India – U.S. bilateral trade grew from US $ 13.49 billion in 2001 to US $ 31.917 billion in 2006. India’s major export products include gems and jewelry, textiles, organic chemicals and engineering goods. Our main imports from the U.S. are machinery, precious stones and metals, organic chemicals, optical and medical instruments, aircraft and aviation machinery.
US exports to India grew by 26.31% in 2006 to reach USD 10.091 billion, while Indian exports to the US increased by 16.07% to hit USD 21.826 billion. The U.S. is one of the largest foreign direct investors in India.
The stock of actual FDI increased from US $ 11.3 million in 1991 to US $ 5708 million as on January 2007. FDI inflows from the U.S. constitute about 11% of total actual FDI inflows into India.
The U.S. is the leading portfolio investor in India. As in December 2006 U.S. based Foreign Institutional Investors have made a net investment of US $ 17.8 billion of a total of US $ 51,021 billion in Indian capital markets accounting for 33% of the total. The U.S. is also the most important destination of Indian investment abroad. Between 1996 and July 2006, Indian companies invested US $ 2619.1 million in the U.S. largely in manufacturing and non-financial services.
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The institutional framework for bilateral economic cooperation comprises a U.S. – India Economic Dialogue co-chaired on the Indian side by Deputy Chairman Planning Commission Dr. Montek Singh Ahluwalia and on the U.S. side by Dr. Allan Hubbard, Assistant to the President for Economic Policy and Director of the National Economic Council.
The sub-components of this dialogue are (a) a U.S. India Financial and Economic Forum led by India’s Finance Minister and the U.S. Treasury Secretary (b) a U.S. – India Commercial Dialogue headed by our Commerce Minister and the US Commerce Secretary (c) a U.S. India Working Group on Trade co-chaired by our Commerce Minister and the US Trade Representative.
The Economic Dialogue has two crosscutting themes in biotechnology and information technology. The IT theme has been expanded to become the Information and Communications Technology Working Group (ICT Working Group) that held its most recent meeting in Washington in July 2007.
In November 2002 a Statement of Principles on high technology commerce was issued which established the High Technology Cooperation Group (HTCG) aimed at furthering hi-tech trade including trade in dual- use goods and technologies. This group led by the Foreign Secretary of India and the US Under Secretary of Commerce held its 5th meeting in Washington, DC. February 22-23, 2007.
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Comprising of two distinct parts, government-to-government meetings as well as a public-private forum, the HTCG meetings focus on four sectors IT, biotechnology, and nanotechnology and defense technology. Prime Minister Dr. Man Mohan Singh and President Bush established a CEO’s Forum prior to their meeting in Washington July 18, 2005.
Envisaged as a brains trust of business leaders from the two countries, the CEO’s Forum presented a report to the two leaders during the visit to India of President Bush aimed at substantially broadening the levels of economic interaction between India and the U.S. The Chairs of the Indo-US Economic Dialogue have been directed to follow up expeditiously with the CEO’s Forum.
In this effort they convened a meeting of the Forum in New York on October 25, 2006 with high level government participation from both sides. The next meeting of this Forum is scheduled for September 2007 at New York.
In July 2005, Prime Minister Singh and President Bush established a U.S. – India Agricultural Alliance to focus on promoting teaching, research, service and commercial linkages. In March 2006, during the visit to India by President Bush the two countries launched the bilateral Knowledge Initiative on Agriculture with a three-year financial commitment to link universities, technical institutions and businesses to support agriculture education, joint research and capacity building projects including in the area of biotechnology. A work plan has been finalized and is being implemented.
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President Bush and Prime Minister Singh agreed that their two governments would organize a high-level public-private Investment Summit in 2006, with a view to advancing mutually beneficial bilateral trade and investment flows.
This was held in New York on October 25, 2006. The logjam in multilateral trade negotiations in the Doha Round of the WTO has produced a strain among the major trading nations of the world. India-
US relations are not completely free from these strains either. The US Government has sanctioned a few Indian companies and individuals for exporting to and contacts with Iranian enterprises and scientific establishments. India has stated that no Indian company or individual has violated either Indian law or international obligations.