IMPACT OF OBAMA’s VISIT ON

INDO-US TRADE RELATIONS

Prepared By- Ankur Srivastava

Nivedita kumari
Asis Nayak
Introduction
“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 mere
1.3% of US trade, there is substantial potential to increase bilateral trade, said
ASSOCHAM 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 India’s economic history, the US remained its leading
trading 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 global
integration.

.
Cont……
United States is India's second largest source of FDI (after Mauritius), accounting
for or 16% of total FDI flows to India from 1991 through July 2001. USA has
17.08% share in FDI inflows to India, While Mauritius is at top with 34.49%
and Japan comes 3rd 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 2009
representing an impressive 572% growth in a span of 19 years.

India’s merchandise exports to the U.S. grew by 45.1% from $ 13.56 billion during
the period Jan-Aug 2009 to $ 19.73 billion in the corresponding period in 2010.
US exports of merchandise to India also grew by 17.5%, from $ 10.82 billion
during the period Jan- Aug 2009 to $ 12.72 billion during the corresponding period
in 2010. Total India - Bilateral Merchandise Trade accounts for $ 32.45 billion. 
Cont…..
The steps taken by the Government of India in providing a boost to foreign
investment in India include, increase in foreign ownership limit, reduction of
regulatory charges, moving to unified licensing and spectrum policy, bringing about
comprehensive broad band policy and revamping of national telecom policy.

India's Telecommunication sector, already a major recipient of US investment, is

expected to continue to provide substantial opportunities to US investors. The
proportion of households moving towards richer and well to do category is going up
in India. There also exist huge untapped rural potential.

India's energy sector has been an important destination for US investment. Since,
the entry of Private sector participation in generation, distribution and transmission
in power sector, further liberalization . Considering the vast present and projected
demand supply gap, there is tremendous potential for economic cooperation
between the two countries in this area. Pharmaceuticals, biotechnology and
chemical Industries also provide great opportunities for closer cooperation.
US Export & Import From India
India Export & Import With US
Trade during the period Jan - Aug 2010
Major items of export from India to US

Select major items with their percentage shares, are

given 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%)
Trade during the period Jan - Aug 2010
Major items of export from US to India
Select major items with their percentage shares, are
given 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)
AGENDA of Obama’s Visit…
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 Obama’s stinging political setback in mid-term elections this week, as we
assess the importance of the US president’s visit to India that starts Saturday. It is an
important bilateral engagement, keenly watched in other Asian capitals for its
multilateral implications. 

The visit included the situation in Afganistan and Pakistan bilateral business ties and
the world economy.
President Obama was also expected to discuss the issue of a permanent seat in
the United Nations Security Council for India during this trip.

The transformation of the previously poor relationship between India and U.S. as the
"most significant triumphs of recent American foreign policy" and called for further
deepening of the relationship during Obama's visit.
Cont….
 To fight Unemployment by increasing business with Developing nations.
 The United States is seeking greater Indian cooperation on a number of
issues, ranging from trade to climate change
 It wants India to finalize details of a civilian nuclear cooperation accord
so that US companies can enter its potentially large nuclear power plant
market, which could be worth up to $10 billion for US firms such as
General Electric
 Washington is also keen to see India open up its retail sector, a big plumb
for Wal-Mart
 US 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 world
climate change discussion, and the United States is hoping for more
Indian support for new emission targets at the next United Nations
global warming meeting in Cancun in November
FDI Regulations……

The two countries have identified five areas for broader

cooperation: strategic issues, energy, climate change,
education and development, and trade and agriculture.

Expects 100% FDI in Multi-Brand Retail Industry

Expects increase from 27%-74% In Defence
Expects increase from FDI to 49% in Insurance