The India-US economic and strategic partnership has continued to consolidate in recent years, with the US emerging as India's largest trade partner for merchandise goods in FY 2022. This collaboration is anticipated to grow even stronger as India assumes the G20 presidency in 2023, with a focus on advancing technology, innovation, resilient supply chains, and attaining inclusive and sustainable growth goals. In this article, we summarize significant decisions made during the 13th Ministerial Meeting of the India-US Trade Policy Forum (TPF). We also explore significant developments in commercial ties between the US and India.

In recent years, the India-US strategic partnership has consolidated further. The trade relations between the two have expanded exponentially, with bilateral trade hitting a record US$157 billion in two-way goods and services trade in 2021 and the US emerging as the top destination for India’s merchandise exports.

In fact, 2022 has been a rewarding year for both democracies, which saw the forging of significant new partnerships, including the Indo-Pacific Economic Framework (IPEF), and the consolidation of existing ones such as I2U2, Quad, etc. The past year witnessed the fulfilment of many tangible outcomes, including the resolution of existing market access issues, the Quad focus on STEM, the signing of an Investment Incentive Agreement, the launch of Technology Innovation Hubs as a collaboration of the respective science agencies, a record level of trade and investments, etc.

The year 2023 kicked off with the successful conclusion of the 13^th Ministerial Meeting of the India-US Trade Policy Forum (TPF). It must be noted that this forum lay dormant for four years until a relaunch in November 2021. Experts and diplomats forecast that the future of India-US ties will determine the future of technology and innovation. With India holding the G20 presidency in 2023, the India-US partnership is expected to further intensify to achieve global growth objectives that are inclusive, sustainable, and focus on critical and emerging technologies, resilient supply chains, and climate action.

In this article, we outline key decisions announced during the 13th Ministerial Meeting of the India-US Trade Policy Forum. We also explore significant developments in commercial ties between the US and India.

India-US TPF to focus on deepening trade and economic engagement

The India-US TPF aims to activate its working groups in the fields of agriculture, non-agriculture goods, services, investment, and intellectual property to address issues of mutual concern and deliver tangible benefits to both countries by resolving unresolved market access issues.

In the forum’s 13^th meeting, India and the US underlined their eagerness to deepen bilateral trade and economic ties at the recently concluded ministerial meeting of the TPF.

During this meeting, both nations emphasized the significance of the forum in fostering robust bilateral trade ties and enhancing the bilateral economic partnership. Both nations decided to collaborate in order to strengthen supply chain resilience, particularly in the critical industries that underpin the two economies.

In the meeting, India and the US jointly established a new working group on "Resilient Trade" to advance bilateral discussion on a variety of topics that can improve the trade relationship, such as trade facilitation, helping workers, and fostering sustainable and inclusive growth, as well as common sustainability challenges like securing sustainable finance, scaling up innovative clean technologies, and adopting circular economy strategies.

Both countries also welcomed the finalization of the Turtle Excluder Device (TED) design. This collaboration for expediting the TED trials will ensure that the TEDs are effective in minimizing the impact of fishing on sea turtle populations and restoring market access for India’s export of wild-caught shrimp.

Additionally, during the meeting, India also highlighted its interest in the restoration of its beneficiary status under the U.S. Generalized System of Preferences (GSP) program, which the US agreed to consider.

India-US bilateral trade: Trends and outlook

The US is currently positioned as India’s largest trading partner with respect to merchandise trade, accounting for 11.98 percent of India's total merchandise trade. As per US Census data, India-US merchandise trade in calendar year 2022 reached US$123.48 billion, up from US$113 billion in 2021.

As per data from the Indian Ministry of Commerce, India-US bilateral trade crossed US$119.42 billion in FY 2022. In the first eight months of FY 2023, the total bilateral trade has already reached US$87.33 billion, with exports from India dominating imports.

Going forward in 2023, India and the US are expected to materialize intensive collaboration in the defense, clean energy, tech, and space.

According to Piyush Goyal, Minister of Commerce and Industry for India, the India-US partnership is expected to evolve multifold in the upcoming years, and the bilateral trade in goods and services between both countries is anticipated to reach $500–600 billion by 2030.

Major commodities traded between India and US

India-US bilateral hydrocarbon trade, which started in 2017, amounted to US$19 billion during FY 2022. US has also emerged as India’s fourth largest supplier of crude oil and second largest supplier of liquefied natural gas (LNG).

The principle commodities exported by India to the US are precious and semi-precious stones, drugs and pharmaceuticals, petroleum products, cotton fabrics, garments, marine products, iron and steel products, electrical equipment, and auto components. Several factors like a high consumption-driven growth in US, pent-up demand for items such as jewelry and electronics, diversification of supply chains by companies, etc. have contributed to this accelerated trend. Electronic component companies, too, have moved production to India. For example, Apple now exports a million smartphones from India to the US every month. 

India’s import basket from the US primarily comprised of crude oil, which seized the largest share, along with other items like pearls, precious and semi-precious stones, petroleum products, coal, coke, organic chemicals, gold, and paper and paper board.