When President Joe Biden was the vice president, he had set an ambitious goal of taking bilateral trade to USD 500 billion. “We are committed to achieving the ambitious goal of bilateral trade of USD 500 billion. I am optimistic that there is nothing we cannot achieve together, if we sit across the table and discuss,” India’s Ambassador to the US, Taranjit Singh Sandhu, told in a recent interview.
“We look forward to engaging with the new administration particularly on the trade and economic partnership. You should not forget that the India-US relationship has had a history of breakthroughs. It is in the inherent nature of this relationship,” Sandhu said.
Responding to a question on India-US bilateral trade, he said that it is well known that the bilateral economic partnership has been on an upward trajectory: USD 150 billion in bilateral trade; USD 46 billion US Investments in India; over 2,000 US companies in India, including every major Fortune 500 companies and over 200 Indian companies created about 125,000 jobs in the United States across all states.
“The private sector and businesses on both sides are excited about the limitless opportunities for expanding our trade and investment ties,” Sandhu said.
According to Richard M Rossow, Wadhwani Chair in US India Policy Studies at the Center for Strategic and International Studies (CSIS) think-tank, India-US bilateral trade took a hit this last year, primarily due to COVID-19 pandemic.
Goods trade dropped from USD 92 billion in 2019 to USD78 billion in 2020. Services trade was relatively stable at somewhere around USD50 billion, he said. Beyond the numbers, trade ties are languishing, he noted adding that individual firms are still finding opportunities.
“But that is in spite of our governments. Both governments have taken protectionist turns in recent years. I have no doubt that we will hit USD 500 billion in trade someday; our governments can help decide if it takes a decade or a century,” Rossow said.
“It will take enormous courage and political leadership to repair our trade relationship–especially as our respective economies and job markets reel from COVID effects. But we should start small- securing our “mini trade deal” and remove some of the more onerous frictions,” he said in response to a question.
“Expand discussions to look at cooperation in strategic-economic sectors like critical minerals, climate change, and emerging technologies. Then see where discussions can go. But at the moment, both sides lack a plan and lack leader-level attention,” Rossow said.
In a blog post, CSIS said that the Biden administration is less likely to be driven by populist impulses and may also open new avenues for trade cooperation, such as environmental goods and green technologies.
Expansion and predictability in temporary work visas like H-1B will be welcome news for the services trade, but the visa reform, the Biden administration promised will likely only benefit skilled workers, said the blog post authored by its research associate Kriti Upadhyaya.
Protectionist tendencies, she said, will endure in the near term, mostly owing to the pressures created by the COVID-19 pandemic. Already, the pandemic has set bilateral trade with India back. India slipped from being the United States’ ninth-largest trading partner to its eleventh largest, she said.
The US remained India’s top trading partner for the second consecutive fiscal in 2019-20, which shows increasing economic ties between the two countries.
According to the data of the commerce ministry in New Delhi, in 2019-20, the bilateral trade between the US and India stood at USD 88.75 billion as against USD 87.96 billion in 2018-19. The US is one of the few countries with which India has a trade surplus. The trade gap between the countries has increased to USD 17.42 billion in 2019-20 from USD 16.86 billion in 2018-19, the data showed.