Ahead Of Trump’s India Visit, U.S. Pips China To Become India’s Top Trading Partner
United States has surpassed China to become India’s top trading partner, data released by the commerce ministry a day ahead of U.S. President Donald Trump’s India visit showed.
According to the data, in 2018-19, India-U.S. bilateral trade stood at $ 87.95 billion as compared to India-China bilateral trade worth $87.07 billion. In April-December 2019-20, bilateral trade between the U.S. and India stood at $68 billion, as compared to $64.96 billion with China.
Trade experts believe that the trend will continue in the coming years, as New Delhi and Washington are engaged in further deepening of economic ties. An expert said that if the countries finalise a free trade agreement, then the bilateral trade would reach at different levels.
"FTA with U.S. will be very beneficial for India as the U.S. is the biggest market for domestic goods and services," Ajay Sahai, director general of Federation of Indian Export Organisations, said. India's exports as well as imports are increasing with the U.S., while with China both are declining, he added.
The U.S. is one of the few countries with which India has a trade surplus. On the other hand, India has a large trade deficit with China. In 2018-19, India had a trade surplus of $16.85 billion with the U.S. and trade deficit of $53.56 billion with China.
The commerce ministry data showed that China was India's top trading partner from 2013-14 to 2017-18. Before China, United Arab Emirates was the country's largest trading partner.
A top American business advocacy group has said that an India-U.S. FTA is key to resolving trade disputes between the countries as it will cover the biggest irritants, including tariffs and mobility of Indian professionals.
Rakesh Mohan Joshi, professor at Indian Institute of Foreign Trade, said India should be a bit cautious while negotiating a trade pact with the U.S. in sectors such as agriculture and food products, as the U.S. is the world's largest producer and exporter of certain commodities like maize and soybean.
"A trade deal between the U.S. and India would further increase the trade between the two countries easing tariff restriction and opening up of bigger market for products. India is a major exporter of steel, steel products and aluminium products with combined exports of $22.7 billion last year.
"Steel exports to the U.S. have continued to decline—it went down from $372 million in 2017-18 to $247 million last year. This is only 2.5 percent of our overall $9.74 billion steel export to the world," Pawan Gupta, founder and chief executive officer of online trade platform Connect2India, said.
Commenting on trade with China, Gupta said that despite the fall in volume, exports to the neighbour increased 25 percent last year to $16.7 billion while imports decreased by 8 percent to $70.3 billion last year. The major reduction in imports from India has been on electrical machinery, equipment and apparatus category, he said.
India is demanding cut in visa fees, exemption from high duties imposed by the U.S. on certain steel and aluminium products, and greater market access for its products from sectors such as agriculture, automobile, automobile components and engineering.
The U.S. wants from India greater market access for farm and manufacturing products, dairy items, medical devices, and data localisation, apart from cut on import duties on some information and communication technology products. The U.S. has also raised concerns over its high trade deficit with India.