Since the then US President Bill Clinton’s visit to India in 1999–2000, India’s exports to the US increased six-fold to $ 52.4 billion in the fiscal year ended 31 March 2019, while India’s imports from the US increased 10-fold to $ 35.6 billion. Indian imports from the US grew faster than its exports to that country in 19 years, yet President Donald Trump is not happy.
If in 2018-19, India had a trade surplus of $ 16.85 billion with the US, it was because the goods that India exported fetched more money.
Trump has said before his first official visit that India has not done well with him. Naturally, his intention behind this is to exert pressure on India for agreements that would favour the US. He wants to introduce more and more American products into the Indian market while limiting the entry of Indian products and software engineers in the US.
When there was a deadlock on the trade of medical equipment, India made special arrangements to benefit the sale of American stents and knee implants. Import duties on expensive US motorcycles and food products were reduced. India raised import duties on American almonds and apples when the US increased the customs duty on Indian aluminium and steel.
India wants to enter into a Free Trade Agreement (FTA) with the US. It distanced itself from the Regional Comprehensive Economic Partnership (RCEP), a potentially large trading bloc of the Asia-Pacific region. Officials say American ambitions have increased further in the past few months. In response, India has raised its own demands.
“FTA with the US will be very beneficial for India as the US is the biggest market for domestic goods and services,” Federation of Indian Export Organisations’ director-general Ajay Sahai says, but one sees no progress on this front.
The union government gave permission for the import of animal products and the US demanded a lower import duty on these products. Trump did not stop there. Taking the considerate US policy of India for its weakness, his government raised similar demands for other American products. It began to raise issues that had been resolved already. Sensing the American intention to take advantage of the pressure, India decided to gear up in January. Prime Minister Narendra Modi himself cleared his stand inside the government.
Steel is what India must stress. “Steel exports to the US have continued to decline and it went down from $ 372 million in 2017-18 to $ 247 million last year. This is only 2.5% of our overall $ 9.74 billion steel export to the world,” Pawan Gupta, the Founder and CEO of online trade platform Connect2India says.
In the meantime, the US has surpassed China and become India’s top trading partner. According to the data of the commerce ministry, in 2018-19, the bilateral trade between the US and India stood at $ 87.95 billion. China was India’s top trading partner since 2013-14 until 2017-18. Before China, the UAE was the country’s largest trading nation.