Published: 20th Apr, 2023
Context
The United States (US) has emerged as India's biggest trading partner in 2022-23 on account of increasing economic ties between the two countries.
Key-highlights of the data
- According to the provisional data of the commerce ministry, the bilateral trade between India and the US has increased by 7.65 per cent to USD 128.55 in 2022-23 as against USD 119.5 billion in 2021-22. It was USD 80.51 billion in 2020-21.
- Trade between the two countries has skyrocketed since 2020, when the Covid pandemic led to major global economic disruptions. In 2020-21, India-US trade stood at $80.51 billion, which rose by over 37 percent to $128.55 billion in 2022-23.
- India's exports grew by 2.81 percent to reach $78.31 billion in 2022-23, while imports soared by nearly 16 percent to $50.24 billion in the same period. The trade surplus came to over $28 billion in the last fiscal.
- Netherlands emerged as the third largest goods buyer, displacing China to the fourth position in 2022-23.
- Bangladesh and Hong Kong remained in India’s top 10 export markets.
- Trade deficit widens with China: While China has been one of the top trading partners, India's deficit has widened over the years. Exports to China dipped by about 28 percent to $15.32 billion in 2022-23, while imports rose by 4.16 percent to $98.51 billion in the last fiscal.
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Previous trend China was India's top trading partner since 2013-14 till 2017-18 and also in 2020-21. Before China, the UAE was the country's largest trading partner. |
Why is it a good news for India?
- United States is one of the few countries with which India enjoys a trade surplus. This means India exports more than it imports from the United States.
- So, trading with the United States helps India improve its foreign exchange reserves.
What led to this development?
- The increasing exports of goods such as pharmaceutical, gems and jewellery were helping India to push its shipments to America.
- Furthermore, India is emerging as a trusted trading partner and global firms are reducing their dependence on China for their supplies and are diversifying business into other countries like India.
- India has joined a US-led initiative to set up an Indo-Pacific Economic Framework (IPEF) and this move would help boost economic ties further.
- The US has consistently been India’s largest market for services exports, but the recent overseas sales of merchandise goods to that country overtook China, making it the largest bilateral trading nation of India.
Government interventions:
The Government has taken the following measures to boost exports and reduce trade deficit:
- Foreign Trade Policy (2015-20) extended up to 31-03-2023.
- Interest Equalization Scheme on pre and post shipment rupee export credit has also been extended up to 31-03-2024.
- Assistance provided through several schemes to promote exports, namely, Trade Infrastructure for Export Scheme (TIES) and Market Access Initiatives (MAI) Scheme.
- Rebate of State and Central Levies and Taxes (RoSCTL) Scheme to promote labour oriented textile export has been implemented since 07.03.2019.
- Remission of Duties and Taxes on Exported Products (RoDTEP) scheme has been implemented since 01.01.2021.
- Common Digital Platform for Certificate of Origin has been launched to facilitate trade and increase Free Trade Agreement (FTA) utilization by exporters.
- Districts as Export Hubs has been launched by identifying products with export potential in each district, addressing bottlenecks for exporting these products and supporting local exporters/manufacturers to generate employment in the district.
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