The bilateral trade between India and the US could reach $238 billion by 2025 from the current $143 billion given the present dynamics of the commercial engagement, a US-based India centric advocacy group said July 11.
This growth will occur if trade grows by 7.5 per cent each year, as has been the trend for the last seven years, the US India Strategic and Partnership Forum (USISPF) said in a report released on the occasion of its second annual leadership summit.
The USISPF’s “US India Bilateral Trade Report” estimate also projects that, by 2025, bilateral trade could range between $283 billion to $327 billion, at an annual average growth rate of 10 per cent-12.5 per cent (as witnessed in 2017 and 2018).
“The assessment underscores pathways for growth and economic opportunity in our bilateral ties by highlighting current trends,” it said.
Sectors such as defence trade, commercial aircrafts, oil and LNG, coal, machinery and electronics are areas of potential growth in US investments and commerce into India.
Similarly, Indian industry has an opportunity to promote the automotive, pharmaceuticals, seafood, IT and travel services to the US market, the report said.
“In line with the current trends and huge impending deals in aerospace and petroleum & gas sectors between the two economies, the volume of bilateral trade is likely to increase in the short to medium terms,” the report said.
Observing that the US–India trade relationship stands solid today with a promising future, the report concluded that the latest trends in increasing volumes of bilateral trade between the two economies point to complementarity of commercial interests.
Reaching $238 billion by 2025 may not be very difficult to achieve given the present dynamics of the commercial engagement, it noted.
“The policy gaps in the trade dynamics of the two countries have led to several contentious issues albeit trade volumes have been steadily expanding, suggesting there is tremendous interest among the businesses from both sides and immense potential remains untapped. This potential may be unlocked with appropriate policy measures from both sides,” the report said.
In its report, the USUISPF notes that currently, the US-India trade relationship is at its highest point with both economies witnessing positive growths in their bilateral trade volumes.
Total bilateral trade of goods and services increased 5.6 per cent on an average annual basis for the period 2012-2016; however, double-digit growth rates of 2017 and 2018 pushed up the annual average growth rate (AAGR) to 7.4 per cent between 2012 and 2018.
“This growth in bilateral trade was accelerated by services trade, which grew at an AAGR of 9.4 percent. Meanwhile, goods trade grew at an AAGR of 6.4 per cent over the same period,” it said.
The US-India trade balance has grown 3.8 per cent on an average in favour of India, from $24.8 billion in 2012 to $25.3 billion in 2018; it has been on the decline since its 2014 peak of $30.2 billion.
“Despite 18 disputes since the inception of the WTO and several ongoing trade policy issues, the US-India bilateral trade numbers are witnessing an upward trend, suggesting that a vast potential remains untapped and can be achieved with policy measures to remove existing trade barriers on both sides,” the USISPF report said.