Many countries are looking to reduce their supply-chain dependence on China in a post-COVID world, while entrusting a more expansive trade partnership with India, says the author.
Deepanshu Mohan, Associate Professor of Economics and Director, Centre for New Economics Studies, Jindal School of Liberal Arts and Humanities, O.P. Jindal Global University, Sonipat, Haryana, India.
The US surpassed China to become India’s top trading partner in 2021-22, reflecting a strengthening of ties between the two economic giants. According to recent data released by the Ministry of Commerce, bilateral trade between the US and India stood at $119.42 billion against $80.51 billion in 2020-21. Exports increased to $76.11 billion in 2021-22 from $51.62 billion in the previous fiscal year, while imports rose to $43.41 billion as compared to about $29 billion in 2020-21.
India-US Trade as Part of the Quad (2018-22)
As part of the Quad and beyond, India’s dominant export-import partnership is with the US, and the largest percentage share of total trade with the US is estimated to be 18% (the highest).
America is one of the few countries with which India has a trade surplus. In 2021-22, India’s trade surplus was $32.8 billion with the US. Beyond services, major export items from India to the US include petroleum-polished pharmaceutical products, jewellery, light oils, and petroleum, frozen shrimp, whereas major imports from the US include petroleum, rough diamonds, gold, coal, waste and scrap, etc.
As Washington looks to partner more closely with India to pivot its Indo-Pacific strategy after Trump and develop a strong (regional) counter-narrative to China’s economic influence in the region, stronger India-US economic ties are expected to shape the region’s economic landscape in years ahead. Many countries – not just those part of the Quad but also within ASEAN (now members of IPEF) – are looking to reduce their supply-chain dependence on China in a post-COVID world, while entrusting a more expansive trade partnership with India.
During 2021-22, India-China trade aggregated at $115.42 billion as compared to $86.4 billion in 2020-21. See the figure below for India’s bilateral trade levels with China during the last four years (2018-22).