant disadvantages. Secondary data can never be completely tailored
to the needs of the researcher because it was gathered for another purpose in the
past. Even though secondary data sources can make a large amount of data
available, quantity does not always imply accuracy.

2.6 TOOLS USED TO COLLECT DATA

Secondary data has been used extensively in this project to meet the project's
objectives and best suit the project's demands. This information was gathered via a
variety of websites. The information gathered here comes from secondary or other
sources.

• Graphs
• Charts
• Tables

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 CHAPTER 3

LITERATURE REVIEW

Shri Saket Dalmia(2020), bilateral relations between India and the United States
have been steadily improving over the years, guided by shared democratic values and
growing convergence of interests on bilateral, regional, and global concerns. At this
point, when the India-US FTA is finalised, it will serve as an effective tool for
unlocking greater bilateral and multilateral trade liberalisation in goods and services,
as well as eliminating trade-related distortions such as high tariffs and complex non-
tariff measures. Going forward, India's large consumer base, improved infrastructure,
highly skilled and semi-skilled manpower, increased transparency, expanded
digitization, greater innovation, and more policy stability, among other factors, will
significantly boost business sentiments, allowing the two economies' trade and
investment paths to continue to improve.

Shri Pradeep Multani - Senior Vice President PHDCCI (2020) affirms that
bilateral relations between India and the United States have always been robust. The
two countries have taken advantage of the synergies inherent in their shared
conviction in global expansion, commerce, and prosperity to forge unprecedented
bilateral economic ties. An FTA could boost trade and economic welfare in both
economies by removing trade barriers, increasing market access, and providing a
stable framework for comprehensive growth of sectors such as defence and security,
education, science and technology, cyber security, high-tech, agriculture, and health,
among others, by removing trade barriers, increasing market access, and providing a
stable framework for comprehensive growth of sectors such as defence and security,
education, science and technology, cyber security, high-tech, agriculture, and health.
Going forward, the initial trade agreement should pave the way for a full-fledged free
trade agreement, resulting in a significant rise in bilateral commerce and investment
between India and the United States.

Shri Saurabh Sanyal (2020) pronounces that the cooperation between India and the
United States is based on a common commitment to democracy. Fair trade standards,
as well as the promotion of economic growth and development, are all important.

~ 45 ~
Because India and the United States are natural partners, the trend of expanding
economic and trade relations between the two countries will continue in the coming
years, owing to significant complementarities and mutual synergies. The initial trade
package agreement will create the groundwork for a full-fledged free trade agreement
between India and the United States, bolstering bilateral economic ties. The Future of
Expanding India-US Bilateral Relations is a detailed research study that gives a
concise description of how the signing of an FTA between India and the United States
could be a cornerstone in the long-standing bilateral trade and investment relations
between the two countries.

Dr. Stephen P. Cohen (2000), in his paper highlights that from a strategic, political,
or ideological standpoint, the United States should see India not as just another South
Asian state like Pakistan or Indonesia, but as a player in the greater Asian sphere, one
of the five most important states in the world. India is not China, but it is also not a
minor "Third World" country. An India that continues to restructure its economy and
reconciles with Pakistan might be a stabilising influence in Asia, as well as a partner
in humanitarian aid in Africa and other war-torn areas. It could be a partner in
containing a threatening or expansionist China if the situation arises.

Dr. Gouher Ahmed (International Management Consultant, New York, USA), in

his paper studied the new trade regime and India – America trade. He concludes that
The World Commerce Organization (WTO) has opened up new horizons for the
global economy and trade, based on the principles of fair multilateral trade and trade
cooperation rather than trade rivalry. Leading democracies such as India and the
United States support this democratic trade policy. Despite being at different phases
of development, the two appear to be trading on an equal footing. Over the years, the
United States has been India's most important export and import partner. However,
under the new trading arrangement, the United States has risen in the X-partnership
rankings but has dropped in the import rankings. India has strengthened its position in
the XM market in the United States. India's GDP has grown at a faster rate (9%) than
the rest of the world (1 trillion USD). India, on the other hand, has a pressing need to
link its people to growth and trade. The economy and trade need improved
management inputs of the Gandhian type for this and other reasons. Regardless of the

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two nations' history and current trade links, as well as India's recent good and trade
performance, the gap between India and America looks to be rather significant.

