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ECONOMICS
Trade Relations U.S. & India; the
Changing Faces
Group 6
What is Trade Relation?
• The status given to a trading partner who is eligible to receive low tariffs and other
concessions in exchange for similar benefits. Also called permanent normal trade
relations.
• Trade is an important factor on which the international economic relations between two
countries depends.
• Normally there are two types of trades - bilateral trade and multilateral trade.
• Bilateral trade is the trade between two countries and multilateral trade is trade between
more than two countries.
Why do Countries Trade?
• Countries trade with each other when, on their own, they do not have the resources, or
capacity to satisfy their own needs and wants. By developing and exploiting their
domestic scarce resources, countries can produce a surplus, and trade this for the
resources they need.
• Today, international trade is at the heart of the global economy and is responsible for
much of the development and prosperity of the modern industrialised world.
• Goods and services are likely to be imported from abroad for several reasons. Imports
may be cheaper, or of better quality. They may also be more easily available or simply
more appealing than locally produced goods. In many instances, no local alternatives
exist, and importing is essential.
India’s International Economics Relations
• India has important and strong economic relations with many countries in the world.
• Traditionally India has maintained trade relations with various countries. After the
economic reforms of the early nineties, the Indian economy was opened up to further
bilateral trade relations with various countries and to Foreign Direct Investment (FDI).
• Import restrictions on many items were lifted which led to expansion of India's economic
relations with other nations.
Some Countries with which India has Strong
Economic Relations
• United States of America
• United Kingdom
• Japan
• China
• Germany
• Canada
• Switzerland
• Italy
India’s Trade Relation with U.S.
• India–United States relations (or Indo-American relations) refers to the international relations that
exist between the Republic of India and the United States of America.
• India-U.S. bilateral relations have developed into a "global strategic partnership", based on shared
democratic values and increasing convergence of interests on bilateral, regional and global issues.
• Regular exchange of high level political visits has provided sustained momentum to bilateral
cooperation, while the wide-ranging and ever-expanding dialogue architecture has established a
long-term framework for India-U.S. engagement.
• A unique feature of this relation is that U.S. is the world's oldest democracy, while India is the
world's largest democracy.
• The value of merchandise trade between India and the United States has picked up dramatically
• Over the last 20 years. In 1986, according to U.S. trade statistics, the total value of bilateral trade
with India was $4.0 billion. By 2006, the total value of bilateral trade had risen to $31.9 billion —
nearly an eight-fold increase.
History of Indo-U.S. Relation
• The relationships between India in the days of the British Raj and the US were thin;
Americans learned more about India from English writer.
• Swami Vivekananda promoted Yoga and Vedanta in America at the World's Parliament of
Religions in Chicago, during the World's Fair in 1893.
• In the 1930s and early 1940s the United States gave very strong support to the Indian
independence movement in defiance of the British Empire.
• Mahatma Gandhi had an important influence on the philosophy of non-violence promoted
by Martin Luther King, Jr., this leads attention of American public and U.S. Congress.
• There were American consulates in Calcutta and Bombay, they existed primarily for trade
purposes, and all official American relations with India were conducted during world
war-II.
India Trade with U.S.
• The graph shows that both
India’s exports to and imports
from the United States were
relatively low in value and
subject to fluctuations from
1958 to about 20 years ago.
• However, since the mid-
1980s, U.S. imports from
India have steadily increased
in value while India’s exports
to the United States have shot
up dramatically.
U.S. Trade with India
• In value terms, U.S.
exports to India and
India’s exports to the
United States are
comparatively low in
value and flat until the
mid-1980s.
• After a significant
increase in the 1980s,
U.S. imports from India
rise rapidly starting in
the early 1990s. U.S.
exports to India also
pick up in value starting
in the early 1990s, but
not at the same pace as
imports from India.
Indo-American Trades
• India ranks 24th among the trade partners of the U.S. in terms of exports, 18th in terms of imports.
• U.S. goods and services trade with India totaled an estimated $109.0 billion in 2015. Exports were
$39.6 billion; imports were $69.5 billion. The U.S. goods and services trade deficit with India was
$29.9 billion in 2015.
• India is currently our 9th largest goods trading partner with $67.7 billion in total (two way) goods
trade during 2016. Goods exports totaled $21.7 billion; goods imports totaled $46.0 billion. The
U.S. goods trade deficit with India was $24.3 billion in 2016.
• Trade in services with India totaled an estimated $42.8 billion in 2015 (latest data available).
Services exports totaled $18.1 billion; services imports totaled $24.7 billion. The U.S. services
trade deficit with India was $6.6 billion in 2015.
• According to the Department of Commerce, U.S. exports of Goods and Services to India
supported an estimated 197 thousand jobs in 2015.
Current Trade Situation
• India has recently agreed to lower tariffs for pharmaceutical products from the United
States.
• India has recently eliminated tariffs for soft drinks from the United States.
• Current Indian law allows for up to 51 percent of its retail sector to have support from
foreign investors.
• United States and India have recently agreed to establish exchange programs between
small businesses in each country.
• Trade in food and other agricultural products has increased between the United States and
India.
• India's percentage share in U.S. imports has remained more or less stable over the last few
years.
India’s main Export to U.S.
• Precious stones
• Metals (worked diamonds & gold jewellery)
• Woven apparel
• Knit apparel
• miscellaneous textile article
• Fish and seafood (frozen shrimp)
• Textile floor coverings
• Iron/steel products
• Organic chemicals
• Machinery (taps, valves, transmission shafts, gears, pistons, etc.)
India’s main Import form U.S.
• Sophisticated machinery (computers and components, gas turbines, telecom, etc.)
• Electrical machinery (recording/sound media)
• Medical and surgical equipment/instruments
• Aircraft, spacecraft (small aircraft)
• Precious stones
• Metals (diamonds, not mounted or set)
• Organic chemicals
• Plastic
• Cotton and cotton waste
• Wood pulp, etc.
Investment by U.S.
• On investment front, USA covers almost every sector in India, which is open for private
participants.
• Both government-to-government level and business-to-business level conduct regular
interactions with each other to promote and strengthen the trade and economic
interactions between the two countries.
• The US investor community is today increasingly sharing confidence in the future of the
Indian economy.
• Several areas like infrastructure, IT, Telecom sector, energy and other knowledge
industries such as pharmaceuticals and biotechnology, possess immense potential for
progressing economic cooperation between India and the US.
• A very important aspect of US India economic relations comes with the emergence of
Business Process Outsourcing, where in many US companies are reaping the advantages
offered by India's IT sector.
• India offers a large pool of trained, English speaking personnel, which offers huge cost
benefits to the US MNCs.
Details of Investment by U.S.
• U.S. investments in India are about half the size of its investments in China, less than a
quarter of the size of U.S. investments in Hong Kong, and nearly a sixth the size of U.S.
investments in Singapore.
• Overall, India ranked 31st in 2005 for locations for overseas U.S. direct investments.
