India US Relationship: Trade, Economy & Culture Insights

Explore the multifaceted India US relationship, focusing on economic ties, trade relations, cultural exchanges, and democratic values. Understand the current standing of these two nations through key points and examples, highlighting the significance of people-to-people connections.

Current Status and PM Modi's US Visit

During his recent visit to the U.S., Indian Prime Minister Narendra Modi met with top business leaders, including Elon Musk, and U.S. President Donald Trump. Amidst the backdrop of the deportation of Indian migrants, Modi emphasized a new "trust" framework aimed at transforming India-U.S. relations through advanced technology and resilient supply chains.

During a meeting with his American counterpart, President Trump announced the approval of Tahawwur Rana's extradition to India. He described Rana as one of the "very evil people of the world," emphasizing the need for justice for the 2008 Mumbai terror attack.

The Foundations of the India-US Relationship

The relationship between India and the United States has evolved considerably since India's independence in 1947. Initially marked by skepticism and distance, the ties between these two nations have grown closer over the decades, reflecting shared interests in democracy, security, and economic growth. Today, the India-US relationship symbolizes a strategic partnership based heavily on mutual respect and shared values.

Historical Perspective of India US relationship

# Since India's independence

the relationship with the United States has evolved, navigating through the complexities of Cold War-era tensions and disagreements over India's nuclear ambitions. Recently, however, ties have strengthened, with enhanced cooperation in various economic and political domains.

# Cold War and Non-Alignment Movement (NAM)

A significant moment came when Prime Minister Jawaharlal Nehru met with U.S. President Harry S. Truman during a multi-week tour of the United States, just before India declared its commitment to neutrality in the Cold War. This pivotal trip marked India's leadership role in the non-alignment movement and established a framework for U.S.-India relations during the Cold War. While the relationship faced challenges, it also opened avenues for collaboration and dialogue, shaping a dynamic partnership that continues to adapt to a changing global landscape.

Economic and Trade Relations

## U.S.-India Investment and Trade Relations

The United States is the third-largest investor in India, with FDI inflows reaching $65.19 billion from April 2000 to March 2024. As India's largest trading partner, the U.S. contributed to a trade surplus in 2023-24, primarily in engineering and electronic goods.

# India-USA Trade Overview for FY24

In the fiscal year 2024, the bilateral trade between India and the United States reached a remarkable $118.2 billion, a slight decrease from $128.78 billion recorded in FY22. This year, India enjoyed a substantial trade surplus of $36.8 billion.

# Exports Breakdown

Indian exports to the US accounted for $77.5 billion, significantly higher than the $40.7 billion worth of American exports to India. This highlights India's strong export capabilities and growing demand for Indian goods in the American market.

# Investment Landscape

Additionally, the USA stands as the third-largest investor in India, with cumulative Foreign Direct Investment (FDI) inflows totaling $65.19 billion from April 2000 to March 2024. This points to a robust economic relationship bolstered by significant investment opportunities on both sides.

The US is one of the largest investors in India, with investments spanning various sectors like technology, renewable energy, and pharmaceuticals. Conversely, India has established itself as a valuable market for American businesses, particularly in information technology and service industries. This exchange has not only bolstered economic growth but also created millions of jobs on both sides.

Cultural Connections and People-to-People Ties

# Large Indian diaspora

Cultural connections between India and the US are deeply ingrained, facilitated by a large Indian diaspora residing in America. This community plays a vital role in fostering ties through cultural exchanges and social integration.

India US cultural relation and Indian Diaspora in US

# Indian Culture Celebration

Events like Diwali and Indian Independence Day are celebrated in many American cities, showcasing the rich tapestry of Indian culture to a broader audience.

Moreover, educational exchanges further strengthen the bond, with numerous Indian students pursuing higher education in the US. This not only contributes to cultural understanding but also builds a network of individuals who can bridge both societies.

Democracy and Political Relations

PM Modi addressed to Joint sitting of the US Congress in 2023

# Democracy, Human Rights and Rule of Law

The commitment to democracy stands as a crucial pillar in the India-US relationship. Both nations uphold democratic values and regularly engage in dialogues that emphasize governance, human rights, and the rule of law. Elections in both countries often draw attention from the other, reflecting a keen interest in each other's political landscape.

# Mutual Respect and Interest in Democratic Traditions

Instances such as the participation of American diplomats in India's democratic processes demonstrate mutual respect and interest in democratic traditions. Moreover, both nations collaborate on a variety of global issues, including climate change and sustainable development, underscoring their broader commitment to global democracy.

India-USA Defense and Security Relations

MH 60R Seahawk helicopter imported from US.

# Major Defense Partner

Since the designation of India as a "Major Defense Partner" by the United States in 2016, the two nations have significantly strengthened their defense ties. This relationship was further enhanced in 2018 when India attained Strategic Trade Authorization Tier 1 status, permitting it to access a variety of military and dual-use technologies without the need for licenses.

# Key agreements including LEMOA, COMCASA

Key agreements such as the Logistics Exchange Memorandum of Agreement (LEMOA), the Communications Compatibility and Security Agreement (COMCASA), and the Industrial Security Agreement (ISA) have facilitated deeper collaboration between the two nations.

# Defense Trade

This burgeoning partnership has seen substantial defense trade, with notable sales including MH-60R Seahawk helicopters and Apache helicopters, underscoring the growing military collaboration and mutual interests in regional security.

Apache helicopter also imported from US.

Cooperation Between India and the US in Global Forums

Major International Forum where India US is key member sharing common platform

1. G20

India and the US collaborate within the G20 framework to address pressing global issues such as economic stability, climate change, and sustainable development. Their partnership aims to enhance global governance and improve the resilience of economies.

2. G7

As key players in the G7, India and the US work together on initiatives related to public health, technology, and economic growth, reinforcing their commitment to democratic values and collective security.

3. I2U2

In the I2U2 forum, which includes India, the US, Israel, and the UAE, both nations focus on sustainable urban development and infrastructure projects, fostering innovation and investment in critical sectors.

4. Quad Group

Through the Quad, India and the US strengthen their strategic partnership alongside Japan and Australia, addressing regional security challenges, promoting a free and open Indo-Pacific, and enhancing maritime cooperation.

Future Prospects

Currently, the India-US relationship is at a high point, characterized by strong strategic and economic ties. The recent emphasis on defense cooperation and technological partnerships reflects a commitment to address common challenges in a rapidly changing global environment.

Looking ahead, it's crucial to continue nurturing this relationship through diplomatic channels, economic collaborations, and cultural exchanges. Initiatives aimed at enhancing trade and facilitating investments will reflect positively in the ongoing partnership and underscore the importance of India and the US as critical partners on the world stage.

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