India US Relations and its

Impact on Economy
Introduction
Since India’s independence, ties with the United States have weathered Cold War-era
distrust and estrangement over India’s nuclear program. Relations have warmed in
recent years and cooperation has strengthened across a range of economic and political
areas. Increase in bilateral trade & investment, co-operation on global security matters,
the inclusion of India in decision-making on matters of global governance, upgraded
representation in trade & investment forums (World Bank, IMF, APEC), admission into
multilateral export control regimes, and support for admission in the Nuclear Suppliers
Group and joint-manufacturing through technology sharing arrangements have become
key milestones and a measure of speed and advancement on the path to closer US–India
relations. Recently Prime Minister Narendra Modi visited the USA from 22-25th
September 2021.
Trade Relations
The US is India's second-largest trading Under the Trump Administration, bilateral tensions
partner, and India is its 9th largest increased over each side’s tariff policies. India
trading partner. imposed higher tariffs of 10% to 25%, affecting
In 2019-20, the bilateral trade between about $1.32 billion of U.S. export.
the USA and India stood at USD 88.75
billion. In 2020-21, the trade between the
US and India dropped to USD 80.5 billion.
There is a huge potential to boost
bilateral trade between the countries
especially on account of increasing anti-
China sentiment in both nations. Thus,
the negotiation should focus on the
resolution of various non-tariff barriers
and other market access improvements Recently Piyush Goyal, the minister of Commerce &
as early as possible. Industry has said that India is ready to expand
The major issues in Trade include Tariffs. trade ties with the US, both countries must look at
trillion-dollar trade.

Strategic Partnership

Regular exchange of high-level political visits has President Biden also extended his help
provided great momentum to bilateral in fighting the pandemic, early in April
cooperation. Adding to that the wide-ranging and this year.
ever-expanding dialogue has enabled smooth
communication between the two nations.
After the formation of Quad, the two democracies
have become in Indo Pacific amid Chinese
assertiveness in the region.
Similar values, geopolitical interest, and
coordination of Nations and cooperation are what
PM Modi said, both the nations have in common.
He added further strengthening the supply chain,
new emerging technology and Space are his areas
of priority.
Source: TOI, Wikipedia, HT, The Hindu Vittarth- An Initiative of PGDM students of NIBM
 India US Relations and its
Impact on Economy
Millitary Relations
The overall military budget of India and US
stands at Rs 42.84 US$ BN & 682 US$ BN
respectively 2.78 per 1,000 people
The Per capita personnel is 5.22 per 1,000
people for for US and 2.78 per 1,000 people for
India.
The overall spend on Military for India is 2.5%
of GDP, while for US it is 4.06% of GDP.
Imports of defense for India is around USD 1.85
billion and for US it is 904 million USD.
The Exports include 21 million USD for India
versus 6.16 billion USD for US.
India and the US are expected to reach a target
of USD 25 billion in military trade over the next
few years. So as far, the trade between the two
countries stands at around USD 20 billion over Various millitary exercises also take place
15 years. between the two nations for strengthing the
bond.
They both share a vision of a free and open Indo-Pacific.In the recent visit to US, the two leaders discussed defense cooperation, the ongoing situation in Afghanistan, combating terrorism & regional and bilateral matters.

Economic Index Comparision

Economic Freedom Index- It takes into
Index USA Rank India Rank
account 12 parameters to measure some of
Economic Freedom Index 20th 121st which are Property Rights, Tax Burden, Fiscal
health, Monetary freedom, Trade freedom,
Global Firepower etc.
1st 4th
Index 2021 Global Firepower Ranking- It is based on
each nation's potential war-making
Asia Power Index 2020 1st 4th
capabilities across land, sea, and air. The
Human Capital Index 2021 parameters include manpower, equipment,
4th 116th finance, and geography of the nation.
Global Sustainability Asia Power Index- It is an index that
32nd 127th measures resources and influence to rank the
Competitive Index 2020
relative power of states in the Indo-Pacific.
Human Capital Index- The Index measures which countries are best in mobilizing the
economic and professional potential of their citizens.
Global Sustainability Competitiveness Index- The GSCI measures the competitiveness of
countries based on 127 measurable, quantitative indicators derived from reliable sources,
such as the World Bank, the IMF, and various UN agencies.
Unpopular Opinion
PM Modi's US Visit also had some part to play in the Sensex Hitting the first time high of crossing
60k mark, as quoted by the market expert as this type of visit always helps India in flourishing and
achieving newer heights .
www.nationmaster.com Vittarth- An Initiative of PGDM students of NIBM
 India US Relations and its
Impact on Economy
FDI
Foreign Direct Investment plays an
important role in any country's
overall growth as it leads to various
economic opportunities and is a
subject of importance especially to
developing countries like India.
In India USA is the second major
investment country after Singapore.
The major investments from the US
goes into Computer Hardware &
Software followed by the service
sector.
Source: Statista

Source: Business Today

India expects to attract foreign direct
investments (FDI) of US$ 120-160 billion per
year by 2025, achieving this target without
the USA is tough and since US has been
penetrating the same set of the segment
over and again, India needs to open new
opportunities for the investors to bring in
new prospects, the major point of
attraction for the country is its cheap
labour and developing infrastructure,
various companies have found the country
to be the best place for semi conductor
industry. The sector of the telecom industry is also expected to get a good amount of
investment as the technological up-gradation to 5G is concerned. Investments in the ed-tech
and the renewable energy sector are also expected.

India targets to achieve 5 Trillion USD

economy in the near future and needless to
say FDI has major role to play in the same. FDI
in India is still restricted to only few of the
sectors due to many reasons, to achieve the
targeted goal. India should encourage and
open gates to several capital-intensive sectors
which can target to attract greater FDI : textile
and apparel, food processing, electronics,
pharmaceuticals, vehicles and parts, chemicals
and capital goods.
Source: Business Today
Vittarth- An Initiative of PGDM students of NIBM