Foreign Trade Barriers (2021), a report by the United Stated Trade Representative
declares that India currently lacks an adequate structure to defend against unfair
commercial exploitation of unreported test or other data created to seek marketing
authorisation for pharmaceutical and agricultural products, as well as illegal
disclosure. Concerns have also been expressed by the US government and
stakeholders about allegedly infringing medications being promoted without prior
notice or the opportunity for parties to resolve their IP disputes. Companies from the
United States and India have expressed interest in closing deficiencies in India's trade
secret law, such as by enacting standalone trade secret legislation. Trade secrets were
declared an “important area of study for future policy development,” in India's
National Intellectual Property Rights (IPR) Policy in 2016, although the country has
yet to prioritise this work.

Michael F. Martin, Shayerah Ilias Akhtar, K. Alan Kronstadt, Samir Kumar,

and Alison Siskin, in their paper summarizes that India is an important commercial
and economic partner for the United States as the world's third largest economy. The
arrival of newly elected Prime Minister Narendra Modi to Washington, DC, his first,
has piqued congressional interest in the relationship's current state. Modi's visit
presents a chance for the Obama administration to advance the strategic alliance
between the United States and India, especially by exploring ways to increase trade
and investment between the two countries. India's legislative elections in May 2014
ushered in a new government led by Prime Minister Modi and the Bharatiya Janata
Party (BJP). Modi's victory was largely interpreted as a mandate for the incoming
administration to continue economic plans similar to those enacted by Modi during
his 15 years as Gujarat's Chief Minister.

Despite the fact that merchandise commerce between India and the United States has
increased quickly in recent years, each country claims that some parts of the other's
economic and trade policies are impeding future trade and investment growth. India's
intellectual property rights (IPR) protection, for example, is considered insufficient by
the Obama Administration, and its localization plans are considered non-tariff trade

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obstacles. US restrictions on visas for temporary foreign workers and payroll taxes are
considered non-tariff trade by the Indian government.

Dr. Shuchi Gupta (2020), in her paper assessed India’s foreign trade and confirms
that despite the fact that India's economy has steadily opened up, its tariffs remain
high in comparison to other countries, and its investment requirements remain tight.
As a result, some regard India as a "fast globalizer," while others regard it as a "very
protectionist" country. Nonetheless, the government's stance on trade and investment
policy has shifted significantly in recent years, from defending 'producers' to
favouring 'consumers.' India is currently pressing hard for a more liberal world trade
environment, particularly in the services sector. It is providing power at competitive
rates, including lower rates during off-peak hours, which might be a game-changer for
textile exports. and promoting electronics hardware exports, including a Hardware
Software combination, as well as moving away from assembling and toward
establishing a strong manufacturing base with a well-established value chain.

The Economic Times (September, 2021), outlines that while speaking at the 4th
Annual Leadership Summit of the US-India Strategic Engagement Forum (USISPF),
Commerce and Industry Minister Piyush Goyal said that India and the US should
cooperate in a much larger way, and that New Delhi is ready and eager to expand the
economic partnership with America. Neera Tanden, senior counsellor to President Joe
Biden, spoke briefly about the need of having Indian-Americans at the table,
contributing, involved, and engaged in decision-making. Former US Ambassador to
India Richard Verma said Prime Minister Narendra Modi's successful visit marks the
beginning of a new chapter in the critical bilateral relationship. "We can't just sit back
and relax. Now it's up to us to get to work. The president laid out a road plan for us to
follow in terms of trade, health, climate change, security, and so much more. I'm
actually quite enthusiastic about bilateral ties, and even more so for quadrilateral ties
"he stated

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 CHAPTER 4

DATA ANALYSIS, INTERPRETATION AND PRESENTATION

4.1 INDIA’S EXPORTS AND IMPORTS WITH U.S.

4.1.1 Trade over the years

India had a running goods trade deficit, which means that it imports more goods than
it exports. However, India performs 'better' in terms of services. India's trade
relationship with the United States of America is quite different from that of many
other major trading partners. Although India's large software and services exports to
the US are well-known, India also exports more goods to the US. For the first time
since 2006, India's exports to the US exceeded its imports in 2014.

Figure 1

Note: In this piece, all years are calendar years, not fiscal years.

The most notable point of interest is the drop in both Indian exports and imports in
2009, with the former being hit significantly more severely than the latter. This was
preceded by a strong increase in Indian goods imports from the United States in 2007.

