New Delhi: Despite global economic ripples caused by the Russia-Ukraine war and the ongoing Covid pandemic, merchandise trade between India and the US rose at a faster pace in the first five months of 2022 compared to pre-pandemic levels.
According to US Census Bureau data, India-US goods trade touched $55.57 billion between January and May this year compared to $40.27 billion in the same five months in 2019 (pre-pandemic) — a growth of nearly 40 per cent.
The figures for the same five-month period in 2021 and 2020 were also low — $43.03 billion and $30.55 billion, respectively.
Given the steep growth registered in the first five months of this year, the trade deficit between India and the US has reached $16.41 billion already, according to the US Census Bureau data.
The growth in India-US bilateral trade may not be all that surprising given that the US emerged as India’s top trading partner in 2021, surpassing China.
A major contributor to the surge in India-US bilateral trade is Indian shipments of gems and jewellery, pharmaceuticals and other products.
Of the total trade of $55.57 billion in the first five months of this year, Indian exports to the US stood at $35.99 billion, while American imports stood at $19.58 billion.
Top Indian exports driving the surge in trade include gems and jewellery, pharmaceutical products, light crude oil and petroleum, electrical and electronics goods, engineering products, apparel, frozen marine products and others, Ajay Sahai, director general of the Federation of Indian Export Organisations (FIEO), told ThePrint.
Top US exports to India, meanwhile, include mainly oil, liquefied natural gas, gold, coal, machinery, organic chemicals, and large almonds among others, he added.
Asked why there is a surge in bilateral trade now, Biswajit Dhar, trade economist and professor at the Centre for Economic Studies and Planning, Jawaharlal Nehru University (JNU), said two factors are at play. “One, the release of pent-up demand in both countries after the stringent lockdown in the first wave. Two, the stimulus package provided by the Biden administration in the US greatly helped in increasing demand for Indian products.”
‘Surge largely driven by Indian exports to the US’
According to Richard Rossow, senior adviser and Wadhwani Chair in US-India Policy Studies at US-based think tank, Center for Strategic and International Studies (CSIS), bilateral trade between India and the US has been “spiking” ever since a low point in mid-2020.
This surge in trade is largely being driven by Indian exports to the US, Rossow said in a tweet.
According to CSIS data, goods trade between New Delhi and Washington grew from $5.11 billion in June 2014 to $7.68 billion in February 2020. In May 2020, it dipped to a low of $3.48 billion due to the pandemic.
However, Indo-US goods trade jumped from $5.05 billion in June 2020 to $12.48 billion in May this year.
Some experts agree that this is a steep rise, but point out that the share of Indian products in the US’ total import basket remains roughly the same.
“From calendar years 2017-2021, the share of Indian goods in the US’ total import basket has hovered around 2 per cent. China, meanwhile, has hovered around 15 per cent,” Sunitha Raju, professor of economics at the Indian Institute of Foreign Trade (IIFT), told ThePrint.
“Chinese exports are in high-growth sectors like electronics, transport equipment, chemicals and machinery. India is still supplying the US with gems and jewellery, pharma products etc. It has a long way to go,” she added.
This report has been updated with Richard Rossow’s comments.
(Edited by Amrtansh Arora)