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BIGGEST TRADING PARTNER

UPSC CURRENT AFFAIRS | US CROSSES CHINA TO BE INDIA’S BIGGEST TRADING PARTNER | 2ND JUNE | INDIAN EXPRESS

/ June, 2022, UPSC Daily Current Affairs

Syllabus Section: GS III (Economy)

WHY IN THE NEWS?

According to recent data from the Commerce Ministry, the US surpassed China to become India’s top Biggest trading partner in 2021-22.

Key Details:

  • The data showed that China was India’s top trading partner from 2013-14 till 2017-18 and also in 2020-21. Before China, the UAE was the country’s largest trading partner.

Bilateral trade between US and India:

  • In 2021-22 the bilateral trade between the US and India stood at $119.42billion as against $80.51 billionin2020- 21.
  • Major Exports:
  • Major export items from India to the US include petroleum polished diamonds, pharmaceutical products, jewellery, light oils and petroleum, frozen shrimp, made-ups etc. whereas major imports from the US include petroleum, rough diamonds, liquified natural gas, gold, coal, waste and scrap, almonds etc
  • Exports to the US increased to $76.11 billion in 2021-22 from $51.62 billion in the previous fiscal year.
  • Imports rose to $43.31 billion as compared to about $29 billionin2020-21.
  • This shows the strengthening economic ties between the two countries.

Bilateral trade between US and India:

  • During 2021-22, India’s two-way commerce with China aggregated at $115.42 billion as compared to $86.4billionin in 2020-21.
  • Exports to China marginally increased to $21.25 billion last fiscal year from $21.18 billion in 2020-21.
  • Imports jumped to $94.16 billion from about $65.21 billion in 2020-21.
  • The trade gap rose to $72.91 billion in 2021-22from $44billion in the previous fiscal year.
Top Five Trading Partners of India:
  • In 2021-22, the UAE with $72.9 billion, was the third-largest trading partner of India.
  • Saudi Arabia($42,85billion) was the fourth.
  • Iraq ($34.33 billion) was the fifth and
  • Singapore($ 30 billion) was the sixth.
Potential India – US Trade Relations:
  • The Biden government is more tolerant than the previous regime towards the trade surplus that India has with the US.
  • Especially following the trade war between China and the US that began during Trump’s tenure, there exists considerable potential for growth in trade and investment ties
  • The Covid pandemic has also driven home the importance of diversifying supply chains (beyond China).
  • USTR identified digital economy, services, health-related trade and agriculture as potential growth areas.
  • There is also scope for growth in traditional areas of exports such as garments, gems and jewellery, chemicals, electronics and machinery.
  • India has lowered FDI barriers in almost all sectors, most recently in defence, and there is scope for collaboration.

 

Steps need to be done by both sides to tap this potential:
  • India and the US should focus on lowering of non-tariff barriers (NTBs) that businesses in both countries face.
  • The two sides should list out the various NTBs, in the form of sanitary and phytosanitary standards, technical barriers, economic needs tests and complex registration requirements that businesses may face and lower them.
  • The US government could consider reinstating GSP benefits for Indian exporters.
  • For increasing the flow of investments and collaborations, the two sides could try to understand how investment rules could be made more attractive.

Read more: UPSC CURRENT AFFAIRS

 

Source: Indian Express and Business Line