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While Indian exports to the United States have recovered since 2010, imports of
Indian commodities have stagnated in 2011 and have fallen somewhat in real terms
since then. According to the United States Trade Representative's website on India-
US trade ties, India's top products exports to the United States are precious stones
(diamonds), pharmaceuticals, mineral fuel, organic chemicals, and other items.
Precious stones (diamonds and gold), aircraft, machinery, and optical and medical
instruments are among India's top imports.

Using the US Census Bureau's "end use" statistics, a closer look of export and import
trends in different types of commodities reveals the following:

1. Since 2009, the following items have seen the most growth in highly traded
Indian products exports to the United States:
- Petroleum products, other
- Tobacco, waxes, etc
- Fish and shellfish
- Fuel oil

2. As of 2013, the following items have seen the greatest increase in highly
traded Indian goods imports from the United States:
- - Complete military aircraft
- Gem diamonds
- Nonmonetary gold
- Newsprint
- Parts for military-type goods

3. As of 2013, the following items have seen the largest fall in highly traded
Indian goods imports from the United States:
- Civilian aircraft, engines, equipment, and parts
- Chemicals-fertilizers
- Steelmaking materials
- Computers
- Drilling and oilfield equipment

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 Figure 2

Trade and investment relations between the two countries are minimal, but they have
developed in the last decade (Figure 1). They account for a modest percentage of total
foreign transactions in the United States, but they are more significant in India. In
2020, overall merchandise trade between the United States and India (exports plus
imports) amounted for roughly 2% of total merchandise trade in the United States and
about 12% of total merchandise trade in India. The United States was India's top
merchandise export destination and third-largest merchandise import supplier, and
India was the United States' 11th largest overall goods trading partner (after China
and the European Union). Mineral fuels, precious metals and stones, machinery,
aeroplanes, organic compounds, and pharmaceutical products are among the most
commonly traded goods. (US Census Bureau and the World Trade Organization,
2020).

Travel (for business and pleasure, including education) was the top U.S. export, while
telecommunications, computer, and information services were the top U.S. import in
bilateral services trade. The majority of large American corporations have a presence
in India. Professional services, depository institutions, and manufacturing are the top
three sectors attracting Indian FDI in the United States. Defense sales are very crucial
in bilateral trade.

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India: According to FDI figures given by the Indian government's Department for
Promotion of Industry and Internal Trade, the United States is India's sixth largest
source of foreign direct investment. From April 2000 to June 2019, cumulative FDI
inflows from the United States totaled $ 27.01 billion, accounting for 6% of overall
FDI inflows into India. FDI from the United States totaled $ 1.46 billion in the current
fiscal year, from April through June. According to a report published by the
Confederation of Indian Industries (CII) in November 2017 titled "Indian Roots,
American Soil," Indian investment in the United States totals $18 billion, based on a
survey of 100 Indian enterprises across 50 states in the United States.

USA: According to US figures, in 2018 US FDI into India was $ 45.98 billion in
2018, whereas Indian FDI into the US was $ 13.73 billion.

4.1.2 India U.S. Trade Facts

India's GDP was estimated to be $2.9 trillion in 2019 (at current market exchange
rates); real GDP increased by an estimated 4.2 percent; and the population was 1.4
billion. (From the IMF)

In 2019, the United States' goods and services trade with India was estimated to be
$146.1 billion. Exports totaled $58.6 billion, while imports totaled $87.4 billion. In
2019, the United States' goods and services trade deficit with India was $28.8 billion.
With $92.0 billion in total (two-way) goods trade in 2019, India is currently our ninth
largest goods trading partner. Exports of goods totaled $34.3 billion, while imports of
goods totaled $57.7 billion. In 2019, the United States' goods trade deficit with India
was $23.4 billion. In 2019, estimated service trade with India (exports and imports)
totaled $54.1 billion.

Services exports totaled $24.3 billion, while imports totaled $29.7 billion. In 2019, the
United States' services trade deficit with India was $5.4 billion. According to the
Department of Commerce, US exports of goods and services to India supported an
estimated 197 thousand jobs in 2015 (the most recent available data) (82 thousand
supported by goods exports and 116 thousand supported by services exports).

