Trade between U.S. and India drives economic growth and connectivity

Row of women picking saffron flowers (USAID)
Afghan women cultivate saffron, which can be sold through partnerships made through the U.S. and Indian governments. (USAID)

Trade between India and the United States brings about both global economic growth and healthier economies across South and Central Asia.

The United States and India have enjoyed a long history of bilateral trade — spanning 200 years — across a wide range of sectors.

“I would submit that there is no bilateral relationship in the world that is as broad, complex, and rich in substance as that of the United States and India,” said former U.S. Ambassador to India Kenneth Juster on January 5 during his farewell address.

“We cooperate on defense, counterterrorism, nonproliferation, cybersecurity, trade, investment, energy, the environment, health, education, science and technology, agriculture, space, the oceans, and so much more,” he said.

Over the past two decades, U.S.-India trade has grown, and the United States is now India’s Number 1 trading partner. Exchanged goods and services expanded from $20.7 billion in 2001 to nearly $147 billion by the end of 2019. Experts believe that with further liberalization of trade policy, two-way trade could double over the next five years.

Cumulative U.S. direct investment in India reached around $46 billion in 2019, and the actual figure for all sources of U.S. investment is much higher, with U.S. companies having become the largest investors in India. This investment contributes to job creation, consumer choice, technology diffusion and economic improvement for Indians. For example, U.S. e-commerce firms in India have facilitated around $1 billion in exports to the United States.

Since 2017, the United States has become a significant source of energy for India. U.S. crude oil exports to India went from zero in 2016 to 93 million barrels in 2019, and U.S. liquefied natural gas exports grew more than fivefold from 2016 to 2019.

The result is more formal-sector jobs in India, cultural and educational exchange opportunities between the two countries and growth in Indian sectors, like the tech industry.

Four men lined up together holding ribbon near booths (USAID)
Since 2017, the United States has sponsored three Passage to Prosperity trade shows with the Indian and Afghan governments. (USAID)

American companies Walmart and Amazon have invested over $23.7 billion in e-commerce in India, supporting Indian business owners. Through Amazon, Indian e-commerce transactions recently crossed the $2 billion threshold, a first for the country.

American telecommunications companies have also partnered with Indian companies to bring connectivity to the region.

India’s three largest telecommunications companies — Airtel, Jio and Vodafone — partnered with U.S. companies Altiostar, Cisco and Mavenir to create and distribute Open Virtualized Radio Access Network (Open vRAN) across India. This network will bring faster 5G internet and connectivity in a safe, efficient way.

“The bottom line is that no other country contributes as much to job creation, consumer choice, technology diffusion, and economic improvement for Indians,” Juster said.

U.S.-India business partnerships have also benefited other countries, including Afghanistan.

Since 2017, the U.S. Agency for International Development (USAID) has helped foster trade between India and Afghanistan through an initiative called Passage to Prosperity, with trade shows to spur Indian private sector investment in Afghanistan.

The majority of the signed contracts between India and Afghanistan have been agricultural. In 2019, there were over $33.6 million agricultural contracts completed. There is tremendous potential for expanding two-way trade, both within agriculture and in other products, such as marble.

Women, in particular, benefited from these deals. During the 2019 Passage to Prosperity trade show, women-owned companies signed nearly a quarter of all business contracts.

“The United States remains committed to this region — and to India — because our future is inextricably linked to it,” Juster concluded. “It is a durable commitment, supported by the desires of our citizens, our common democratic principles, our shared interests, and our economic and commercial ties.”