US surpasses China as India's biggest trading partner

The US has surpassed China to become India's top trading partner. In FY 2018-19, the bilateral trade between the US and India stood at $87.95 billion while Chinese trade aggregated at $87.07 billion. In FY 2019-20 the trade with US was at 68 million for the period April-December, China only had 65 million during the same time period. This is according to new data published by the ministry of commerce. Pundits believe that this will be a common trend in the years to come, as discussions between New Delhi and Washington are focused on deepening relations. How the upcoming 2020 elections will affect these bilateral ties are as yet unpredictable.

               With the upcoming Trump visit, rumours of an FTA (Free Trade Agreement) to be finalised is spreading like wildfire. This will be extremely beneficial for India as the US is the biggest market for domestic goods and services. The Federation of Indian Export organisations Director General Ajay Sahai said "FTA with US will be very beneficial for India as the US is the biggest market for domestic goods and services,". According to him that India's exports as well as imports are increasing with the US, while with China both are declining. India has a huge trade deficit with China but trade with America is flush with surplus. In 2018-19, India had a deficit of $53.56 billion with China while America had a trade surplus of USD 16.85 billion.

               An FTA will include reduction in high tariffs set by India as well easier mobility for Indian professionals, both important issues for the economy. Lower tariffs have the potential to choke local sellers but at the same time, overall quality of any consumer product is likely to see improvement. The agriculture industry is likely to face heavy competition if the proposed talks follow through, as Indian farmers would be unable to compete with the scale of US exports. Export of Steel might see a major improvement giving new life to the declining steel trade.

               India wants cuts in visa fees, exemptions from high duties imposed by the US on 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, and a cut on import duties on some information and communication technology products.