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Exports:

• In 2019, India was the United States' 12th largest goods export market.
• In 2019, US goods exports to India totaled $34.3 billion, up 3.3 percent ($1.1
billion) from 2018 and 108.5 percent from 2009.
• In 2019, US exports to India account for 2% of total US exports.
• In 2019, the top two-digit HS export categories were mineral fuels ($8.2
billion), precious metals and stones (diamonds) ($6.4 billion), aircraft ($2.8
billion), machinery ($2.4 billion), and organic chemicals ($1.9 billion).
• In 2019, the United States' total agricultural exports to India totaled $1.8
billion, making India our 13th largest agricultural export market.
• Tree nuts ($823 million), cotton ($587 million), fresh fruit ($62 million), dairy
products ($60 million), and pulses ($37 million) are the leading domestic
export categories.

Imports:

• US service exports to India were estimated to be $24.3 billion in 2019, up 4.8

percent ($1.1 billion) from 2018, and up 144 percent from 2009. Travel,
intellectual property (computer software, audio and visual related products),
and transportation were the leading service exports from the United States to
India.
• In 2019, India was the tenth largest supplier of goods imports to the United
States.
• Imports of goods from India into the United States totaled $57.7 billion in
2019, up 6.3 percent ($3.4 billion) from 2018 and 172.6 percent from 2009.
• In 2019, India's imports to the United States account for 2.3 percent of total
U.S. imports.
• Precious metals and stones (diamonds) ($11 billion), pharmaceuticals ($7.6
billion), machinery ($3.7 billion), mineral fuels ($3.6 billion), and organic
chemicals ($2.8 billion) were the top import categories in 2019.
• In 2019, the United States imported $2.6 billion in agricultural products from
India, making it the 14th largest supplier of agricultural imports. Spices ($271
million), rice ($230 million), essential oils ($184 million), processed fruit and

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 vegetables ($142 million), and other vegetable oils ($133 million) are the
leading categories.
• In 2019, US service imports from India were estimated to be $29.7 billion, up
3.0 percent ($864 million) from 2018, and up 143 percent from 2009.
Telecommunications, computer and information services, research and
development, and travel were the leading service imports from India to the
United States.

Trade Balance:

• The United States' goods trade deficit with India was $23.4 billion in 2019,
an increase of 11.0 percent ($2.3 billion) over 2018.
• In 2019, the United States' services trade deficit with India is expected to
be $5.4 billion, a 4.6 percent decrease from 2018.

Investment:

• Foreign direct investment (FDI) from the United States in India (stock)
totaled $45.9 billion in 2019, an increase of 8.1% from 2018.
Professional, scientific, and technical services, manufacturing, and
wholesale trade account for the majority of US direct investment in
India.
• In 2019, India's FDI in the United States (stock) was $5.0 billion, a 2.3
percent decrease from 2018. Professional, scientific, and technical
services, manufacturing, and depository institutions account for the
majority of India's direct investment in the United States.
• Sales of services in India by majority-owned affiliates from the United
States totaled $32.1 billion in 2017 (the most recent data available),
while sales of services in the United States by majority-owned Indian
firms totaled $17.8 billion.
• In the year during 2020, it has become down due to some international
avoidable reasons. India’s import from US was always more than
export. In the changing present scenario, trade between India and US
has been increasingly day by day due to harmony relations.

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 Figure 3

India's GDP was expected to be $2.9 trillion in 2019 (at current market exchange
rates), with a real GDP increase of 4.2% and a population of 1.4 billion. (Source:
International Monetary Fund)

In 2019, the United States' goods and services trade with India was anticipated to be
worth $146.1 billion. Exports totaled $58.6 billion, while imports came in at $87.4
billion. In 2019, the United States' goods and services trade deficit with India was
$28.8 billion.

With $92.0 billion in total (two-way) goods trade in 2019, India is our 9th largest
goods trading partner. Exports of goods totaled $34.3 billion, while imports of goods
totaled $57.7 billion. In 2019, the United States' goods trade deficit with India was
$23.4 billion.

In 2019, service trade with India (exports and imports) was predicted to be worth
$54.1 billion. Exports of services totaled $24.3 billion, while imports totaled $29.7
billion. In 2019, the United States' services trade deficit with India was $5.4 billion.

According to the Department of Commerce, in 2015 (the most recent statistics

available), U.S. exports of products and services to India generated an estimated 197
thousand jobs (82 thousand supported by goods exports and 116 thousand supported
by services exports).