• According to India, the United States had $4.913 billion in investments in India as of
December 2005, making the United States the second biggest investor in India and
representing 16.1% of all foreign direct investment in India.
• If the United States views India as a growing, but comparatively minor market for its
overseas investments, the United States is an important source of foreign direct
investment for India.
Growth of U.S. Development in India
• After steady, modest growth
during the 1990s, U.S.
investments in India rose
dramatically between 2001 and
2005, according to official U.S.
data.
• Between 1990 and 2000, U.S.
investments in India rose from
$372 million to $2.4 billion —
an increase of over $2 billion
over 10 years.
• Over the next five years, U.S.
FDI in India increased by over
$6 billion to $8.5 billion.
• Over the 15 year period, the
total value of U.S. FDI in India
increased 22-fold.
Investment of U.S. in Indian
Companies
Investment of India in American
Companies
Wipro Ford
HDFC Bank General Motors
ICICI Bank Microsoft
Tata Motors Intel
Infosys Technologies Oracle
MakeMy Trip Ltd. Johnson & Johnson
Rediff.com Gillette
MTNL Texas
Dr. Reddy’s Lab Whirlpool
Videocon d2h Xerox Modicorp
Vedanta (Metal & Mining Industry) Discovery
An Example
• Meanwhile, Indian companies have in recent years been buying up overseas firms.
• Indian company actively involved in overseas FDI is the Tata Group.
• In 2000, the Tata Group bought Britain’s Tetley Tea brand.
• In June 2006, a Tata subsidiary purchased Eight O’Clock Coffee for $220 million, which
has a majority share in the U.S. branded whole bean coffee market.
• Then, in January 2007, Tata Steel took over Corus, a European steel company, for over
$11 billion.
• According to an IMF report, India’s overseas acquisitions for the first nine months of
2006 totalled over $7.2 billion.
Obstacles that have an adverse effect on the
Indo-U.S. Trade Relations
• High tariff rates on imports.
• High surcharges and taxes on a variety of imports.
• Non-tariff barriers on US exports to India.
• Managing the U.S.-India-China trilateral relationship.
Indo- U.S. Trade Barriers
• Bureau of Export Administration (BXA) in the US Department of Commerce imposed
restrictions on exports to four Indian organizations:
• Bharat Electronics Ltd
• Bhaba Atomic Research Center (BARC)
• Indira Gandhi Center for Atomic Research
• Indian Rare Earths Ltd
Agriculture Goods
• In India and the United States, there is interest in improving market access to each other’s markets in
anticipation of greater trade in agricultural goods. In 2006, the United States exported over $300 million
in agricultural goods (including over $42 million in prepared foods) to India, and imported $1.3 billion in
agricultural goods from India.
• U.S. exports of live animals and animal products are hindered by Indian import restrictions and cultural
norms. Cattle and beef imports are subject to import controls because of the risk of “mad cow” and “hoof
in mouth” disease, as well as the Hindi and Buddhist prohibitions of eating beef and Muslim prohibitions
of eating pork.
• Similarly, on March 14, 2007, India stopped the import of poultry, poultry products, pigs, and pork
products from countries infected with avian influenza to protect the public health.114 Other U.S. products
— such as coffee, tea and most grains115 — are effectively kept out of India by tariff rates as high as
100%.
• A July 2007 Indian government reported determined that U.S. wheat was unfit to be imported into India
due to the presence of pervasive weeds.
• In 2007, United States requested WTO to charge India for the imposed tariff rate as “additional duty” and
“extra additional duty” of wine and distilled spirits to increase from 150% to 550%. While India has
committed to the WTO to bind its tariff on wine and spirits to no more than 150%.
Agriculture Trade Details
Clothing and Textiles Good
• Trade in clothing and textiles is a major issue in U.S. relations with India for two key
reasons.
• clothing and textiles are among the top five India exports to the United States.
• Following the termination of the WTO’s Agreement on Textiles and Clothing (ATC) on
January 1, 2005, most experts predicted that the global manufacturing of clothing and
textiles would restructure, and that China and India would emerge as major production
sites.
• By implication, it was expected that U.S. clothing and textile imports from India (and
China) would jump beginning in 2005, as production shifted from other nations to India
(and China). As a result, the termination of the ATC cause a spike in the U.S. bilateral
trade deficit with India.
• Clothing imports, which had been increasing by about 10% per year for the previous three
years, rose by over 30%, or more than $1 billion, in 2005, and then returned to the
previous growth rate.
• By contrast, textile imports from India did not spike in either 2005 or 2006, but grew at a
rate similar to the previous three years.
Clothing and Textiles Trade Details
The U.S. trade data
on textile and
clothing imports from
India appear to
support the
predictions for
clothing, but not
textiles.
Jewellery
• India is a leading exporter of jewellery, especially diamonds and diamond jewellery, to the
world and to the United States.
• In 2006, the United States imported $5.9 billion worth of jewellery from India, or 25.5%
of all imports from India. Of this, $3.3 billion (55.5%) were diamonds and diamond
jewellery and another $2.4 billion (41.0%) was precious metal jewellery.
• The depletion of many of India’s diamond mines has pushed its industry to source its
diamonds from overseas. In 2005, India imported nearly $10.6 billion worth of diamonds.
This has raised concerns about the possible import of so-called “conflict diamonds.”
• In January 2003, India, the United States, and 53 other countries endorsed a UN initiative
called the Kimberley Certification Process that certifies that the diamonds do not come
from Angola, Liberia, Sierra Leone, and Congo.
Oil
• The rapid growth in India’s economy has also meant a rapid increase in its demand for oil.
Although India has proven oil reserves, production is nearly at capacity, while demand
continues to rise.
• According to the U.S. Department of Energy’s Energy Information Agency (EIA), India
produced an average of 846,000 barrels per day (bbl/day) of “total oil liquids” in 2006,
and used an average of 2.63 million bbl/d of oil, resulting in a shortage of nearly 1.8
million bbl/d.
• In order to fill its oil gap, India national oil companies have been actively seeking
overseas sources of crude oil, involving the acquisition of equity in some cases.
According to EIA, the most active Indian oil company overseas is ONGC Videsh Ltd.,
which holds interests in 25 oil and natural gas projects in 15 different countries in Africa,
Asia, the Americas, and the Middle East.
IT Sector
• At present, most of the focus of Indo-U.S. service trade is in the information technology
(IT) sector. Over the last few years, U.S. companies have been outsourcing many aspects
of their IT work to India and other nations.
• According to one study, U.S. banks increased the share of their IT work overseas from 6%
to 30% by 2010, representing a transfer of over $10 billion of IT services.
• Another study projected that U.S. IT outsourcing would increase at a compound annual
growth rate of 5.9% over the next five years, reaching a total value of $17.7 billion in
2011.160 This later study indicated that an impending shortage of IT skills among
government employees will be one of the key stimuli of the outsourcing.
