Foreign Policy Watch: India-United States

A robust economic relationship between India and U.S.


From UPSC perspective, the following things are important :

Prelims level: Generalised System of Preferences

Mains level: Paper 2- Trade ties between India-U.S.

The article outlines the potential for India-U.S. collaboration in certain ares of trade which will bring many gains.

India-U.S. bilateral trade

  • In the five years to 2019, bilateral trade grew at a CAGR of 7.7% per year to $146 billion.
  • If we assume the same rate of growth, the $500 billion target will be achieved by 2036.
  • To ensure this, the CAGR would need to be set at 11.9%.
  • This is doable if the right policy actions are taken.

Areas of collaboration

1) Healthcare exchanges

  • A collaborative response to the pandemic would contribute to global containment of the virus.
  • Business partnerships are already taking place in the supply chain.
  • As India becomes the hub of global vaccine distribution, building confidence in the Indian IPR regime, reviving the U.S.-India Health Dialogue, and mutually recognising standards and approvals will help drive healthcare exchanges.

2) Improving the macro trade architecture

  • The macro trade architecture can be strengthened with a broad trade agreement focusing on resolving the low-hanging fruit.
  • The U.S.-India Trade Policy Forum meetings can be revived along with a cross-sector track-2 group to look at convergence on issues such as market access.
  • There is potential for flexibility from both sides for restoring the Generalised System of Preferences.
  • The two countries should consider initiating discussions on a free trade agreement.

3) Trade in services

  • Recent regulations in the U.S. have impacted labour mobility which can be addressed through immigration reforms for employment-based visa backlogs and smooth and timely processes.
  • The MoU on labour cooperation signed in 2011 could be updated in line with India’s recent labour regulatory changes.
  • This may also be a good time to reconsider a totalisation agreement pertaining to social security, given that both have already entered into such agreements with many of the same partner countries.

4) Defence industry ties

  • Defence industry ties can be stepped up in coordination with industry.
  • A defence dialogue including the private sectors of both sides could help in co-production and co-development in the defence and aerospace sectors.

5) Stepping up engagement of SMEs

  • Five, engagement of small and medium enterprises (SMEs) can be stepped up.
  • Smaller U.S. companies can find significant new opportunities for investments in India and sourcing from India.
  • A U.S.-India SME CEOs Forum can be set up to catalyse such partnerships.

6) Clean energy and climate change

  • The U.S.-India Strategic Energy Partnership should be geared towards joint investments in industrial decarbonisation, carbon dioxide removal and green hydrogen.
  • The programmes of Partnership to Advance Clean Energy Research, Partnership to Advance Clean Energy Deployment and Promoting Energy Access through Clean Energy must be relaunched.

7) Digital economy partnership

  • India has proved its ability in this space with new opportunities opening up in robotics, space, AI and electric vehicles.
  • It is also important to disseminate information on India’s IPR regime improvements and work towards taking India off the U.S. Trade Representative IPR priority watchlist.

8) Other areas

  • Other opportunities in the bilateral economic relationship include education, innovation and R&D, and agricultural trade and technology.


A closer economic partnership would bring gains to both sides in terms of GDP, employment, and productivity, given the complementary natures of their economies.

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3 years ago

science and tech aspect
environment and climate aspect
defence industry aspect
free trade aspect
MSME aspect
agri aspect
health, education and R&D aspect
digital trade aspect


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