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 Figure 4

Rapidly developing trade and commercial ties between India and the United States are
a significant feature of the two nations' multifaceted alliance. From $20 billion in
2000 to $142 billion in 2018, total bilateral trade (goods and services) between India
and the United States grew at a CAGR of 11.5 percent. The increase of bilateral trade
was boosted throughout this period by services trade, which grew at a CAGR of 13.4
percent. Goods commerce increased at a rate of 10.6 percent each year. In 2018,
goods trade accounted for 61.6 percent of total bilateral trade between India and the
United States, while services trade accounted for 38.4 percent.

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 Figure 5

Source – Embassy of India, Washington, D.C

Goods Trade: From a low of $14 billion in 2000, bilateral goods trade has grown to
$87.5 billion in 2018 (a CAGR of 10.6%), becoming the United States our second
largest trading partner. India exported $54.4 billion to the United States and bought
$33.12 billion. The value of products traded in 2018 was $87.53 billion, up from
$74.33 billion in 2017, a 17.8% rise. From January to October 2019, commerce in
goods increased by 5% to $ 77.5 billion, up from $ 73.8 billion in the same period last
year.

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 Figure 6

Source – Embassy of India, Washington, D.C

Trade in Services: Bilateral trade in services has increased at a breakneck speed since
2000, rising from $6 billion in 2000 to $54.6 billion in 2018. (CAGR of 13.1%).
India's service exports to the US were valued at $28.8 billion, while India's service
imports from the US were valued at $25.8 billion. In 2018, trade in services totaled $
54.56 billion, up from $51.9 billion in 2017, representing a 5.2 percent rise. From
January to September 2019, trade in services increased by 1.5 percent to $ 41.47
billion, up from $ 40.85 billion in the same period last year.

Exports: In 2019, India was the US's 12th largest goods export market. Goods exports
from the United States to India totaled $34.3 billion in 2019, up 3.3 percent ($1.1
billion) from 2018 and up 108.5 percent from 2009. In 2019, US exports to India
accounted for 2% of total US exports.

Mineral fuels ($8.2 billion), precious metal and stone (diamonds) ($6.4 billion),
aircraft ($2.8 billion), equipment ($2.4 billion), and organic chemicals ($1.9 billion)
were the top two-digit HS export categories in 2019.

In 2019, the United States exported $1.8 billion worth of agricultural products to
India, making it our 13th largest agricultural export market. Tree nuts ($823 million),

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cotton ($587 million), fresh fruit ($62 million), dairy products ($60 million), and
pulses ($37 million) are the top domestic export categories.

Services exports from the United States to India totaled $24.3 billion in 2019, up 4.8
percent ($1.1 billion) from 2018 and 144 percent higher than 2009 levels. Travel,
intellectual property (computer software, audio and visual associated products), and
transportation were the most popular services exports from the United States to India.

Imports: In 2019, India was the tenth largest importer of products into the United
States. Imports of goods from India to the United States totaled $57.7 billion in 2019,
up 6.3 percent ($3.4 billion) from the previous year and up 172.6 percent from 2009.
In 2019, imports from India account for 2.3 percent of total imports in the United
States.

Precious metals and stones (diamonds) ($11 billion), medicines ($7.6 billion),
equipment ($3.7 billion), mineral fuels ($3.6 billion), and organic chemicals ($2.8
billion) were the top two-digit HS import categories in 2019.

India was the 14th largest source of agricultural imports to the United States in 2019,
with $2.6 billion in total imports. Spices ($271 million), rice ($230 million), essential
oils ($184 million), processed fruits and vegetables ($142 million), and other
vegetable oils ($133 million) are the top-selling categories.

In 2019, the United States imported $29.7 billion in services from India, up 3.0%
($864 million) from the previous year and 143 percent higher than in 2009.
Telecommunications, computer and information services, research and development,
and travel were among the most popular services imported from India to the United
States.

4.1.3 Impact of The Global Financial Crisis on Indo – U.S. relations

In 2008, the United States and India began preliminary discussions on a Bilateral
Investment Treaty (BIT) that would establish binding legal regulations for each
other's investments. The formal BIT negotiations began in August 2009, shortly after
Secretary of State Hillary Clinton established a strategic conversation between the US
and India during her visit to India in July 2009. "The United States and India

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recognise that one benefits from the other's success in expanding economic
opportunity, creating jobs, reducing poverty, and enhancing the well-being of its
population," according to the 'Framework for Cooperation on Trade and Investment'
signed by both countries.