Financial Sector
• U.S. companies are not limiting their activities in India to IT; they are also utilizing India
to provide a growing array of services related to the financial sector.
• On April 11, 2007, Citigroup announced the elimination of 17,000 jobs — or nearly 5% of
its global workforce — and the relocation of 9,500 jobs to “low-cost” locations.
• However, in the same news story, sources close to Citigroup said that between 5,000 and
8,000 jobs would be moved to India in the near future.
• Most of these relocated jobs would involve equity research, investment banking, and back
office transaction-related services.
• Many U.S. companies are establishing tech centres in India to take advantage of the
greater availability and lower cost of Indian engineers. Plus, leading Indian IT companies;
such as Tata, Infosys, Wipro, Satyam, and HCL Technologies are developing their
international IT service capacity.
Different Faces of Indo-American Relation
• Post- Independence (1947- 1997)
• NDA Government (1998- 2004)
• UPA I and II Government (2004- 2014)
• Modi Government (Since 2014)
• Trump Government (Since 2015)
Post Independence (1947- 1997)
• Prominent leaders of India's freedom movement had friendly relations with the United
States of America which continued well after independence from Great Britain in 1947.
• After Indian independence and until the end of the Cold War, the relationship between the
US and India was cold and often thorny.
• The US was seen tilting more towards Pakistan and India, on the other hand, proclaimed
to remain non-aligned.
• However, the thorny relationship was not because of India joining the NAM (Non-
Aligned Movement), but due to its closeness to the Soviet Union despite being non-
aligned.
• However, it was not until the late 1990s that there was a significant effort by both
countries to improve relations with each other.
Significant Events that affects Indo-U.S. relation:
• In 1948, India had rejected American mediation in resolving the Kashmir dispute with
Pakistan that started immediately after Independence.
• Closeness of the US towards India's arch-rival Pakistan during the War, with Pakistan
joining the US-led Western Bloc in 1954.
• The US stood by India during the 1962 India-China war, which the South Asian nation
eventually lost.
• The Nixon administration's support for Pakistan during the Indo-Pakistani War of 1971
affected relations till the dissolution of the Soviet Union in 1991. In the 1990s, Indian
foreign policy adapted to the unipolar world and developed closer ties with the United
States.
• After the return of Indira Gandhi to power in 1980, the relations between the two countries
continued to improve gradually, despite India not supporting the United States' role in the
Soviet invasion and occupation of Afghanistan.
Trade Relation
• In the first dozen years of Indian independence (1947–1959), the US provided $1.7 billion
in gifts, including $931 million in food.
• In 1961, the US pledged $1.0 billion in development loans, in addition to $1.3 billion of
free food.
• In 1984 Washington approved the supply of selected technology to India including gas
turbines for naval frigates and engines for prototypes for India’s light combat aircraft.
• There were also unpublicized transfers of technology, including the engagement of a US
company, Continental Electronics, to design and build a new VLF communications station
at Tirunelveli in Tamil Nadu, which was commissioned in the late 1980s.
Details of Trade During Post
Independence
In Year
(1995)
Goods
Trade
Services
Trade
Goods & Services
Trade
Total 9 2.2 11.2
Exports 3.3 1.3 4.6
Imports 5.7 0.9 6.6
Balance -2.4 - -2
Source: https://ustr.gov/countries-regions/south-central-asia/india
Trade in billions of dollars (U.S. Trade with India)
NDA Government (1998- 2004)
• Under the prime minister ship of PV Narasimha Rao, India unleashed sweeping economic
reforms with Finance Minister Manmohan Singh in driver's seat.
• The reforms also helped strengthen the economic cooperation with the US and the rest of the
world. Till 1998, both the countries made mutual efforts to improve bilateral relationship.
• President Clinton made a visit to India in March, 2000. The visit saw many agreements being
signed, including on the establishment of an Indo-US Science & Technology Forum.
• September 11, 2001 attacks in the US and December 13 terror strike on the Indian Parliament
in the same year, the two countries decided to collaborate closely in the global war against
terror.
• After the September 11 attacks against the US in 2001, President George W. Bush
collaborated closely with India in controlling and policing the strategically critical Indian
Ocean sea lanes from the Suez Canal to Singapore.
Details of Trade During NDA
Government
In Year
(2000)
Goods
Trade
Services
Trade
Goods & Services
Trade
Total 14.4 4.7 19.1
Exports 3.7 2.8 6.5
Imports 10.7 1.9 12.6
Balance -7 - -6.1
Source: https://ustr.gov/countries-regions/south-central-asia/india
Trade in billions of dollars (U.S. Trade with India)
Source: https://ustr.gov/countries-regions/south-central-asia/india
Year
(2006)
Goods
Trade
Services
Trade
Goods & Services
Trade
Agricultural
Trade
Manufacturing
Trade
Total 31.5 13.6 45.1 1.4 29.1
Exports 9.7 6.5 16.2 0.4 8.5
Imports 21.8 7.1 28.9 1 20.6
Balance -12.2 - -12.7 -0.7 -12.1
Trade in billions of dollars (U.S. Trade with India)
UPA I and II Government (2004- 2014)
• During the tenure of the George W. Bush administration, relations between India and the United
States were seen to have blossomed, primarily over common concerns regarding growing
Islamic extremism, energy security, and climate change.
• After the December 2004 tsunami, the US and Indian navies cooperated in search and rescue
operations and in the reconstruction of affected areas.
• After Hurricane Katrina, India donated $5 million to the American Red Cross and sent two
planeloads of relief supplies and materials to help.Then, on 1 March 2006, President Bush
made another diplomatic visit to further expand relations between India and the US.
• The influence of a large Indian-American community is reflected in the largest country-specific
caucus in the United States Congress, while between 2009-2010 more than 100,000 Indian
students have attended American colleges and universities.
• In November 2010, President Barack Obama visited India and addressed a joint session of the
Indian Parliament.
Trade Relation
• An Open Skies Agreement was signed in April 2005, enhancing trade, tourism, and
business via the increased number of flights, and Air India purchased 68 US Boeing
aircraft at a cost of $8 billion.
• In March 2009, the Obama Administration cleared the US$2.1 billion sale of eight P-8
Poseidon to India.
• This deal, and the $5 billion agreement to provide Boeing C-17 military transport aircraft
and General Electric F414 engines announced during Obama's November 2010 visit,
makes the US one of the top three military suppliers to India (after Israel and Russia)
Re-engaged the US-India Strategic Dialogue.
• In June 2010, the United States and India formally re-engaged the US-India Strategic
Dialogue.
