US Emerges as India’s Largest Trade Partner in FY 2022, Surpasses China

The US surpassed China to become India’s top trading partner in FY 2021-22, reflecting stronger economic ties between the two countries. Bilateral trade between India and the US stood at US$119.42 billion, or 11.5 percent of India’s total trade. Among India’s top 10 trading partners, the US is the only country with which India has a positive trade balance.

The latest trade figures for the financial year 2021-22 (FY 2022) suggest that the US has surpassed China to become India’s top trading partner, reflecting strengthening economic ties between the two countries.

It also hints at India’s warming relations with the US. India recently became a member of the Indo-Pacific Economic Framework (IPEF) and the US- and WEF-led First Movers Coalition.

Previously, China was India’s top trade partner from FY 2014 to FY 2018 and again in FY 2021 while the UAE was India’s largest trading partner in the intervening years.
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India-US bilateral trade data for FY 2021-22

As per data released by the Ministry of Commerce, bilateral trade between India and the US in FY 2022 stood at US$119.42 billion, accounting for 11.5 percent of India’s total trade, which stood at US$1.03 trillion. India-US bilateral trade has witnessed considerable upsurge compared to the US$80.51 billion recorded just the previous year.

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India’s exports to the US increased to US$76.11 billion in FY 2022, compared to US$51.62 billion in FY 2021, while imports increased to US$43.31 billion compared to US$29 billion in the previous fiscal.

India maintained a positive trade balance with the US, recording a surplus trade of US$32.79 billion. In fact, as per the statistics, among India’s top 10 trading partners, the US is the only country with which India has a positive trade balance. The other top trading partners include UAE (US$72.9 billion), Saudi Arab (US$42.85 billion), Iraq (US$34.33 billion0, Singapore (US$30.10 billion), Hong Kong (US$30.08 billion), etc.

Major commodities traded between India and US

Principle commodities exported by India to the US are precious and semi-precious stones, drugs and pharmaceuticals, petroleum products, cotton fabrics, garments, marine products, iron and steel products, electrical equipment and auto components. Several factors like a high consumption-driven growth in US, pent-up demand for items such as jewellery and electronics, diversification of supply chains by companies, etc. have contributed to this accelerated trend. Electronic component companies, too, have moved production to India. For example, Apple now exports a million smart phones from India to the US every month. 

India’s import basket from the US primarily comprised of crude oil, which seized the largest share, along with other items like pearls, precious and semi-precious stones, petroleum products, coal, coke, organic chemicals, gold, paper and paper board.

US surpasses China as India’s largest trade partner

According to the data, China emerged as India’s second largest trading partner in FY 2022, registering 11.12 percent of India’s total trade. India’s bilateral trade with China amounted to US$115.42 billion as compared to US$86.4 billion in the previous fiscal (FY 2021), when China was India’s largest trading partner.

During FY 2022, exports to China rose to US$21.25 billion, marking a slight increase from US$21.18 billion in FY 2021. Simultaneously, imports too registered a considerable increase, soaring to US$94.16 billion from about US$65.21 billion in FY 2021. According to the data, the trade gap between India and China in FY 2022 rose to US$72.91 billion from US$44 billion in FY 2021.

Trade experts forecast a positive outlook for India-US economic ties

Khalid Khan, vice president of the Federation of Indian Export Organization (FIEO) believes that India-US trade will bolster in coming times, given both countries have increased engagement at various platforms, including at the recent IPEF. India has started to emerge as a trusted partner as global firms are looking to diversify their supply chains and reduce their dependence on China.

Associated Links

• Updates on India’s FTAs in 2022
• India’s Export Import Trends for Merchandise Goods in FY 2021-22

This article was first published on June 1, 2022 and last updated on June 6, 2022.

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