The visit of US President Barack Obama to India in November 2010 marked a

significant milestone in the two countries' economic relationship.

Figure 7 - India U.S. trade – Major Trends

Figure 7 shows that, while India was the US's 12th largest trading partner in 2010, if
the Congressional Research Services Report (2011) is to be considered, there are
some major and troubling patterns to be noted:

a. The rate of increase in Indian exports to the United States has been erratic.

b. The export growth rate has been steadily declining from 2005-06, eventually
turning negative in 2007-08 and 2009-10.

c. Growth rates have been substantially lower during 2007-08 than in the previous
period.

d. Import growth rates from the United States have also fluctuated dramatically.

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e. Import growth from the United States peaked in 2007-08 (a year when export
growth was negative).

f. Since 2008-09, the rate of increase in imports has been substantially lower than in
previous years.

g. After 2005-06 (which many regard to be the first year of the crisis), the share of
exports to the United States has progressively decreased, indicating a deterioration in
the importance of the United States as an export destination.

h. With one exception, the share of imports from the United States has decreased
since 2005-06. (i.e. 2007-08).

i. The trade balance between the two countries improved steadily until 2006-07, but
then turned negative in 2007-08, demonstrating the severe impact of the global crisis
on India-US trade relations.

j. The balance of trade in 2008-09, i.e. the post-meltdown era, is significantly lower
than in the pre-meltdown era, but it is showing indications of improvement.

Figure 8 – Comparison between pre and post recession period

Figure 8 compares statistics from the pre-recession and post-recession periods. In the
post-meltdown era, the average value of both exports and imports has risen. The

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standard deviation, on the other hand, has decreased, indicating less variability in both
exports and imports.

4.2 Trade Balance

In 2019, the US goods trade deficit with India was $23.4 billion, up 11.0% ($2.3
billion) from the previous year.

The United States' services trade deficit with India is expected to be $5.4 billion,
down 4.6% from 2018.

Figure 9 – India’s Exports, Imports and Trade Balance

In 2010, bilateral trade between the United States and India reached a new high of
$46.0 billion, making India the US's tenth-largest trading partner. The continuous
expansion of the Indian economy (9.1%) and the growth of the US economy
(2.8%) both led to an increase in bilateral trade in most major commerce sectors in
2010. In terms of value, India was the 17th-largest export market for the United
States in 2010. In 2010, U.S. exports to India rose at a slower rate (12%) than total
U.S. exports (20%). Intermediate products, such as chemicals, minerals, and

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 metals, were the most popular U.S. exports to India in 2010, supplying the
country's developing economy. Except for energy-related products, which surged
by almost 400 percent, imports from India increased by double digits in all key
commodity categories. Only a few products, such as gemstones, petroleum, and
medical compounds, accounted for a large portion of the expansion.

Shifts in Trade from 2009 to 2010:

The United States' trade deficit increased from $6.6 billion (100%) to $13.2
billion.

Exports from the United States increased by $1.8 billion (12%) to $16.4 billion.

Imports from the United States increased by $8.4 billion (40%) to $29.6 billion.

4.2.1 Impact of COVID-19 on India’s Current Account

The current account records net trade in commodities and services, net investment
earnings, and net transfer payments during a specified time period, usually a year or
quarter. In simple terms, net trade in goods and services is a significant component of
the current account.

The current account provides important information about a country's economic

condition, and a positive current account balance usually corresponds to higher
exports than imports, indicating a healthy inflow of foreign exchange reserves.

Due to the higher value of imports compared to exports, India's current account has
been largely in deficit. Crude oil, gold, and electronic items are among the most
important items we import.

Limited domestic production and challenges affecting our domestic industry's

competitiveness, such as land and labour restrictions, high capital costs, and taxes,
have resulted in severe competition from low-cost imports from nations like China.
As a result, our trade deficit with these countries has increased, negatively impacting
our current account balances and harming domestic manufacturers.