• It outlined extensive bilateral initiatives in each of key areas:
Advancing global security and countering
terrorism
Disarmament and non-proliferation,
Trade and economic relations, High technology,
Energy security, Clean energy, and Climate
change,
Agriculture, Education, Health
Science and technology Development
Details of Trade During UPA
I and II Government
Source: https://ustr.gov/countries-regions/south-central-asia/india
Year
(2012)
Goods
Trade
Services
Trade
Goods & Services
Trade
Agricultural
Trade
Manufacturing
Trade
Total 62.6 31.1 93.7 6.2 57.3
Exports 22.1 12.3 34.4 0.9 19
Imports 40.5 18.8 59.3 5.4 38.4
Balance -18.4 - -24.9 -4.5 -19.4
Trade in billions of dollars (U.S. Trade with India)
Source: https://ustr.gov/countries-regions/south-central-asia/india
Year
(2013)
Goods
Trade
Services
Trade
Goods & Services
Trade
Agricultural
Trade
Manufacturing
Trade
Total 63.6 33.7 97.3 4.4 58.8
Exports 21.8 13.3 35.1 0.9 19.5
Imports 41.8 20.4 62.2 3.5 39.4
Balance -20 - -27.1 -2.6 -19.9
Trade in billions of dollars (U.S. Trade with India)
Modi Government (Since 2014)
• The new government in New Delhi (Modi Government) provides the US and India the
chance to press the reset button and turn “areas of contention into areas of collaboration”.
• In 2015 alone inward FDI increased 26 percent, suggesting that Prime Minister Modi’s
bold initiatives, like “Make in India,” have caught the eye of global companies.
• President Barack Obama and Indian Prime Minister Narendra Modi shared a connection
and invested tremendous amounts of time and political capital to improve the bilateral
relationship.
• During his visit to the US, Modi not only delivered on the above expectations and
promises but also took them forward in a smooth way.
• One of the compelling factors that drove Modi’s visit to the US was the intention to get
the economy on a resurgent path by wooing investors.
• According to reports, the US has overtaken Russia as the largest arms supplier to India in
the last three years. The US stands first, followed by Russia, France and Israel
• The United States named India a “major defense partner” and Prime Minister Modi
welcomed a strong American presence in the Indo-Pacific region.
Trade Details
• Following are the agreement that are signed between two nations during Modi’s visit:
• Arrangement between the Multi-Agency Centre/Intelligence Bureau of the Government of India and the
Terrorist Screening Center of the Government of the United States of America for the exchange of Terrorist
Screening Information.
• Memorandum of Understanding (MoU) between the Government of India and the Government of the
United States of America to enhance cooperation on Energy Security, Clean Energy and Climate Change.
• Memorandum of Understanding (MoU) between Government of India and Government of the United States
of America to enhance co-operation on Wildlife Conservation and Combating Wildlife Trafficking.
• Memorandum of Understanding (MoU) between Consular, Passport and Visa Division of the Ministry of
External Affairs, Government of India and US Customs and Border Protection, Department of Homeland
Security of the United States for the Development of an International Expedited Traveler Initiative (the
Global Entry Programme).
• Technical Arrangement between the Indian Navy and the United States Navy concerning Unclassified
Maritime Information Sharing.
• Memorandum of Understanding (MoU) between the Ministry of Petroleum and Natural Gas, Government of
India and the Department of Energy of the United States of America for Cooperation in Gas Hydrates.
Details of Trade During Modi
Government
Source: https://ustr.gov/countries-regions/south-central-asia/india
Year
(2014)
Goods
Trade
Services
Trade
Goods & Services
Trade
Agricultural
Trade
Manufacturing
Trade
Total 66.9 37.5 104.4 4.2 61.4
Exports 21.5 15.2 36.7 1.1 18.9
Imports 45.4 22.4 67.7 3.2 42.5
Balance -23.9 - -31 -2.1 -23.6
Trade in billions of dollars (U.S. Trade with India)
Source: https://ustr.gov/countries-regions/south-central-asia/india
Year
(2015)
Goods
Trade
Services
Trade
Goods & Services
Trade
Agricultural
Trade
Manufacturing
Trade
Total 66.2 42.8 109 3.9 60.5
Exports 21.5 15.2 39.6 1.2 18.5
Imports 44.8 22.4 69.5 2.7 41.9
Balance -23.3 - -29.9 -1.5 -23.4
Trade in billions of dollars (U.S. Trade with India)
After Trump’s “Acche Din”
Can Trump Replicate the Obama- Modi
Partnership?
• President Barack Obama and Indian Prime Minister Narendra Modi shared a connection
and invested tremendous amounts of time and political capital to improve the bilateral
relationship. There is no reason that Trump and Modi can’t find similar success.
• Trump has called Modi a “great man” and has repeatedly expressed an interest in
working closely with India. He said that “there won’t be any relationship more important
to us” than the one with India.
• Donald Trump may well prefer maintaining friendship over principle, which could work
to Modi’s liking. There could be bumps along the road, however.
Trump’s Policy: Declaring American Economice
Independence
• U.S. withdrawal from the Trans-Pacific Partnership (TPP)
• Appoint tough trade negotiators
• Direct the Secretary of Commerce to identify violations of trade agreements, and use
American and international law to end any abuses
• Renegotiate, and possibly withdraw from, the North American Free Trade Agreement
(NAFTA)
• Impose tariffs and taxes on countries actively manipulating their currencies to take
advantage of the U.S., and label China a currency manipulator
• Instruct the U.S. Trade Representative to bring trade cases against China addressing
violations of the World Trade Organization (WTO) rules and restrictions
• Employ aggressive tariffs against countries promoting illegal activities, such as the theft
of U.S. trade secrets
Will Indo- U.S. Relation Suffer
• Trump criticized Asian economies like China, Japan, and Korea for cheating the U.S. through currency
manipulation or bad trade practices.
• India was one of the few countries that escaped his wrath. However, India will not escape the negative
impacts of the trade policies Trump proposed during the campaign.
• India’s positive goods trade balance will diminish if the U.S. erects trade walls.
• India is set to benefit from greater integration with the global economy, Trump’s actions could depress
already sluggish global trade and growth.
• After growing at a steady pace from 2000 to 2013, bilateral trade has been stagnant in recent years. That
might continue under President Trump.
• If Trump seeks to reduce temporary work visas. Trump criticized the U.S. H-1B non-immigrant
specialty worker visa program during the campaign, saying it “decimate[s]” American jobs.
• The Indian government has long sought more H-1B visas for its citizens, who are already the greatest
recipients of them.
• If President Trump keeps his promise to reduce H1-Bs, India would likely see fewer of its citizens
coming to work in the United States, putting its IT companies under greater pressure.
Conclusion
• Over a period of time Indo-U.S. relations were conditional; but ex-President Obama and
Prime Minister Modi led this relation to another stage. Now relation between India and
U.S. is much better than earlier and will continue to improve under the Trump-led
Government too as President Trump called India a “True Friend”.
• The challenge for the next administration, then, will be fostering continued cooperation
with the Indian Government without creating an unmanageable security dilemma between
the United States and India on the one hand and China on the other.
