Indo-US trade relations

Amity Business School

APresentation

onTrade Relations Between India & The Trade

Agreement & Various Trade Barriers.

Presented To:Mr. Ashok

Sharma

Presented By

Ramneek S Sandhey(46)

Marketing & Sales Section E


ContentsIntroductionIndia – U.S. trade relationsBilateral and multinational trade relationsWorld trade organization and other multilateral relationsBilateral merchandise tradeIndo-U.S. trade in servicesMajor component of the bilateral tradeDirect investmentIndo-us trade barriersCurrent trade situationConclusionRecommendation


• Research Methodology and Design:• Exploratory Research: an initial research which analysis the data & explores the possibility

of obtaining ideas & insight. A literature survey is used for this purpose and secondary sources i.e. available information/literature, magazines, internet websites, books are useful for findings and to develop new hypothesis. It is the most economical and quickest way to find possible hypothesis.

• • Project rationale• This report provides a summary of India’s key economic and trade issues between India and

the United States. It analyses Indian and US markets and understands the area of International Business and various factors that influence the trade between them. It also talks about India’s foreign trade policies especially with the US with respect to the trade agreements and trade barriers.

• • Project Limitations• The project is based on the past trend and data of previous years• The research is literature based • Availability of recent information is missing• The practical approach may vary from the stated

3


Introduction

From modest $ 5.6 billions in 1990, the bilateral trade in merchandise goods has increased to $ 21.68 billion in 2004 representing an impressive growth in a span of 14 years.

India’s merchandise exports to the U.S.A. grew at 19.28 % from US $ 13.05 billion in 2003 to US $ 15.57 billion in 2004.

US merchandise exports to India increased from US $ 4.98 billion in 2003 to US $ 6.11 billion in 2004, an increase of 22.69%.

US exports to India recorded a 22% plus growth for second consecutive year.

1


Economic and trade relations between the United States and India

Number of ups and downs since India’s independence in 1947.

During much of the 1950s, the United States was a leading trading partner for India

2


INDIA – U.S. TRADE RELATIONS

1993 1994 1995 1996 1997 1998 1999 2000

India’s

Exports

4551 5320 5736 6169 7322 8237 9071 10686

India’s

Imports

2761 2296 3296 3318 3608 3564 3688 3663

Turnover 7312 7598 9032 9487 10931 11801 12759 14349

Balance (+) 1790 3005 2440 2851 3715 4673 5383 7023

4


INDIA’S SHARE IN US TRADE

In 1991,U.S identified India as one of the 10 major emerging markets.

India-US bilateral trade also started to grow.

US is the destination of one-fifth of India’s exports.

India's percentage share in US imports has remained more or less stable over the last few years.

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• INDIA - USA TRADE COMPOSITION

Increases in the exports of diamonds, textiles and ready-made garments, carpets, footwear and leather products, dyes, iron, edible fruit and nuts and spices, coffee and tea

The chief items imported from the U.S. at present are machinery including project items, fertilizers, aircraft and aeronautical equipment, medical equipment, and organic chemicals.

8


BILATERAL AND MULTILATERAL TRADE RELATIONS

Bilateral relationships :

Civil Nuclear Cooperation

U.S. Generalized System of Preferences

U.S.-India Economic Dialogue

Verified End User Program/Trusted Customer Program

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• Multilateral Relationships:a. WTO

b. IMF

c. WIPO

d. Asian Development Bank

But U S and India also oppose each other in:

1. Doha Round Negotiations

2. Proposed Regional Free Trade Agreements

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Item Years 2001 2002 2003 2004 2005

India’s exports to US

9737

11818

13055

15572

12002

US exports to

3757

4101

4980

6109

5210

Total Bilateral Trade

13494

15919

18035

21681

17212

Bilateral Merchandise Trade (2001 to 2005) (In US $ Millions)

Source: U.S. Department of Commerce

8


Major items export from India to U.S.

Diamonds & precious stones 29%

Textiles-25%

Iron & Steel-5.73%

Organic Chemicals-3.46%

Electrical Machinery-3.24%


Major items of export from US to India


Insurance sector in India is opened up for up to 26% FDI, proposals to hike this limit to 49%.

Emergence of Business Process Outsourcing.- American Express, Citicorp, Microsoft, Dell, Hewlett-Packard,

HSBC, Standard Chartered and Convergys etc are taking advantage of the opportunities offered by India's IT Sector.

