IMPACT OF OBAMA’s VISIT ON INDO-US TRADE RELATIONS

8/8/2019 IMPACT OF OBAMAs VISIT ON INDO-US TRADE RELATIONS

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Prepared By- Ankur SrivastavaNivedita kumari

Asis Nayak


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Over the longer term of ten years, India and the US can become much more significant economic partners.

Considering that India, a country with a GDP of around $1 trillion, accounts for a mere1.3% of US trade, there is substantial potential to increase bilateral trade, saidASSOCHAM President, Dr. Swati Piramal.

The trade between the United States and India is relatively small, it has risen sharply over the years. In terms of India's major trading partner, USA continues to lead. However,India's share in US trade is 24th in US export and eighteenth in US imports.

Through most of Independent Indias economic history, the US remained its leadingtrading partner, a primary source of investment, the first resort for technology acquisition,and significant in funds and aid support. While the US seeks markets for its industry

products, India needs technology and expertise for faster development and globalintegration.

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United States is India's second largest source of FDI (after Mauritius), accountingfor or 16% of total FDI flows to India from 1991 through July 2001. USA has17.08% share in FDI inflows to India, While Mauritius is at top with 34.49%and Japan comes 3 rd with 7.33% share.

Trade and commerce form a crucial component of the rapidly expanding and multi-faceted relations between India and US. From modest $ 5.6 billions in 1990, the

bilateral trade in merchandise goods has increased to $ 37.64 billion in 2009representing an impressive 572% growth in a span of 19 years.

Indias merchandise exports to the U.S. grew by 45.1% from $ 13.56 billion duringthe period Jan-Aug 2009 to $ 19.73 billion in the corresponding period in 2010. USexports of merchandise to India also grew by 17.5%, from $ 10.82 billion duringthe period Jan- Aug 2009 to $ 12.72 billion during the corresponding period in2010. Total India - Bilateral Merchandise Trade accounts for $ 32.45 billion.


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Th e steps taken by t h e Government of India in providing a boost to foreigninvestment in India include, increase in foreign owners h ip limit, reduction of regulatory c h arges, moving to unified licensing and spectrum policy, bringingabout compre h ensive broad band policy and revamping of national telecompolicy.

India's Telecommunication sector, already a major recipient of USinvestment, is expected to continue to provide substantial opportunities toUS investors. Th e proportion of h ouse h olds moving towards ric h er and wellto do category is going up in India. Th ere also exist h uge untapped ruralpotential.

India's energy sector h as been an important destination for US investment.Since, t h e entry of Private sector participation in generation, distribution andtransmission in power sector, furt h er liberalization . Considering t h e vastpresent and projected demand supply gap, t h ere is tremendous potential foreconomic cooperation between t h e two countries in t h is area.Ph armaceuticals, biotec h nology and c h emical Industries also provide greatopportunities for closer cooperation.


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Select major items with their percentage shares, aregiven below.

a) Textiles (19.6%) b) Precious stones & metals (22.4%)c) Mineral fuel, oils (9.4%)d) Pharmaceutical products (7.4%)e) Organic chemicals (6.3%)e) Electrical machinery (4.8%)f) Machinery (4.4%)g) Iron / steel products (4.4%)


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Select major items with their percentage shares, aregiven below-

a) Precious stones & metals (23.7%) b) Machinery (12.8%)c) Electrical machinery (7.2%)d) Aircraft, spacecraft (7.4%)e) Optical instruments & equipment (6.0%)f) Mineral fuel, Oil, etc. (5.8%)g) Fertilizers (5.1)


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An Elephant, even if emaciated, does not belong in a cattle shed, goes a Malayalam folk saying. So let us not make too big a deal of either the US current economic travails or President Obamas stinging political setback in mid-term elections this week, as weassess the importance of the US presidents visit to India that starts Saturday. It is animportant bilateral engagement, keenly watched in other Asian capitals for itsmultilateral implications.

Th e visit included t h e situation in Afganistan and Pakistan bilateral business ties andth e world economy.President Obama was also expected to discuss t h e issue of a permanent seat inth e United Nations Security Council for India during t h is trip.

Th e transformation of t h e previously poor relations h ip between India and U.S. as t h e"most significant triump h s of recent American foreign policy" and called for furt h erdeepening of t h e relations h ip during Obama's visit.


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To fight Unemployment by increasing business with Developingnations.The United States is seeking greater Indian cooperation on a numberof issues, ranging from trade to climate changeIt wants India to finalize details of a civilian nuclear cooperationaccord so that US companies can enter its potentially large nuclearpower plant market, which could be worth up to $10 billion for USfirms such as General ElectricWashington is also keen to see India open up its retail sector, a bigplumb for Wal-MartUS firms Lockheed Martin and Boeing are in the running for India's

planned $11 billion purchase of 126 new fighter jets.India is a major carbon emitter and an influential voice in the worldclimate change discussion, and the United States is hoping for moreIndian support for new emission targets at the next United Nationsglobal warming meeting in Cancun in November


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The two countries have identified five areas for broadercooperation: strategic issues, energy, climate change,education and development, and trade and agriculture.

Expects 100% FDI in Multi-Brand Retail IndustryExpects increase from 27%-74% In DefenceExpects increase from FDI to 49% in Insurance


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IMPACT OF OBAMA’s VISIT ON INDO-US TRADE RELATIONS