References
• https://en.wikipedia.org/wiki/India%E2%80%93United_States_relations
• https://ustr.gov/countries-regions/south-central-asia/india
• https://www.iaccindia.com/page.asp?pageid=38
• http://www.ipcs.org/issue-brief/us-south-asia/indo-us-relations-after-narendra-
modirsquos-visit-257.html
• http://asiasociety.org/blog/asia/three-challenges-us-india-relations-under-president-trump
• http://indianexpress.com/article/business/business-others/donald-trump-regime-may-alter-
indo-us-trade-relations-4367279/
Thank You

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Trade relations US & India; the changing faces

  • 1. ECONOMICS Trade Relations U.S. & India; the Changing Faces Group 6
  • 2. What is Trade Relation? • The status given to a trading partner who is eligible to receive low tariffs and other concessions in exchange for similar benefits. Also called permanent normal trade relations. • Trade is an important factor on which the international economic relations between two countries depends. • Normally there are two types of trades - bilateral trade and multilateral trade. • Bilateral trade is the trade between two countries and multilateral trade is trade between more than two countries.
  • 3. Why do Countries Trade? • Countries trade with each other when, on their own, they do not have the resources, or capacity to satisfy their own needs and wants. By developing and exploiting their domestic scarce resources, countries can produce a surplus, and trade this for the resources they need. • Today, international trade is at the heart of the global economy and is responsible for much of the development and prosperity of the modern industrialised world. • Goods and services are likely to be imported from abroad for several reasons. Imports may be cheaper, or of better quality. They may also be more easily available or simply more appealing than locally produced goods. In many instances, no local alternatives exist, and importing is essential.
  • 4. India’s International Economics Relations • India has important and strong economic relations with many countries in the world. • Traditionally India has maintained trade relations with various countries. After the economic reforms of the early nineties, the Indian economy was opened up to further bilateral trade relations with various countries and to Foreign Direct Investment (FDI). • Import restrictions on many items were lifted which led to expansion of India's economic relations with other nations.
  • 5. Some Countries with which India has Strong Economic Relations • United States of America • United Kingdom • Japan • China • Germany • Canada • Switzerland • Italy
  • 6. India’s Trade Relation with U.S. • India–United States relations (or Indo-American relations) refers to the international relations that exist between the Republic of India and the United States of America. • India-U.S. bilateral relations have developed into a "global strategic partnership", based on shared democratic values and increasing convergence of interests on bilateral, regional and global issues. • Regular exchange of high level political visits has provided sustained momentum to bilateral cooperation, while the wide-ranging and ever-expanding dialogue architecture has established a long-term framework for India-U.S. engagement. • A unique feature of this relation is that U.S. is the world's oldest democracy, while India is the world's largest democracy. • The value of merchandise trade between India and the United States has picked up dramatically • Over the last 20 years. In 1986, according to U.S. trade statistics, the total value of bilateral trade with India was $4.0 billion. By 2006, the total value of bilateral trade had risen to $31.9 billion — nearly an eight-fold increase.
  • 7. History of Indo-U.S. Relation • The relationships between India in the days of the British Raj and the US were thin; Americans learned more about India from English writer. • Swami Vivekananda promoted Yoga and Vedanta in America at the World's Parliament of Religions in Chicago, during the World's Fair in 1893. • In the 1930s and early 1940s the United States gave very strong support to the Indian independence movement in defiance of the British Empire. • Mahatma Gandhi had an important influence on the philosophy of non-violence promoted by Martin Luther King, Jr., this leads attention of American public and U.S. Congress. • There were American consulates in Calcutta and Bombay, they existed primarily for trade purposes, and all official American relations with India were conducted during world war-II.
  • 8. India Trade with U.S. • The graph shows that both India’s exports to and imports from the United States were relatively low in value and subject to fluctuations from 1958 to about 20 years ago. • However, since the mid- 1980s, U.S. imports from India have steadily increased in value while India’s exports to the United States have shot up dramatically.
  • 9. U.S. Trade with India • In value terms, U.S. exports to India and India’s exports to the United States are comparatively low in value and flat until the mid-1980s. • After a significant increase in the 1980s, U.S. imports from India rise rapidly starting in the early 1990s. U.S. exports to India also pick up in value starting in the early 1990s, but not at the same pace as imports from India.
  • 10. Indo-American Trades • India ranks 24th among the trade partners of the U.S. in terms of exports, 18th in terms of imports. • U.S. goods and services trade with India totaled an estimated $109.0 billion in 2015. Exports were $39.6 billion; imports were $69.5 billion. The U.S. goods and services trade deficit with India was $29.9 billion in 2015. • India is currently our 9th largest goods trading partner with $67.7 billion in total (two way) goods trade during 2016. Goods exports totaled $21.7 billion; goods imports totaled $46.0 billion. The U.S. goods trade deficit with India was $24.3 billion in 2016. • Trade in services with India totaled an estimated $42.8 billion in 2015 (latest data available). Services exports totaled $18.1 billion; services imports totaled $24.7 billion. The U.S. services trade deficit with India was $6.6 billion in 2015. • According to the Department of Commerce, U.S. exports of Goods and Services to India supported an estimated 197 thousand jobs in 2015.
  • 11. Current Trade Situation • India has recently agreed to lower tariffs for pharmaceutical products from the United States. • India has recently eliminated tariffs for soft drinks from the United States. • Current Indian law allows for up to 51 percent of its retail sector to have support from foreign investors. • United States and India have recently agreed to establish exchange programs between small businesses in each country. • Trade in food and other agricultural products has increased between the United States and India. • India's percentage share in U.S. imports has remained more or less stable over the last few years.
  • 12. India’s main Export to U.S. • Precious stones • Metals (worked diamonds & gold jewellery) • Woven apparel • Knit apparel • miscellaneous textile article • Fish and seafood (frozen shrimp) • Textile floor coverings • Iron/steel products • Organic chemicals • Machinery (taps, valves, transmission shafts, gears, pistons, etc.)
  • 13. India’s main Import form U.S. • Sophisticated machinery (computers and components, gas turbines, telecom, etc.) • Electrical machinery (recording/sound media) • Medical and surgical equipment/instruments • Aircraft, spacecraft (small aircraft) • Precious stones • Metals (diamonds, not mounted or set) • Organic chemicals • Plastic • Cotton and cotton waste • Wood pulp, etc.
  • 14. Investment by U.S. • On investment front, USA covers almost every sector in India, which is open for private participants. • Both government-to-government level and business-to-business level conduct regular interactions with each other to promote and strengthen the trade and economic interactions between the two countries. • The US investor community is today increasingly sharing confidence in the future of the Indian economy. • Several areas like infrastructure, IT, Telecom sector, energy and other knowledge industries such as pharmaceuticals and biotechnology, possess immense potential for progressing economic cooperation between India and the US. • A very important aspect of US India economic relations comes with the emergence of Business Process Outsourcing, where in many US companies are reaping the advantages offered by India's IT sector. • India offers a large pool of trained, English speaking personnel, which offers huge cost benefits to the US MNCs.