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 Figure 10

In June 2020, merchandise exports fell 12.4% while imports fell 47.6%, resulting in a
$790 million trade surplus. In 2020, Trade Minister Piyush Goyal tweeted that exports
of $4.94 billion in the first week of June were nearly equal to the previous year's level
($5.03 billion). During the month, exports of 12 of the 30 major items increased.
Pharmaceuticals (9.9%), chemicals (19.1%), iron ore (63.1%), rice (32.7 %), cereals
(19.3%), and fruits and vegetables contributed to the narrowing of the export
contraction (11%). However, imports continued to fall, with crude oil imports falling
55.3% compared to the same period in 2019.

Only vegetable oils (8.5%), pulses (0.1%), sulphur and unroasted iron pyrites
(24.3%), and pharmaceutical products (0.3%) increased among the 30 major items.
Gold imports continued to dwindle in June, falling by 77.4%.

India's current account balance marked a surprise marginal surplus of 0.1% of GDP in
the March quarter, compared to 0.4 percen% in the December 2019 quarter, closing a
12-year gap due to a lower trade deficit and a sharp increase in remittance inflows.

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Because of the significant drop in domestic economic activity caused by the lockdown
imposed to prevent the spread of the coronavirus, imports were significantly reduced.

A current account surplus indicates that there is more foreign inflow than outflow. It
aids in the growth of reserves, which is necessary for financial and external sector
stability. However, in the current situation, an improvement in our current account is
being driven by lower import levels, which coincide with stagnant domestic demand.
As a result, it is critical to interpret such an increase as a sign of potential weakness
and implement supportive policy measures.

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 CHAPTER 5

CONCLUSION AND SUGGESTIONS

5.1 RECOMMENDATIONS AND SUGGESTIONS

• Shift of Supply chain from China to India

India has always believed in and promoted the principle of free and fair trade, and it
provides a plethora of economic and trade opportunities. Global optimism is growing
toward India, which is seen as an appealing destination by international giants. The
country serves as a catalyst for increased global growth, trade, development, and job
creation, thereby contributing to a more prosperous and resilient world.

If the trade war between the United States and China created uncertainty in global
markets and investment, the COVID-19 outbreak highlighted the dangers of China's
importance in global value chains. Various countries including US and India feel the
obligation to diversify their supply chain portfolio to avoid over-dependence on
China. A strong bilateral trade and investment agreement between India and the
United States, as well as forums like 'Quad,' can aid in the development of alternate
supply chains. Under the Quad umbrella, the two countries are cooperating to oppose
the Chinese threat globally while also ensuring that the Quad works closely together
to create strong economic and defence relations.

• Re-launch of the India-US Trade Promotion Forum (TPF)

After four years, India and the United States (US) are ready to resurrect the Trade
Policy Forum (TPF) in an effort to boost trade and investment flows between the two
countries.

Katherine Tai, the US Trade Representative, stated that she intended to make progress
in areas like as cross-border movement of products and services, as well as removing
market access barriers and excessive tariffs, and that these issues will be addressed
first with India. She was excited to talk about improving the trade relationship by
working together on worker-centric policies. “President Biden and I are convinced
that US trade policy requires a fundamental shift to ensure that our policies and

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actions focus on the impact that trade and trade agreements have on real working
people,” “The trade relationship between our two countries is a top priority, both from
President Biden and for me. That’s why it was important for me to come to India and
relaunch the trade policy forum on my first trip to Asia,” she said.

The India-US TPF, which was established in 2005, held its most recent meeting in
October 2017. It was later replaced by trade negotiations between the two parties. The
focus on the TPF has resurfaced, with the Biden administration focused on fixing
grievances first rather than pursuing a mini-deal.

• Mr. Joe Biden's Presidency

The US administration, led by Mr. Barack Obama as President and Mr. Joe Biden as
Vice President (2009-2017), continued to deepen India-US collaboration on strategic,
defence, economic, regional, and global challenges. Recognizing India's growing role
on the global stage, the United States considered India to be on par with its closest
allies. Under the newly elected Biden administration, the United States has stated its
intention to collaborate with India to support a rules-based and stable Indo-Pacific
region in which no country can threaten its neighbours.

Over the years, there has been bipartisan agreement on both democracies' national
interests in strengthening India-US bilateral defence relations.

With the change of guard at the White House and key agreements reached at the
recent 2+2 dialogue, India-US defence ties are expected to remain strong. The new
administration places a high priority on strengthening Indo-US ties in the areas of
climate and health. Furthermore, the Indian pharmaceutical industry is expected to
benefit from Biden's presidency as a result of an increased push for generic
prescriptions and access to affordable health insurance. Every year, the United States
imports approximately USD 7 billion in formulations from India. As a result, India's
pharmaceutical industry will continue to play an important role in the US healthcare
system, and the election of Mr. Joe Biden as President will improve growth
opportunities for Indian pharmaceuticals in the United States.

