State by State: India and Texas Trade

If Texas were a country, it would have the 14th largest economy in the world. With a GDP of US $1.414 trillion, the ‘Lone Star State’ would vie with South Korea to be ranked 13th, leaving Spain and neighboring Mexico at a respectable distance.

Texas has been the U.S. state with the highest volume of exports for 13 consecutive years. In 2014, Texas led U.S. exports again, totaling US $289 billion. The state boasts 16 seaports, three of which rank in the country’s top ten busiest. As part of the Gulf Intracoastal Waterway that runs from Brownsville, Texas to St. Marks, Florida, the state covers 67 percent of the U.S. waterborne traffic.

Trade and Exports

As the second largest state in the U.S. by both population and GDP, Texas has significant trade relations with India. Last year, Texas did US $1.95 billion in exports to India and US $4.04 billion in imports from India. This level of trade is part of the reason the Houston-Galveston Customs District is the third busiest gateway for US-Indian trade by sea and air.

The biggest exports from Texas are chemicals and petroleum and coal, which account for 33.6 percent and 18.9 percent of total exports to India, respectively. Machinery and computer electronic products are also big exports with 14.1 percent and 8.9 percent of exports.

Imports are an especially big component of India-Texas trade, accounting for 67.4 percent of the total bilateral trade relationship. The biggest contributor to this is food manufacturing, which is valued at US $1.04 billion and equals about a quarter of imports from India. The next biggest contributor is petroleum and coal products with about US $500 million. This reflects the important ways in which India contributes to some Texas’ strongest industries, especially agriculture and energy.

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Investment Opportunities

India could become a market for manufactured goods from Texas. Non-electrical machinery is already the third biggest exports from Texas to India. In 2014, machinery exports from Texas to India increased by 7.38 percent while petroleum and coal exports decreased by 7.23 percent. This contrast shows that future trade could begin to shift.

With a 14.25 percent increase in 2014 from 2013, metal products are one of the fastest growing imports from India into Texas. If Prime Minister Narendra Modi’s ‘Make in India’ initiative is successful, exporting machinery and importing products may become a fixture of India-Texas trade in the years to come.

In the energy sector, Texan firms could utilize their expertise to do business in India. Oil Natural Gas Corporation (ONGC), an Indian multinational oil and natural gas corporation, recently acquired fracking units, and is likely to bring small fracking companies from Texas and North Dakota to explore for gas in India. ONGC is planning to outsource about 100 additional wells per year to fracking companies, which could be an opportunity for many smaller energy firms in Texas.

In addition, the greater Houston and Dallas-Fort Worth areas are major hubs for the Indian-American community in Texas. This area hosts numerous Indian-American owned companies, such as Vinmar International, a petrochemical product market distribution and project development company. This community can help facilitate trade between Texas and India, while the Indian government has recently enacted several reforms to make it easier for Indian-Americans to invest in India.

RELATED: Pre-Investment and Entry Strategy Advisory

Tax Treaty – U.S. Trade with India

The U.S. has signed a Double Tax Treaty with India. This can reduce tax burdens under certain circumstances in both trade and any India legal establishment. Please seek professional advice for specific India investment requirements.

Further Support from Dezan Shira & Associates

Dezan Shira & Associates can service Texas-based companies that are looking to further develop their operation in China. The firm can help companies establish a direct office in the country and can guide them through the affiliated tax, legal and HR issues that come with doing so. To arrange a free consultation, please contact our U.S. office at usa@dezshira.com.

For further Texas-Asia trade data, please see our articles on trade with ASEAN, China and Vietnam.

An Introduction to Doing Business in India 2015 (Second Edition)
Doing Business in India 2015 is designed to introduce the fundamentals of investing in India. As such, this comprehensive guide is ideal not only for businesses looking to enter the Indian market, but also for companies who already have a presence here and want to keep up-to-date with the most recent and relevant policy changes. We discuss a range of pertinent issues for foreign businesses, including India’s most recent FDI caps and restrictions, the key taxes applicable to foreign companies, how to conduct a successful audit, and the procedures for obtaining an employment visa.

Using India’s Free Trade & Double Tax Agreements
In this issue of India Briefing magazine, we take a look at the bilateral and multilateral trade agreements that India currently has in place and highlight the deals that are still in negotiation. We analyze the country’s double tax agreements, and conclude by discussing how foreign businesses can establish a presence in Singapore to access both the Indian and ASEAN markets.

Passage to India: Selling to India’s Consumer Market In this issue of India Briefing magazine, we outline the fundamentals of India’s import policies and procedures, as well as provide an introduction to engaging in direct and indirect export, acquiring an Indian company, selling to the government and establishing a local presence in the form of a liaison office, branch office, or wholly owned subsidiary. We conclude by taking a closer look at the strategic potential of joint ventures and the advantages they can provide companies at all stages of market entry and expansion.

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