  • 15. Details of Investment by U.S. • U.S. investments in India are about half the size of its investments in China, less than a quarter of the size of U.S. investments in Hong Kong, and nearly a sixth the size of U.S. investments in Singapore. • Overall, India ranked 31st in 2005 for locations for overseas U.S. direct investments. • According to India, the United States had $4.913 billion in investments in India as of December 2005, making the United States the second biggest investor in India and representing 16.1% of all foreign direct investment in India. • If the United States views India as a growing, but comparatively minor market for its overseas investments, the United States is an important source of foreign direct investment for India.
  • 16. Growth of U.S. Development in India • After steady, modest growth during the 1990s, U.S. investments in India rose dramatically between 2001 and 2005, according to official U.S. data. • Between 1990 and 2000, U.S. investments in India rose from $372 million to $2.4 billion — an increase of over $2 billion over 10 years. • Over the next five years, U.S. FDI in India increased by over $6 billion to $8.5 billion. • Over the 15 year period, the total value of U.S. FDI in India increased 22-fold.
  • 17. Investment of U.S. in Indian Companies Investment of India in American Companies Wipro Ford HDFC Bank General Motors ICICI Bank Microsoft Tata Motors Intel Infosys Technologies Oracle MakeMy Trip Ltd. Johnson & Johnson Rediff.com Gillette MTNL Texas Dr. Reddy’s Lab Whirlpool Videocon d2h Xerox Modicorp Vedanta (Metal & Mining Industry) Discovery
  • 18. An Example • Meanwhile, Indian companies have in recent years been buying up overseas firms. • Indian company actively involved in overseas FDI is the Tata Group. • In 2000, the Tata Group bought Britain’s Tetley Tea brand. • In June 2006, a Tata subsidiary purchased Eight O’Clock Coffee for $220 million, which has a majority share in the U.S. branded whole bean coffee market. • Then, in January 2007, Tata Steel took over Corus, a European steel company, for over $11 billion. • According to an IMF report, India’s overseas acquisitions for the first nine months of 2006 totalled over $7.2 billion.
  • 19. Obstacles that have an adverse effect on the Indo-U.S. Trade Relations • High tariff rates on imports. • High surcharges and taxes on a variety of imports. • Non-tariff barriers on US exports to India. • Managing the U.S.-India-China trilateral relationship.
  • 20. Indo- U.S. Trade Barriers • Bureau of Export Administration (BXA) in the US Department of Commerce imposed restrictions on exports to four Indian organizations: • Bharat Electronics Ltd • Bhaba Atomic Research Center (BARC) • Indira Gandhi Center for Atomic Research • Indian Rare Earths Ltd
  • 21. Agriculture Goods • In India and the United States, there is interest in improving market access to each other’s markets in anticipation of greater trade in agricultural goods. In 2006, the United States exported over $300 million in agricultural goods (including over $42 million in prepared foods) to India, and imported $1.3 billion in agricultural goods from India. • U.S. exports of live animals and animal products are hindered by Indian import restrictions and cultural norms. Cattle and beef imports are subject to import controls because of the risk of “mad cow” and “hoof in mouth” disease, as well as the Hindi and Buddhist prohibitions of eating beef and Muslim prohibitions of eating pork. • Similarly, on March 14, 2007, India stopped the import of poultry, poultry products, pigs, and pork products from countries infected with avian influenza to protect the public health.114 Other U.S. products — such as coffee, tea and most grains115 — are effectively kept out of India by tariff rates as high as 100%. • A July 2007 Indian government reported determined that U.S. wheat was unfit to be imported into India due to the presence of pervasive weeds. • In 2007, United States requested WTO to charge India for the imposed tariff rate as “additional duty” and “extra additional duty” of wine and distilled spirits to increase from 150% to 550%. While India has committed to the WTO to bind its tariff on wine and spirits to no more than 150%.
  • 23. Clothing and Textiles Good • Trade in clothing and textiles is a major issue in U.S. relations with India for two key reasons. • clothing and textiles are among the top five India exports to the United States. • Following the termination of the WTO’s Agreement on Textiles and Clothing (ATC) on January 1, 2005, most experts predicted that the global manufacturing of clothing and textiles would restructure, and that China and India would emerge as major production sites. • By implication, it was expected that U.S. clothing and textile imports from India (and China) would jump beginning in 2005, as production shifted from other nations to India (and China). As a result, the termination of the ATC cause a spike in the U.S. bilateral trade deficit with India. • Clothing imports, which had been increasing by about 10% per year for the previous three years, rose by over 30%, or more than $1 billion, in 2005, and then returned to the previous growth rate. • By contrast, textile imports from India did not spike in either 2005 or 2006, but grew at a rate similar to the previous three years.
  • 24. Clothing and Textiles Trade Details The U.S. trade data on textile and clothing imports from India appear to support the predictions for clothing, but not textiles.
  • 25. Jewellery • India is a leading exporter of jewellery, especially diamonds and diamond jewellery, to the world and to the United States. • In 2006, the United States imported $5.9 billion worth of jewellery from India, or 25.5% of all imports from India. Of this, $3.3 billion (55.5%) were diamonds and diamond jewellery and another $2.4 billion (41.0%) was precious metal jewellery. • The depletion of many of India’s diamond mines has pushed its industry to source its diamonds from overseas. In 2005, India imported nearly $10.6 billion worth of diamonds. This has raised concerns about the possible import of so-called “conflict diamonds.” • In January 2003, India, the United States, and 53 other countries endorsed a UN initiative called the Kimberley Certification Process that certifies that the diamonds do not come from Angola, Liberia, Sierra Leone, and Congo.
  • 26. Oil • The rapid growth in India’s economy has also meant a rapid increase in its demand for oil. Although India has proven oil reserves, production is nearly at capacity, while demand continues to rise. • According to the U.S. Department of Energy’s Energy Information Agency (EIA), India produced an average of 846,000 barrels per day (bbl/day) of “total oil liquids” in 2006, and used an average of 2.63 million bbl/d of oil, resulting in a shortage of nearly 1.8 million bbl/d. • In order to fill its oil gap, India national oil companies have been actively seeking overseas sources of crude oil, involving the acquisition of equity in some cases. According to EIA, the most active Indian oil company overseas is ONGC Videsh Ltd., which holds interests in 25 oil and natural gas projects in 15 different countries in Africa, Asia, the Americas, and the Middle East.
  • 27. IT Sector • At present, most of the focus of Indo-U.S. service trade is in the information technology (IT) sector. Over the last few years, U.S. companies have been outsourcing many aspects of their IT work to India and other nations. • According to one study, U.S. banks increased the share of their IT work overseas from 6% to 30% by 2010, representing a transfer of over $10 billion of IT services. • Another study projected that U.S. IT outsourcing would increase at a compound annual growth rate of 5.9% over the next five years, reaching a total value of $17.7 billion in 2011.160 This later study indicated that an impending shortage of IT skills among government employees will be one of the key stimuli of the outsourcing.
