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Why in the news?

US President Trump visit has open the doors for more trade and bilateral relation between India and US

India-US trade relation:

The United States and India view one another as important strategic partners to advance common interests regionally and globally. Bilateral trade in goods and services is about3% of U.S. world trade.

The trading relationship is more consequential for India; in 2018, the United States was its second largest goods export market (16.0% share) after the European Union (EU, 17.8%), and third largest goods import supplier (6.3%) after China (14.6%) and the EU28 ( 10.2%). U.S.-India foreign direct investment (FDI) is small, but growing.

after the European Union and third largest goods import supplier after China and the EU28 ( U.S.-India foreign direct investment (FDI) is small, but growing. Defense sales also are significant in bilateral trade. Civilian nuclear commerce, stalled for years over differences on liability protections, has produced major potential U.S. supply contracts.

US trade deficit:

US foreign policy since Trump has become president one aspect has been added to it i.e. “trade deficit” means how much US is exporting and importing and difference in import and export and which country is more favored by the deal

Trade deficit of US with China $400 billion . China was enjoying heavy trade deficit with US now it is less than $350 million

. China was enjoying heavy trade deficit with US now it is less than India US together trade: $142.6 billion US goods and services trade with India in 2018

US goods and services trade with India in 2018 $25.2 billion US trade deficit with India in 2018

India export more to US and import less the trade deficit that is going against US is $25.2 billion

Breaking down the number in trades between both the countries:

Goods : $87.9 billion total (two-way) US-India goods trade in 2018; India is US’s ninth largest goods trading partner. US goods exports to India $33.5 billion; goods imports from India $54.3 billion (2018)

: total (two-way) US-India goods trade in 2018; India is US’s ninth largest goods trading partner. US goods exports to India $33.5 billion; goods imports from India $54.3 billion (2018) Services : $54.8 billion total US-India trade in services. US services exports $25.2 billion; services imports from India $29.6 billion (2018)

: total US-India trade in services. US services exports $25.2 billion; services imports from India (2018) If we compare this figure with china then the trade is too small, presently not China but Mexico is the biggest trading partner of US

Trading percent of US with Mexico is 15% with China and Canada is 14%, japan 5.3%, Germany 4.5% and India 2.3%

What U.S buys from India?

Precious metal and stone (diamonds) $11billion

Pharmaceuticals $6.3 billion

Machinery $3.3 billion

Mineral fuels $3.2billions

Vehicles $2.8 billion

India also purchases defence equipment from U.S

$3 billion defence deal has been signed between India and U.S during the visit of Trump to India to narrow down the trade deficit.

Major Indian companies in the U.S:

TATA

Infosys

Reddy’s

Piramal

Tech Mahindra

What is stopping India U.S trade from flourishing?

Both India and U.S are using very protectionist policies in their respective countries because both are suffering from trade deficits.

India’s overall trade deficit, including both goods and services, has increased to USD 103.63 billion in 2018-19 from USD 84.45 billion in the previous financial year.

More increase: Trade deficit of India with Korea, Japan, Germany, Iraq and Saudi Arabia increased to USD 12 billion, USD 7.9 billion, USD 6.25 billion, USD 20.38 billion and USD 22.9 billion, respectively, in 2018-19

Even with ASEAN India’s trade deficit is huge:

India had signed an FTA in goods with the regional bloc in 2009, known as the Asean-India Free Trade Agreement (AIFTA). In 2014, an FTA in services was also included.

India’s total trade deficit with ASEAN increased from $8 billion in 2009-10 to about $22 billion in 2018-19.

U.S global Tariff War:

India has been negotiating this trade deal since 2018, and the visit comes at the backdrop of India not signing the RCEP deal.

There have also been various sticking points in the two countries’ ties.

The US slapped additional tariffs 25% on aluminum and 10% on steel, since 2018, the US wants India to have stronger patent regulations, access for agriculture and dairy products, and Trump is also unhappy with India’s heavy duties on Harley-Davidson.

India trade with US and China-

Mains oriented question:

Write about the opportunities and challenges related to bilateral relation between US and China. (200 words)