The Biden presidency is also expected to implement a more liberal, fair, rational, and
systematic visa policy that will benefit Indians on student and work visas, particularly

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those in the IT industry.Furthermore, a focus on technology and innovation would
benefit the Indian industry and aid in the growth of entrepreneurship.

As responsible partners, the new Presidency has indicated a desire to strengthen

defence ties and capabilities, improve health systems and pandemic response, and
deepen cooperation in areas such as higher education, space exploration, humanitarian
relief, and so on. Furthermore, it is widely expected that Indo-US economic ties will
grow stronger and deeper into areas of business-to-business cooperation in strategic
areas, as well as research and development.

• Reform Measures

During the last few years, the government has implemented significant reform
measures in order to achieve all-inclusive socio-economic growth and raise India's
visibility in global rankings. Greater efforts are already being made to facilitate trade,
industry, and investment in order to achieve AatmaNirbhar Bharat which requires
foreign investment in areas such as defense production, energy infrastructure,
agriculture technology, and so on, where the United States can play a key role. The
establishment of a GIS-enabled land bank and the creation of a single-window
clearance system would provide avenues for increased business and investment
opportunities, as well as ensure seamless engagement of US investors in India's
booming economy.

5.2 CONCLUSION

Over the years, bilateral relations between India and the United States have risen
sharply, propelled by shared democratic values and growing convergence of interests
on bilateral, regional, and global issues. Bilateral trade and economic cooperation is a
multifaceted partnership that has expanded beyond the traditional arenas of military
and economics to include a knowledge partnership in high technology areas such as
space and cyber, healthcare, and others. Furthermore, people-to-people relations are
one of the most important pillars of this special partnership between India and the
United States. The Indian Diaspora in the United States (estimated at around 4 million

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people) has been the most significant contributor to the country's economic growth
and development, resulting in successful bilateral relations over the years.

America recently elected its 46th President, Mr. Joe Biden, and with his election as
the new President of the United States, India will see a revitalised bilateral economic
agenda with the US, facilitating economic growth, job creation, small business
promotion, and increased trade and investment exchanges, particularly in the
aftermath of the COVID-19 pandemic. The administration is expected to promote
post-pandemic economic stability, business collaboration based on shared democratic
values, and increased people-to-people ties, which have historically defined the
special India-US relationship.

Energy and the green economy, defence and manufacturing, particularly providing a
boost to small business linkages, as well as pharmaceuticals and healthcare, will be
key sectors to watch for increased trade and economic cooperation, all driven by India
and the US' new age businesses and disruptive innovation and technologies. In recent
months, India and the United States have expressed a desire to finalise a preliminary
limited trade package and have discussed the possibility of a Free Trade Agreement
(FTA). The India-US Free Trade Agreement (FTA) should cover all aspects of
bilateral trade, including goods and services trade, intellectual property rights (IPR),
and investments. The initial trade agreement should pave the way for a comprehensive
full-fledged FTA, resulting in a significant increase in bilateral trade and investment,
as well as progressive economic growth in both economies. Efforts should be made to
hold regular high-level discussions in order to finalise the details of a full-fledged
FTA covering trade in goods and services as well as investments.

Going forward, India and the United States should strive to gradually eliminate trade
and investment barriers in order to strengthen bilateral trade and economic
partnership. Both sides should work together to resolve outstanding issues such as the
restoration of the United States' Generalized System of Preferences (GSP), tariffs on
steel and aluminium, increased market access for a variety of product categories such
as agriculture, medical devices, dairy, information and communication technology
(ICT), and e-commerce, among others.

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India's large consumer base, improved infrastructure, highly skilled and semi-skilled
labour, increased Ease of Doing Business (EoDB), expanded digitization, greater
innovation, and more policy stability, among other factors, will significantly boost
business sentiments, enhancing the trade and investment course between the two
economies.

Looking at the pillars of politics, trade, and diaspora, it's easy to see why the US-India
partnership has so much potential. Regardless of the occasional turbulences in the
relationship, the areas of cooperation and commonalities cannot be ignored.

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 CHAPTER 6

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