Telecom industry- Amongst major US companies that have entered the Indian market are AT&T and Qualcomm.

Amity Business School India has also made progress in expanding their

investment base in the United States of America. e.g. - Dr. Reddy's Laboratories and Ranbaxy have bought pharmaceutical manufacturing units in the US.

According to some surveys conducted in the US, Indians living there contribute a lot to US economy and are among the most highly educated class in America.


INDO-US TRADE BARRIERS

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US EXPORT RESTRICTIONS ON INDIAN COMPANIES1.Bureau of Export Administration (BXA) in the US

Department of Commerce imposed restrictions on exports to four Indian organizations

Bharat Electronics Ltd Bhaba Atomic Research Center (BARC) Indira Gandhi Center for Atomic Research Indian Rare Earths Ltd


2.Export licensing became stricter with the US imposition of sanctions in May 1998, after our nuclear tests.

• According to a BXA notification issued in June 1998:

BXA will deny all export and re-export applications to India under the Export Administration Regulations (EAR).

BXA will publish a list of Indian Government and Private entities involved in nuclear and missile activities.

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3.GENERALIZED SYSTEM OF PREFERENCES (GSP) Under the Generalized System of Preferences (GSP),

Indian exports worth about US $ 1.1 billion enjoy duty free access or reduced duty access to the U.S. market.

In 1992, the US removed GSP benefits for a large number of products from India, mainly agricultural chemicals and pharmaceuticals.


INDO –US CONTROVERSIES…..

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1.INTELLECTUAL PROPERTY RIGHTS In April 1991, India was designated as a Priority Country

under Special 301 for alleged inadequate protection of intellectual property rights.

After several rounds of consultations, differences between the two sides on the issues of Copyright, Trademarks and Access for Motion Pictures were largely resolved to have market access to US motion pictures. India agreed to move some amendments to its Copyright and Trademark laws take steps for better enforcement and substantially improve market access for U.S. motion pictures.

In its April 1996 determination, the USTR (United States Trade Representative) indicated that USA would take up the case in the WTO against India.

Due to failure in pharmaceutical and agricultural chemical products, as required under the TRIPS Agreement.


2.ANTIDUMPING (AD) & EXCESSIVE CUSTOM DUTY(ECD) CASES AGAINST INDIAN PRODUCTS

Rise in the number of AD/ECD cases against Indian companies.

In1998, 3 AD & 1ECD cases were initiated against Indian products while 21 cases from other countries.

preserved mushrooms stainless steel round wire elastic rubber tape


CURRENT TRADE SITUATION India has recently agreed to lower tariffs for

pharmaceutical products from the United States. India has recently eliminated tariffs for soft drinks from

the United States. Current Indian law allows for up to 51 percent of its retail

sector to have support from foreign investors. United States and India have recently agreed to

establish exchange programs between small businesses in each country.

Trade in food and other agricultural products has increased between the United States and India.


Steps taken up by India Enhancement in Indian technological capabilities.

Ensure high quality packaging.

Aggressive marketing of competitively priced products.

Timely delivery and consistent maintenance of minimum and rising quality standards


India’s Trade Performance(in US $billion)

Year Exports %change Imports %change

1990-91 18.1 9.25 23.5 10.59

1991-92 18.0 -0.55 19.6 -16.60

1992-93 18.5 2.78 21.9 11.73

1993-94 22.2 20.00 23.3 6.39

1994-95 26.3 18.47 28.7 23.18

1995-96 31.8 20.91 36.7 27.87

1996-97 33.5 5.35 39.2 6.81

1997-98 35.0 4.48 41.5 5.87

1998-99 33.2 -5.12 42.4 2.17

1999-00 36.8 10.84 49.8 17.45

2000-01 44.2 20.11 50.1 0.60

2001-02 44.0 -0.45 51.6 2.99

2002-03 52.7 19.09 61.4 18.99

2003-2004 63.5 20.49 77.0 25.42

2004-2005 80.0 25.98 106.0 37.66


Opportunities for US India's Telecommunication sector, expected to continue to

provide substantial opportunities to US investors.

Reduction of regulatory charges by Govt. of India

Moving to licensing policy.

Revamping of national telecom policy.

India's energy sector - an important destination for US investment.


RECOMMENDATIONS• India is required to further relax its trade and

investment regimes.

• Stop piracy.

• India can look to join APEC (Asia Pacific Economic Co-operation).

Date post:	07-May-2015
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Indo-US trade relations

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