New Delhi: The US has surpassed China to become India’s top trading partner, showing greater economic ties between the two countries.
According to the data of the commerce ministry, in 2018-19, the bilateral trade between the US and India stood at USD 87.95 billion.
During the period, India’s two-way commerce with China aggregated at USD 87.07 billion.
Similarly, during April-December 2019-20, the bilateral trade between the US and India stood at USD 68 billion. It stood at USD 64.96 billion with China in the same period.
Trade experts believe that the trend will continue in the coming years also as New Delhi and Washington are engaged in further deepening the economic ties.
An expert said that if the countries will finalise a free trade agreement (FTA), then the bilateral trade would reach at different levels.
“FTA with 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 said.
He said that India’s exports, as well as imports, are increasing with the US, while with China both are declining.
America is one of the few countries with which India has a trade surplus.
On the other hand, India has a huge trade deficit with China. In 2018-19, India has a trade surplus of USD 16.85 billion with America, while it has a deficit of USD 53.56 billion with the neighbouring country.
The data showed that China was India’s top trading partner since 2013-14 till 2017-18. Before China, UAE was the country’s largest trading nation.
A top American business advocacy group has said that a free trade agreement between India and the US is a key to resolving their trade disputes as it will cover biggest irritants in ties, including tariffs and mobility of Indian professionals.
Professor at Indian Institute of Foreign Trade (IIFT) Rakesh Mohan Joshi said that India should be a bit cautious while negotiating a trade pact with the US in areas, including agriculture and food products, as America is the world’s largest producer and exporter of certain commodities like maize and soybean.
A trade deal between the US 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 USD 22.7 billion last year.
“Steel exports to the US have continued to decline and it went down from USD 372 million in 2017-18 to USD 247 million last year. This is only 2.5 per cent of our overall USD 9.74 billion steel export to the world,” Pawan Gupta, the Founder and CEO of online trade platform Connect2India observed.
Commenting on trade with China, Gupta said despite the fall in volume exports to the Asian neighbour increased 25 per cent last year to USD 16.7 billion while imports decreased by around 8 per cent to USD 70.3 billion last year.
The major reduction in imports from India has been on electrical machinery, equipment and apparatus category, the CEO said.
India and the US were negotiating a limited trade pact, which now has a bleak chance to be signed during the two-day visit of US President Donald Trump, beginning February 24.
India is demanding a cut in visa fees, exemption from high duties imposed by the US on certain steel and aluminium products, and greater market access for its products from sectors such as agriculture, automobile, automobile components and engineering.
On the other hand, the US wants greater market access for its 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 US has also raised concerns over high trade deficit with India.