This document summarizes trade relations between India and the United States. It discusses the growth in bilateral trade from $5.6 billion in 1990 to $21.68 billion in 2004. It outlines the major components of bilateral trade and discusses various trade agreements and barriers between the two countries, including the Generalized System of Preferences and restrictions on exports to India. It also provides recommendations to further strengthen trade relations.

1. A Presentation on Trade Relations Between India & The Trade Agreement & Various Trade Barriers. Presented To: Mr. Ashok Sharma Presented By Ramneek S Sandhey(46) Marketing & Sales Section E

2. Contents Introduction India – U.S. trade relations Bilateral and multinational trade relations World trade organization and other multilateral relations Bilateral merchandise trade Indo-U.S. trade in services Major component of the bilateral trade Direct investment Indo-us trade barriers Current trade situation Conclusion Recommendation

3. Research Methodology and Design: Exploratory Research: an initial research which analysis the data & explores the possibility of obtaining ideas & insight. A literature survey is used for this purpose and secondary sources i.e. available information/literature, magazines, internet websites, books are useful for findings and to develop new hypothesis. It is the most economical and quickest way to find possible hypothesis. Project rationale This report provides a summary of India’s key economic and trade issues between India and the United States. It analyses Indian and US markets and understands the area of International Business and various factors that influence the trade between them. It also talks about India’s foreign trade policies especially with the US with respect to the trade agreements and trade barriers. Project Limitations The project is based on the past trend and data of previous years The research is literature based Availability of recent information is missing The practical approach may vary from the stated

4. Introduction From modest $ 5.6 billions in 1990, the bilateral trade in merchandise goods has increased to $ 21.68 billion in 2004 representing an impressive growth in a span of 14 years. India’s merchandise exports to the U.S.A. grew at 19.28 % from US $ 13.05 billion in 2003 to US $ 15.57 billion in 2004. US merchandise exports to India increased from US $ 4.98 billion in 2003 to US $ 6.11 billion in 2004, an increase of 22.69%. US exports to India recorded a 22% plus growth for second consecutive year. 1

5. Economic and trade relations between the United States and India Number of ups and downs since India’s independence in 1947. During much of the 1950s, the United States was a leading trading partner for India 2

6. INDIA – U.S. TRADE RELATIONS 4 1993 1994 1995 1996 1997 1998 1999 2000 India’s Exports 4551 5320 5736 6169 7322 8237 9071 10686 India’s Imports 2761 2296 3296 3318 3608 3564 3688 3663 Turnover 7312 7598 9032 9487 10931 11801 12759 14349 Balance (+) 1790 3005 2440 2851 3715 4673 5383 7023

7. INDIA’S SHARE IN US TRADE In 1991,U.S identified India as one of the 10 major emerging markets. India-US bilateral trade also started to grow. US is the destination of one-fifth of India’s exports. India's percentage share in US imports has remained more or less stable over the last few years. 5

8. INDIA - USA TRADE COMPOSITION Increases in the exports of diamonds, textiles and ready-made garments, carpets, footwear and leather products, dyes, iron, edible fruit and nuts and spices, coffee and tea The chief items imported from the U.S. at present are machinery including project items, fertilizers, aircraft and aeronautical equipment, medical equipment, and organic chemicals.

9. BILATERAL AND MULTILATERAL TRADE RELATIONS Bilateral relationships : Civil Nuclear Cooperation U.S. Generalized System of Preferences U.S.-India Economic Dialogue Verified End User Program/Trusted Customer Program 6

10. Multilateral Relationships: WTO IMF WIPO Asian Development Bank But U S and India also oppose each other in: 1. Doha Round Negotiations 2. Proposed Regional Free Trade Agreements

11. Bilateral Merchandise Trade (2001 to 2005) (In US $ Millions) Source: U.S. Department of Commerce 8 Item Years 2001 2002 2003 2004 2005 India’s exports to US 9737 11818 13055 15572 12002 US exports to 3757 4101 4980 6109 5210 Total Bilateral Trade 13494 15919 18035 21681 17212

12. Major items export from India to U.S.

13. Major items of export from US to India

14. Insurance sector in India is opened up for up to 26% FDI, proposals to hike this limit to 49%. Emergence of Business Process Outsourcing. - American Express, Citicorp, Microsoft, Dell, Hewlett-Packard, HSBC, Standard Chartered and Convergys etc are taking advantage of the opportunities offered by India's IT Sector. Telecom industry- Amongst major US companies that have entered the Indian market are AT&T and Qualcomm.

