The bilateral relationship between India and the United States has progressed into a "global strategic partnership" grounded in common democratic principles and a growing alignment of interests concerning bilateral, regional, and global issues. During his recent visit, the Hon’ble Prime Minister of India addressed a joint session of the US Congress (a rare honour for a foreign leader visiting the country) which makes the growing depth and breadth of US-Indian relations evident and is seen as "a momentous development that will benefit not just the US and India, but the world at large."

The foundation of India-US bilateral relations rests upon several key elements, which encompasses the expanding market size of the Indian economy, the increasing influence of the Indian diaspora in American business and politics, and a shared recognition of the imperative to address Chinese aggression. As the United States deepens its involvement in the Indo-Pacific region and India consolidates its regional influence, the collaboration between these democratic powerhouses possesses the capacity to redefine the geopolitical landscape.

However, to further smoothen their relations, India and the USA must resolve their persisting bottlenecks. The current impediments to bilateral relations include tariff and non-tariff barriers, complex custom clearance procedures, IPR and data localisation issues.

Bilateral Trade

The bilateral trade relationship between India and the United States has experienced a remarkable expansion over the years. partners. The success of trading partnership between India and the US can be gauged from the fact that the bilateral trade between the two countries has risen by 72 per cent between 2017-18 and 2022-23. is at 7 per cent. During 2022-23, the USA was top destination of Indian exports to the world and third source of India’s imports from the world. Further, India’s exports to the USA stood at $ 78.5 billion in 2022-23 and its imports from the USA were $ 50.2 billion.

The United States is the third largest source of Foreign Direct Investment (FDI) in India with equity investment of $ 59.1 billion (April 2000 to December 2022), which represents 9.45 per cent of the cumulative inflows received by India. The US accounted for 18 per cent of the gross FDI inflows into India during 2021-22, ranking second behind Singapore that stood at 27 per cent. Computer software and hardware; services sector and automobile industry attracted the maximum FDI equity inflow and Gujarat; Karnataka and Delhi are the top FDI receiving states from the USA.

Additionally, to enhance economic and trade cooperation between India and the United States, multiple dialogue mechanisms have been established. These include the Ministerial-level Economic and Financial Partnership, the Ministerial Trade Policy Forum established in 2005, the bilateral India-US CEO's Forum (2005) which encourages private sector involvement in discussions on trade and investment issues, and the Indo-Pacific Economic Framework that India joined in May 2022. In 2014, the two countries also initiated the bilateral Investment Initiative, aimed at facilitating foreign direct investment, portfolio investment, capital market development, and infrastructure financing. Notably, the US-India Infrastructure Collaboration Platform in 2014 has also been established, with a focus on deploying advanced US technologies to meet India's infrastructure requirements. These initiatives reflect the commitment of both the nations to strengthen bilateral trade ties and foster economic collaboration.

Major announcements during the Hon’ble Prime Minister’s US visit

During the Hon’ble Prime Minister's recent visit to the United States, several significant announcements were made, reflecting the deepening collaboration between the two nations. Some of these announcements include:

  • Semiconductor Industry: Micron Technology, a U.S. company, revealed plans to invest $ 2.75 billion in the next five years to establish a semiconductor assembly and test facility in India, along with a collaborative engineering centre and the training of 60,000 Indian engineers.
  • Defense Partnership: General Electric Aerospace and HAL's agreement to manufacture GE's F414 engine under license for India's light combat aircraft strengthens defense ties, fostering technological advancements and indigenous manufacturing capabilities.
  • Space Exploration: India joined the Artemis Accords, a multinational agreement comprising 25 countries dedicated to space exploration and cooperation. Additionally, the two nations established a framework for human spaceflight in the current year, signalling their shared ambitions for advancements in space exploration. Furthermore, plans were announced for a joint mission to the International Space Station in 2024, showcasing the commitment of both countries to space research and exploration.
  • Telecommunications and Technology: Recognizing the importance of secure telecommunications, resilient supply chains, and global digital inclusion, the United States and India launched two Joint Task Forces. These task forces will focus on advanced telecommunications, particularly Open RAN, and research and development in 5G/6G technologies. This collaboration aims to strengthen digital infrastructure and pave the way for innovative advancements in the telecommunications sector.

What lies ahead- The future of India-U.S. Collaboration

The evolving relationship between India and the United States holds significant importance in shaping the global order of the 21st century. To fully unlock the potential of this partnership, both governments must focus on reducing bilateral and multilateral bottlenecks and charting a course for a comprehensive and strategic global alliance. Sustaining and strengthening this relationship requires embracing diplomatic flexibility and exploring innovative approaches. As India and the United States forge closer ties, their collaboration on economic, democratic, and global challenges becomes increasingly critical. It is essential for the coalition to transition from a people-to-people strategy to ground-led strategies, aligning their efforts to tackle socio-economic and geopolitical issues while sharing a unified vision. Through continued cooperation and unified action, India and the United States can realize their shared goals and contribute to a more prosperous and secure world.

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