  • 28. Financial Sector • U.S. companies are not limiting their activities in India to IT; they are also utilizing India to provide a growing array of services related to the financial sector. • On April 11, 2007, Citigroup announced the elimination of 17,000 jobs — or nearly 5% of its global workforce — and the relocation of 9,500 jobs to “low-cost” locations. • However, in the same news story, sources close to Citigroup said that between 5,000 and 8,000 jobs would be moved to India in the near future. • Most of these relocated jobs would involve equity research, investment banking, and back office transaction-related services. • Many U.S. companies are establishing tech centres in India to take advantage of the greater availability and lower cost of Indian engineers. Plus, leading Indian IT companies; such as Tata, Infosys, Wipro, Satyam, and HCL Technologies are developing their international IT service capacity.
  • 29. Different Faces of Indo-American Relation • Post- Independence (1947- 1997) • NDA Government (1998- 2004) • UPA I and II Government (2004- 2014) • Modi Government (Since 2014) • Trump Government (Since 2015)
  • 30. Post Independence (1947- 1997) • Prominent leaders of India's freedom movement had friendly relations with the United States of America which continued well after independence from Great Britain in 1947. • After Indian independence and until the end of the Cold War, the relationship between the US and India was cold and often thorny. • The US was seen tilting more towards Pakistan and India, on the other hand, proclaimed to remain non-aligned. • However, the thorny relationship was not because of India joining the NAM (Non- Aligned Movement), but due to its closeness to the Soviet Union despite being non- aligned. • However, it was not until the late 1990s that there was a significant effort by both countries to improve relations with each other.
  • 31. Significant Events that affects Indo-U.S. relation: • In 1948, India had rejected American mediation in resolving the Kashmir dispute with Pakistan that started immediately after Independence. • Closeness of the US towards India's arch-rival Pakistan during the War, with Pakistan joining the US-led Western Bloc in 1954. • The US stood by India during the 1962 India-China war, which the South Asian nation eventually lost. • The Nixon administration's support for Pakistan during the Indo-Pakistani War of 1971 affected relations till the dissolution of the Soviet Union in 1991. In the 1990s, Indian foreign policy adapted to the unipolar world and developed closer ties with the United States. • After the return of Indira Gandhi to power in 1980, the relations between the two countries continued to improve gradually, despite India not supporting the United States' role in the Soviet invasion and occupation of Afghanistan.
  • 32. Trade Relation • In the first dozen years of Indian independence (1947–1959), the US provided $1.7 billion in gifts, including $931 million in food. • In 1961, the US pledged $1.0 billion in development loans, in addition to $1.3 billion of free food. • In 1984 Washington approved the supply of selected technology to India including gas turbines for naval frigates and engines for prototypes for India’s light combat aircraft. • There were also unpublicized transfers of technology, including the engagement of a US company, Continental Electronics, to design and build a new VLF communications station at Tirunelveli in Tamil Nadu, which was commissioned in the late 1980s.
  • 33. Details of Trade During Post Independence In Year (1995) Goods Trade Services Trade Goods & Services Trade Total 9 2.2 11.2 Exports 3.3 1.3 4.6 Imports 5.7 0.9 6.6 Balance -2.4 - -2 Source: https://ustr.gov/countries-regions/south-central-asia/india Trade in billions of dollars (U.S. Trade with India)
  • 34. NDA Government (1998- 2004) • Under the prime minister ship of PV Narasimha Rao, India unleashed sweeping economic reforms with Finance Minister Manmohan Singh in driver's seat. • The reforms also helped strengthen the economic cooperation with the US and the rest of the world. Till 1998, both the countries made mutual efforts to improve bilateral relationship. • President Clinton made a visit to India in March, 2000. The visit saw many agreements being signed, including on the establishment of an Indo-US Science & Technology Forum. • September 11, 2001 attacks in the US and December 13 terror strike on the Indian Parliament in the same year, the two countries decided to collaborate closely in the global war against terror. • After the September 11 attacks against the US in 2001, President George W. Bush collaborated closely with India in controlling and policing the strategically critical Indian Ocean sea lanes from the Suez Canal to Singapore.
  • 35. Details of Trade During NDA Government In Year (2000) Goods Trade Services Trade Goods & Services Trade Total 14.4 4.7 19.1 Exports 3.7 2.8 6.5 Imports 10.7 1.9 12.6 Balance -7 - -6.1 Source: https://ustr.gov/countries-regions/south-central-asia/india Trade in billions of dollars (U.S. Trade with India)
  • 36. Source: https://ustr.gov/countries-regions/south-central-asia/india Year (2006) Goods Trade Services Trade Goods & Services Trade Agricultural Trade Manufacturing Trade Total 31.5 13.6 45.1 1.4 29.1 Exports 9.7 6.5 16.2 0.4 8.5 Imports 21.8 7.1 28.9 1 20.6 Balance -12.2 - -12.7 -0.7 -12.1 Trade in billions of dollars (U.S. Trade with India)
  • 37. UPA I and II Government (2004- 2014) • During the tenure of the George W. Bush administration, relations between India and the United States were seen to have blossomed, primarily over common concerns regarding growing Islamic extremism, energy security, and climate change. • After the December 2004 tsunami, the US and Indian navies cooperated in search and rescue operations and in the reconstruction of affected areas. • After Hurricane Katrina, India donated $5 million to the American Red Cross and sent two planeloads of relief supplies and materials to help.Then, on 1 March 2006, President Bush made another diplomatic visit to further expand relations between India and the US. • The influence of a large Indian-American community is reflected in the largest country-specific caucus in the United States Congress, while between 2009-2010 more than 100,000 Indian students have attended American colleges and universities. • In November 2010, President Barack Obama visited India and addressed a joint session of the Indian Parliament.
