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Last Published: 7/31/2019



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Bilateral U.S.-India trade expanded to $142.1 billion in goods and services in 2018 against a backdrop of Indian GDP growth of 7.1 percent and declining overall levels of global trade volumes.  The United States remained one of India’s largest trading partners, with exports of U.S. goods and services to India reaching $58.9 billion, and imports from India hitting $83.2 billion.  The United States also remained India’s top export market, while India was the 12th biggest export market for U.S. goods in 2018.  Despite gains in our bilateral trade, there exists enormous potential to further increase our trade.  India’s $24.2 billion trade surplus with the United States is its largest with any country.

India-sourced Foreign Direct Investment into the United States was valued at $13.1 billion in 2017, an increase of $1 billion from the previous year.  India-sourced FDI supported approximately 66,800 U.S. jobs in 2016.  India's direct investment in the United States is led by professional, scientific, and technology services, but also includes depository institutions, and manufacturing.  U.S.-sourced FDI into India was valued at $44.5 billion in 2017, but much U.S. investment enters the country from third country destinations.  U.S. companies directly employ approximately 1.3 million Indians and support an estimated six million jobs across the country.  U.S. companies are the largest foreign investors and employers in India.  Most major U.S. companies are active in the market, including fast growing U.S. franchisors that are responding to changing consumer tastes and an expanding consumer class, particularly in urban areas. 

India’s economy performed well in 2018, with GDP growing at over seven percent coupled with a stable rupee and steady, relatively low inflation.  India remains a difficult market for doing business, despite a 23-place jump in the World Bank’s 2019 Ease of Doing Business Index ranking 77th out of 190 countries surveyed.  The primary gains resulted from improvements in granting construction permits and trading across borders.  However, large trade irritants remain for U.S. industry in the healthcare, information and communication technology (ICT), aviation, agriculture, and financial services sectors.  Steel excess capacity and ongoing antidumping and countervailing duties (AD/CVD) cases also present challenges.

The United States designated India as a “Major Defense Partner” in June 2016, paving the way for greater trade and technology sharing on par with that of the United States’ closest allies and partners.  On July 30, 2018, the U.S. Department of Commerce announced that India would be moved to Tier 1 of the Department’s Strategic Trade Authorization (STA) license exception, expanding the scope of military exports that can be made available to India without individual licenses.

In May 2019, the Bharatiya Janata Party led by Narendra Modi won the world’s largest democratic election by a landslide.  Prime Minister Modi’s government once again enjoys an absolute majority in the lower house of Parliament.  In the beginning of his first term in 2014, Prime Minister (PM) Modi undertook the Make in India initiative, a campaign to attract international capital to the country’s struggling manufacturing sector and increase the share of manufacturing GDP.  He also made several moves to open the economy to foreign investment in civil aviation and e-commerce, and the Government of India (GOI) implemented a national Goods and Services Tax (GST) to replace the complex web of national and state-government taxes.  It appeared that the GOI was developing a more business-friendly stance to spur job creation and maintain its growth momentum.  However, in the run-up to the 2019 national elections,  some protectionist measures tarnished this image.

Bilateral tensions have increased over market access and tariff policies.  These include the United States’ 25 percent steel and ten percent aluminum tariffs under the national security-based “Section 232” law.  India supplied less than three percent of U.S. steel and aluminum in 2017.  On June 16, 2019, India imposed retaliatory tariffs of ten to 50 percent, targeting U.S. goods such as nuts, apples, and steel.  India is challenging the U.S. tariff increases in the World Trade Organization (WTO).  In response, in early July 2019, the United States requested dispute consultations at the WTO and argued that India was unfairly discriminating against U.S. imports vis-à-vis those from other WTO members.  Separately, after an internal review process and protracted negotiations with the Government of India that were unsuccessful in increasing market access, on June 5, 2019, the United States terminated India’s benefits under the Generalized System of Preferences (GSP).  GSP provides duty-free tariff treatment to certain imports from eligible developing countries to support their economic development.  India was GSP’s top beneficiary worldwide.  In 2018, GSP represented 11 percent ($6.3 billion) of U.S. merchandise imports from India, such as chemicals, auto parts, and tableware.  GSP removal reinstated U.S. tariffs, which range from one to seven percent on the top 15 GSP imports from India.   

Opportunities for U.S. companies to succeed in India, however, are still abundant, and the potential to increase bilateral trade is significant.  Indian conglomerates and high technology companies are generally equal in sophistication and prominence to their international counterparts.  Indian companies in certain industrial sectors, such as information technology, telecommunications, pharmaceuticals, textiles, and engineering are globally recognized for their innovation and competitiveness.  U.S. companies operating in India emphasize that success requires a long-term planning horizon and a state-by-state strategy to adapt to the complexity and diversity of India’s markets.

Prepared by our U.S. Embassies abroad. With its network of 108 offices across the United States and in more than 75 countries, the U.S. Commercial Service of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the U.S. Commercial Service trade specialist in the U.S. nearest you by visiting http://export.gov/usoffices.