State by State: India and Illinois Trade
As the 5th most populous state in the U.S., Illinois is the economic engine of the Midwest region and a national hub for global commerce. The state owns the third largest intermodal port in the world, after Hong Kong and Singapore. Known as the state of innovation, Illinois is home to 32 Fortune 500 companies, involved in everything from agribusiness to life sciences, aerospace and financial services.
In 2013, the GDP of Illinois was US $720.7 billion and ranked 5th in the U.S. Advanced manufacturing is the largest industry in Illinois, due to the state’s highly trained workforce and superior logistics and infrastructure. Other major industries include financial services, agribusiness, coal technology, energy and recycling, life sciences, logistics and information technology.
Trade and Exports
In 2014, trade between Illinois and India increased drastically, with the total exports from Illinois to India reaching US $712.7 million, a 50.4 percent increase from the previous year. Non-electrical machinery accounted for 24.1 percent of the exports, while chemicals and electronics accounted for 18.5 percent and 12.8 percent of the exports, respectively. Overall, the top exports from the state are petroleum and biodiesel, followed by soybeans.
Illinois is one of the largest commercial hubs in the world. Notable corporations headquartered in the state of Illinois include Archer Daniels Midland, McDonalds, Caterpillar, State Farm Insurance, John Deere and Walgreens-Boots Alliance. Meanwhile, Chicago hosts many leading financial, legal and consulting firms that do business with India. Many of these companies stand to benefit from Prime Minister Narendra Modi’s business friendly government and ‘Make in India’ campaign.
Electronics manufacturing represents an opportunity for increased trade between Illinois and India. In 2012, the Indian electronics industry in India was estimated to be worth USD 68.4 billion, and in 2015 it is expected to grow to be worth US $94.2 billion. By 2020, the telecom, laptop, and LED industries are expected to be worth at least US $34 billion each.
Currently, many large foreign electronics companies have invested or are planning to invest in India such as Samsung, IBM, Dell, LG and Motorola to name a few. There are also many investment opportunities for companies that work in the semiconductor industry, particularly for those that can help setup electronic manufacturing centers, provide electronic manufacturing services or telecom products.
Earlier this year, India opened up its medical devices industry, presenting important investment opportunities for Illinois businesses that specialize in the healthcare sector. India’s cheap yet skilled labor force make it an ideal location for manufacturers to set up their factories, while its large and growing demand for medical devices present an attractive opportunities for investors. The country’s growing middle class and expanding healthcare industry is projected to increase the value of the medical device industry to US $50 billion by 2025.
India’s biotechnology industry has grown from US $530 million in 2003 to US $4.3 billion at the end of 2013. Many U.S.-based companies outsource clinical trials to India, while India remains strong in clinical data management, drug discovery and low-cost manufacturing. The Indian government has also implemented a number of initiatives to improve infrastructure for the industry as well as incentive schemes for foreign investors.
There was a 69.9 percent growth in agricultural imports from India in 2014. Both India and Illinois contain large agrarian sections of their economy. Investments in agriculture-based industries appear to be lucrative given India’s rapid population growth. However, Illinois-based companies that manufacture agriculture-related machinery and equipment stand to benefit the most from India’s agriculture sector, as well as the Make in India campaign that is designed encourage foreign investment into manufacturing in India.
Tax Treaty – U.S. Trade with India
The U.S. has signed a Double Tax Treaty with India. This can reduce tax burdens under certain circumstances in both trade and any India legal establishment. Please seek professional advice for specific India investment requirements.
Further Support from Dezan Shira & Associates
Dezan Shira & Associates can service Illinois-based companies that are looking to develop their Asia operations. The firm can help companies establish a direct office in the region and can guide them through the affiliated tax, legal and HR issues that come with doing so. To arrange a free consultation, please contact our U.S. office at firstname.lastname@example.org.
Asia Briefing Ltd. is a subsidiary of Dezan Shira & Associates. Dezan Shira is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in China, Hong Kong, India, Vietnam, Singapore and the rest of ASEAN. For further information, please email email@example.com or visit www.dezshira.com.
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