  • 38. Trade Relation • An Open Skies Agreement was signed in April 2005, enhancing trade, tourism, and business via the increased number of flights, and Air India purchased 68 US Boeing aircraft at a cost of $8 billion. • In March 2009, the Obama Administration cleared the US$2.1 billion sale of eight P-8 Poseidon to India. • This deal, and the $5 billion agreement to provide Boeing C-17 military transport aircraft and General Electric F414 engines announced during Obama's November 2010 visit, makes the US one of the top three military suppliers to India (after Israel and Russia)
  • 39. Re-engaged the US-India Strategic Dialogue. • In June 2010, the United States and India formally re-engaged the US-India Strategic Dialogue. • It outlined extensive bilateral initiatives in each of key areas: Advancing global security and countering terrorism Disarmament and non-proliferation, Trade and economic relations, High technology, Energy security, Clean energy, and Climate change, Agriculture, Education, Health Science and technology Development
  • 40. Details of Trade During UPA I and II Government Source: https://ustr.gov/countries-regions/south-central-asia/india Year (2012) Goods Trade Services Trade Goods & Services Trade Agricultural Trade Manufacturing Trade Total 62.6 31.1 93.7 6.2 57.3 Exports 22.1 12.3 34.4 0.9 19 Imports 40.5 18.8 59.3 5.4 38.4 Balance -18.4 - -24.9 -4.5 -19.4 Trade in billions of dollars (U.S. Trade with India)
  • 41. Source: https://ustr.gov/countries-regions/south-central-asia/india Year (2013) Goods Trade Services Trade Goods & Services Trade Agricultural Trade Manufacturing Trade Total 63.6 33.7 97.3 4.4 58.8 Exports 21.8 13.3 35.1 0.9 19.5 Imports 41.8 20.4 62.2 3.5 39.4 Balance -20 - -27.1 -2.6 -19.9 Trade in billions of dollars (U.S. Trade with India)
  • 42. Modi Government (Since 2014) • The new government in New Delhi (Modi Government) provides the US and India the chance to press the reset button and turn “areas of contention into areas of collaboration”. • In 2015 alone inward FDI increased 26 percent, suggesting that Prime Minister Modi’s bold initiatives, like “Make in India,” have caught the eye of global companies. • President Barack Obama and Indian Prime Minister Narendra Modi shared a connection and invested tremendous amounts of time and political capital to improve the bilateral relationship. • During his visit to the US, Modi not only delivered on the above expectations and promises but also took them forward in a smooth way. • One of the compelling factors that drove Modi’s visit to the US was the intention to get the economy on a resurgent path by wooing investors. • According to reports, the US has overtaken Russia as the largest arms supplier to India in the last three years. The US stands first, followed by Russia, France and Israel • The United States named India a “major defense partner” and Prime Minister Modi welcomed a strong American presence in the Indo-Pacific region.
  • 43. Trade Details • Following are the agreement that are signed between two nations during Modi’s visit: • Arrangement between the Multi-Agency Centre/Intelligence Bureau of the Government of India and the Terrorist Screening Center of the Government of the United States of America for the exchange of Terrorist Screening Information. • Memorandum of Understanding (MoU) between the Government of India and the Government of the United States of America to enhance cooperation on Energy Security, Clean Energy and Climate Change. • Memorandum of Understanding (MoU) between Government of India and Government of the United States of America to enhance co-operation on Wildlife Conservation and Combating Wildlife Trafficking. • Memorandum of Understanding (MoU) between Consular, Passport and Visa Division of the Ministry of External Affairs, Government of India and US Customs and Border Protection, Department of Homeland Security of the United States for the Development of an International Expedited Traveler Initiative (the Global Entry Programme). • Technical Arrangement between the Indian Navy and the United States Navy concerning Unclassified Maritime Information Sharing. • Memorandum of Understanding (MoU) between the Ministry of Petroleum and Natural Gas, Government of India and the Department of Energy of the United States of America for Cooperation in Gas Hydrates.
  • 44. Details of Trade During Modi Government Source: https://ustr.gov/countries-regions/south-central-asia/india Year (2014) Goods Trade Services Trade Goods & Services Trade Agricultural Trade Manufacturing Trade Total 66.9 37.5 104.4 4.2 61.4 Exports 21.5 15.2 36.7 1.1 18.9 Imports 45.4 22.4 67.7 3.2 42.5 Balance -23.9 - -31 -2.1 -23.6 Trade in billions of dollars (U.S. Trade with India)
  • 45. Source: https://ustr.gov/countries-regions/south-central-asia/india Year (2015) Goods Trade Services Trade Goods & Services Trade Agricultural Trade Manufacturing Trade Total 66.2 42.8 109 3.9 60.5 Exports 21.5 15.2 39.6 1.2 18.5 Imports 44.8 22.4 69.5 2.7 41.9 Balance -23.3 - -29.9 -1.5 -23.4 Trade in billions of dollars (U.S. Trade with India)
  • 47. Can Trump Replicate the Obama- Modi Partnership? • President Barack Obama and Indian Prime Minister Narendra Modi shared a connection and invested tremendous amounts of time and political capital to improve the bilateral relationship. There is no reason that Trump and Modi can’t find similar success. • Trump has called Modi a “great man” and has repeatedly expressed an interest in working closely with India. He said that “there won’t be any relationship more important to us” than the one with India. • Donald Trump may well prefer maintaining friendship over principle, which could work to Modi’s liking. There could be bumps along the road, however.
  • 48. Trump’s Policy: Declaring American Economice Independence • U.S. withdrawal from the Trans-Pacific Partnership (TPP) • Appoint tough trade negotiators • Direct the Secretary of Commerce to identify violations of trade agreements, and use American and international law to end any abuses • Renegotiate, and possibly withdraw from, the North American Free Trade Agreement (NAFTA) • Impose tariffs and taxes on countries actively manipulating their currencies to take advantage of the U.S., and label China a currency manipulator • Instruct the U.S. Trade Representative to bring trade cases against China addressing violations of the World Trade Organization (WTO) rules and restrictions • Employ aggressive tariffs against countries promoting illegal activities, such as the theft of U.S. trade secrets
  • 49. Will Indo- U.S. Relation Suffer • Trump criticized Asian economies like China, Japan, and Korea for cheating the U.S. through currency manipulation or bad trade practices. • India was one of the few countries that escaped his wrath. However, India will not escape the negative impacts of the trade policies Trump proposed during the campaign. • India’s positive goods trade balance will diminish if the U.S. erects trade walls. • India is set to benefit from greater integration with the global economy, Trump’s actions could depress already sluggish global trade and growth. • After growing at a steady pace from 2000 to 2013, bilateral trade has been stagnant in recent years. That might continue under President Trump. • If Trump seeks to reduce temporary work visas. Trump criticized the U.S. H-1B non-immigrant specialty worker visa program during the campaign, saying it “decimate[s]” American jobs. • The Indian government has long sought more H-1B visas for its citizens, who are already the greatest recipients of them. • If President Trump keeps his promise to reduce H1-Bs, India would likely see fewer of its citizens coming to work in the United States, putting its IT companies under greater pressure.
  • 50. Conclusion • Over a period of time Indo-U.S. relations were conditional; but ex-President Obama and Prime Minister Modi led this relation to another stage. Now relation between India and U.S. is much better than earlier and will continue to improve under the Trump-led Government too as President Trump called India a “True Friend”. • The challenge for the next administration, then, will be fostering continued cooperation with the Indian Government without creating an unmanageable security dilemma between the United States and India on the one hand and China on the other.
  • 51. References • https://en.wikipedia.org/wiki/India%E2%80%93United_States_relations • https://ustr.gov/countries-regions/south-central-asia/india • https://www.iaccindia.com/page.asp?pageid=38 • http://www.ipcs.org/issue-brief/us-south-asia/indo-us-relations-after-narendra- modirsquos-visit-257.html • http://asiasociety.org/blog/asia/three-challenges-us-india-relations-under-president-trump • http://indianexpress.com/article/business/business-others/donald-trump-regime-may-alter- indo-us-trade-relations-4367279/