Imports from India double that of exports.
By Deepak Chitnis
WASHINGTON, DC: The US Census Bureau has just released its numbers involving trade between the US and India over the first six months of 2013. While exports from the US to India total roughly $11.15 billion, imports from India are nearly double that, hovering around $21.36 billion. This, however, mean that 2013 is right on course to match up with the past several years, where year-end numbers put exports around the low $20 billion while exports stay in the high-30s and low-40s.
These numbers come at a time when the US is calling upon India to strengthen ties between the two countries by increasing trade, in an effort to reinforce political, economic, and social relations between the two democracies. India’s Commerce Minister Anand Sharma, during a recent trip to Washington, DC, stated that both the India and the US are “in favor of a bilateral investment agreement,” which would hopefully provide the spark necessary to reignite Indo-US relations.
But the road will not be easy. India has faced criticism from the US in recent months over the harsh taxes and laws it has begun levying on foreign companies trying to do business in India. During his trip to India last month, US Vice-President Joe Biden urged the Indian government to ease up on its scrutiny of US companies, lest the Indian economy take a huge hit by having these companies flee for greener pastures. In fact, some already have, with the US National Institutes of Health (NIH) suspending clinical trials in India until the situation improves.
US Ambassador to India Nancy Powell cited India’s opaque and unpredictable tax policies as the main hindrance in the way of free and open trade. “Fair, transparent, and predictable tax policy and administration are key foundations of a strong investment climate. Many US companies want to invest in India, in many different sectors,” said Powell. “But how Indian tax rules are applied to companies operating in India is a source of frustration for US companies and a factor that they consider seriously in connection with any decision to invest in India.”
In 2011, Indo-US goods trade totaled over $57.7 billion. Last year, the number was $62.6 billion. With the 2013 mid-year number already at $32.5 billion, it would appear that the upward trend will continue this year, but it’s difficult to say unless the bilateral trade agreement is signed or companies stop dropping out of India. While the world’s largest and the world’s oldest democracies still remain allies, the potential for an even more fruitful relationship is as yet fully untapped, and many in Washington fear that it may stay that way too long.
The full US Census Bureau report can be found here.