15. India has also made progress in expanding their investment base in the United States of America. e.g. - Dr. Reddy's Laboratories and Ranbaxy have bought pharmaceutical manufacturing units in the US. According to some surveys conducted in the US, Indians living there contribute a lot to US economy and are among the most highly educated class in America.

16. INDO-US TRADE BARRIERS

17. US EXPORT RESTRICTIONS ON INDIAN COMPANIES 1.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

18. 2. Export licensing became stricter with the US imposition of sanctions in May 1998, after our nuclear tests. According to a BXA notification issued in June 1998: BXA will deny all export and re-export applications to India under the Export Administration Regulations (EAR). BXA will publish a list of Indian Government and Private entities involved in nuclear and missile activities.

19. 3.GENERALIZED SYSTEM OF PREFERENCES (GSP) Under the Generalized System of Preferences (GSP), Indian exports worth about US $ 1.1 billion enjoy duty free access or reduced duty access to the U.S. market. In 1992, the US removed GSP benefits for a large number of products from India, mainly agricultural chemicals and pharmaceuticals.

20. INDO –US CONTROVERSIES…..

21. 1. INTELLECTUAL PROPERTY RIGHTS In April 1991, India was designated as a Priority Country under Special 301 for alleged inadequate protection of intellectual property rights. After several rounds of consultations, differences between the two sides on the issues of Copyright, Trademarks and Access for Motion Pictures were largely resolved to have market access to US motion pictures. India agreed to move some amendments to its Copyright and Trademark laws take steps for better enforcement and substantially improve market access for U.S. motion pictures. In its April 1996 determination, the USTR (United States Trade Representative) indicated that USA would take up the case in the WTO against India. Due to failure in pharmaceutical and agricultural chemical products, as required under the TRIPS Agreement.

22. 2.ANTIDUMPING (AD) & EXCESSIVE CUSTOM DUTY(ECD) CASES AGAINST INDIAN PRODUCTS Rise in the number of AD/ECD cases against Indian companies. In1998, 3 AD & 1ECD cases were initiated against Indian products while 21 cases from other countries. preserved mushrooms stainless steel round wire elastic rubber tape

23. 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.

24. Steps taken up by India Enhancement in Indian technological capabilities. Ensure high quality packaging. Aggressive marketing of competitively priced products. Timely delivery and consistent maintenance of minimum and rising quality standards

25. India’s Trade Performance (in US $billion) Year Exports %change Imports %change 1990-91 18.1 9.25 23.5 10.59 1991-92 18.0 -0.55 19.6 -16.60 1992-93 18.5 2.78 21.9 11.73 1993-94 22.2 20.00 23.3 6.39 1994-95 26.3 18.47 28.7 23.18 1995-96 31.8 20.91 36.7 27.87 1996-97 33.5 5.35 39.2 6.81 1997-98 35.0 4.48 41.5 5.87 1998-99 33.2 -5.12 42.4 2.17 1999-00 36.8 10.84 49.8 17.45 2000-01 44.2 20.11 50.1 0.60 2001-02 44.0 -0.45 51.6 2.99 2002-03 52.7 19.09 61.4 18.99 2003-2004 63.5 20.49 77.0 25.42 2004-2005 80.0 25.98 106.0 37.66

26. Opportunities for US India's Telecommunication sector, expected to continue to provide substantial opportunities to US investors. Reduction of regulatory charges by Govt. of India Moving to licensing policy. Revamping of national telecom policy. India's energy sector - an important destination for US investment.

27. RECOMMENDATIONS India is required to further relax its trade and investment regimes. Stop piracy. India can look to join APEC (Asia Pacific Economic Co-operation).