The final figures on India-U.S. trade in merchandise goods for 2010, which was released recently by the U.S. Census Bureau’s Foreign Trade Division, are both encouraging and sobering at the same time.
But, first, the hard, cold statistics: the volume of trade between the world’s richest country and its 11th largest economy was worth $48.8 billion last year; the U.S. exports to India accounted for $19.2 billion and its imports from the country totaled $29.5 billion.
Exports to the United States comprised roughly 14 percent of India’s all exports last year, and its imports from the United States was just under 7 percent of its overall imports. The cumulative value of Indian exports in 2010 was $215 billion and imports $285 billion, the Ministry of Commerce and Industry numbers show.
Major Indian exports to the United States included cut and polished diamonds and jewelry, textiles, pharmaceutical products, mineral fuels and oils, and items India imported included precious stones and metals, machinery, aircraft and spacecraft.
The most encouraging aspect of the new Foreign Trade Division data was that the Indo-U.S. bilateral merchandise trade is growing again. After losing a little bit of momentum in 2009, it increased sharply last year.
Even though the much anticipated $50 billion milestone was missed by a whisker, 2010 turned out to be the best year for bilateral trade in goods. The previous high was $43.4 billion in 2008.
The $48.8 billion in total volume was a 30 percent increase over the previous year, when for the first time in many years the bilateral trade declined mainly because of a nearly $5 billion dip in U.S. imports from India, in the aftermath of the Great Recession. It also represents a more than 8-fold growth over two decades that saw India embrace market reforms and chart a new course for its economy.
Another good news is that India-U.S. merchandise commerce is more or less a two-way trade, with the balance of trade—which is in favor of India—is a manageable $10.3 billion. It is important for the long-term health of bilateral economic relations that a runaway deficit such as the one the United States is having with China—which ran up a surplus of $257 billion with America last year—is avoided at all cost. It is especially important during tough economic times when protectionist fervor drowns out rational free market thinking.
The sobering aspect of last year’s trade data is that, while the India-U.S. merchandise trade is on the upswing, the two countries have not been able to put it on a fast track. Though India recognizes the importance of the US market, its size and scope for the expansion of exports, it is struggling to meet even the modest goal of increasing its market share to 2 percent.
Trade with India accounted for 1.5 percent of all U.S trade in goods, which totaled $3.2 trillion. In comparison, its Canada trade accounted for 16.5 percent of America’s overall trade in goods, and trade with China 14.3 percent. In November alone, the United States and China traded in goods worth $45 billion, close to a whole year’s worth of India-U.S. trade.
Last year, India was America’s 12th biggest trading partner, sandwiched between the Netherlands at 11th and Singapore at 13th, both much smaller economies. The Dutch gross domestic product is approximately half the size of India’s and Singapore’s less than a sixth.
In recent years, both countries have signaled their intention to increase the bilateral trade volume. Last November, during his historic visit to India, President Barack Obama announced the U.S. goal of doubling its exports to India within the next five years. The president also announced trade deals worth $10 billion, which are expected to create 50,000 jobs in the United States.
India, on its part, knows that trade with the United States will make the country more competitive and innovative, thus strengthening its economy. India also understands that a robust trading relationship with the United States—which imported goods worth more than $1.9 trillion last year—is a realm of endless possibilities.
One can never overestimate the role of U.S. consumers in underwriting the Asian giant’s rapid rise as a global power. Beijing’s surplus in trade with Washington since 2001 is a mindboggling $2 trillion. It is all the more remarkable when considering that, as recently as 1994, the Sino-U.S. trade was $48 billion, which is the volume of Indo-U.S. trade last year.
India realizes, by merely looking at China, that good things can happen when you trade with a rich and reliable partner like the United States.
(Copyrights: Global India Newswire)