Why Indo-US Trade Ties Will Strengthen Whether Trump Wins or Biden

Data indicates that trade ties between India and US is immune to regime changes in either of the two countries.

Any relationship that's mature enough is considered better suited to handle mood swings and other changes. Similarly, an evolved bilateral relations between two countries can stay the course despite domestic changes.

Looking at the data of the last two decades, one gets the impression that the trade ties between India and the United States have attained the exalted status of being immune to regime changes in either of the two countries. But why is it so? We’ll let data do the talking.

How deep is the trade engagement?

The bilateral trade grew a very impressive 7.5 times between 2000 and 2018. From a little over $19 billion in 2000 to more than $142 billion in 2018, it has been a one-way street when it comes to trade engagement between the world’s two largest democracies.  The growth has been even more impressive in the last ten years, with import from and export to the US growing in excess of 100 percent between 2009 and 2019. This has happened despite regular regime changes in both the countries. While we have had three prime Ministers since 2000, the US has had three different kinds of personalities leading the country. Including the mercurial Donald Trump.

How has bilateral trade grown in the last 10 years?

According to the Office of the United States Trade Representative, “US goods exports to India in 2019 were $34.3 billion, up 3.3 percent ($1.1 billion) from 2018 and up 109 percent from 2009” and the top US export items to India include “mineral fuels ($8.2 billion), precious metal and stone (diamonds) ($6.4 billion), aircraft ($2.8 billion), machinery ($2.4 billion), and organic chemicals ($1.9 billion).” It says India’s exports to the US “totaled $57.7 billion in 2019, up 6.3 percent ($3.4 billion) from 2018, and up 173 percent from 2009. And top export items included pharmaceuticals, IT services and gems and jewelleries. More than doubling in 10 years is very impressive growth indeed. That too at a time when global growth has been slightly subdued because of the after effects of 2008 Lehman crisis.

How has the growing clout of Indian-Americans contributed to the bonhomie?

From just 3.8 lakhs in 1980 to more than 32 lakhs in 2010, the ranks of Indian-Americans have seen rapid growth in recent years. Add that to their growing might in the technological influential Silicon Valley and their ascent in board rooms of Fortune 500 companies, including iconic Google and Microsoft, you have a community that has added a new dimension to Indo-US relations. It is estimated that one out of every seven doctors in the US are persons of Indian origin and CEOs of 2 percent of Fortune 500 companies are Indian-Americans. And if opinion polls are to be believed, a person of Indian origin may become the vice-president of the world’s most powerful nation very soon. The growing clout of the Indian-American community has added wings to brand India and has lent immense stability to Indo-US relations. This has been one of the factors that has ensured that trade ties keep strengthening despite regime changes and even in the midst of growing trade protectionism the world over.

Will the growing trade deficit of the US be a dampener?

US’ trade deficit with India stood at $8 billion in 2009. It ballooned to nearly $29 billion in 2019. Will this put brakes on the growing bilateral trade? Looks unlikely, given the nature of the trade between the two countries. Pharmaceutical products, for instance, remains one of India’s top exporting items to the US. And India’s pharma sector has influential US companies like Pfizer, Abbot and Johnson and Johnson. What it means is that not just Indian companies, US companies too are the beneficiaries of India’s growing pharma exports to the US. Other sectors too, have similar examples of US companies profiting from India’s growing trade. The trade deficit data, therefore, does not present the complete picture of Indo-US trade engagement.

How US giants have contributed to better trade ties?

Google has an employee base of nearly 6,500 in India which is close to 6 percent of the company’s total global workforce. India happened to be one of the first destinations of Microsoft outside of the US right after its inception. Ford Motors uses its manufacturing unit in India to export its small cars to nearly 40 countries. Global oil giant ExxonMobil has captured a large part of India’s lubricant market and US companies like PepsiCo, Coca-Cola, MacDonald’s, Nike, Amazon, Pfizer are household names in India. The presence of such multinational corporations has ensured that the US has vested interests in growing economic partnership with India.

That is the reason why despite US presidency alternating between Republicans and Democrats and leaders of different persuasions capturing Delhi Durbar, Indo-US economic engagement keeps on deepening. The election of either Joe Biden or Donald Trump is not going to be more than a comma in this forward march. It is therefore safe to assume that irrespective of who gets entry into the coveted White House for the next four years, India and US will continue to be all-weather friends for years to come.