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Amity Business School

A

Presentationon

Trade Relations Between India & The Trade

Agreement & Various Trade Barriers.

Presented To:

Mr. Ashok

Sharma

Presented By

Ramneek S Sandhey(46)

Marketing & SalesSection E
http://images.google.co.in/imgres?imgurl=http://www.ustr.gov/sites/default/files/global-deal.jpg&imgrefurl=http://www.ustr.gov/trade-topics/industry-manufacturing/industrial-tariffs/free-trade-agreements&usg=__HL4Ys9xUwVqnYGYNL-GUTd5LGPs=&h=282&w=425&sz=171&hl=en&start=31&itbs=1&tbnid=ToEC59YAUnnJHM:&tbnh=84&tbnw=126&prev=/images%3Fq%3Dtrade%2Bagreement%26start%3D20%26hl%3Den%26sa%3DN%26gbv%3D2%26ndsp%3D20%26tbs%3Disch:1http://images.google.co.in/imgres?imgurl=http://www.ustr.gov/sites/default/files/global-deal.jpg&imgrefurl=http://www.ustr.gov/trade-topics/industry-manufacturing/industrial-tariffs/free-trade-agreements&usg=__HL4Ys9xUwVqnYGYNL-GUTd5LGPs=&h=282&w=425&sz=171&hl=en&start=31&itbs=1&tbnid=ToEC59YAUnnJHM:&tbnh=84&tbnw=126&prev=/images%3Fq%3Dtrade%2Bagreement%26start%3D20%26hl%3Den%26sa%3DN%26gbv%3D2%26ndsp%3D20%26tbs%3Disch:1http://images.google.co.in/imgres?imgurl=http://2.bp.blogspot.com/_gevTWchPWwE/SRSFd4foDGI/AAAAAAAAADc/SZsxkZP_yjE/S254/AMITY-Logo1.jpg&imgrefurl=http://amitykolkata.blogspot.com/2009/01/statistics-case-study-sem-1.html&usg=__ttH8UjKd1rwTqpm4pCzlzFYSeow=&h=200&w=200&sz=11&hl=en&start=2&itbs=1&tbnid=6AGS0uimWWXKEM:&tbnh=104&tbnw=104&prev=/images%3Fq%3Damity%2Blogo%26hl%3Den%26gbv%3D2%26tbs%3Disch:1

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Contents

Introduction IndiaU.S. trade relations

Bilateral and multinational trade relations

World trade organization and other multilateral relations

Bilateral merchandise trade Indo-U.S. trade in services

Major component of the bilateral trade

Direct investment

Indo-us trade barriers

Current trade situation Conclusion

Recommendation

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Research Methodology and Design:

Exploratory Research: an initial research which analysis the data & explores the possibilityof obtaining ideas & insight. A literature surveyis used for this purpose and secondarysources i.e.available information/literature, magazines, internet websites, books are usefulfor findings and to develop new hypothesis. It is the most economical and quickest way tofind possible hypothesis.

Project rationale This report provides a summary of Indias key economic and trade issues between India and

the United States. It analyses Indian and US markets and understands the area ofInternational Business and various factors that influence the trade between them. It alsotalks about Indias foreign trade policies especially with the US with respect to the trade

agreements and trade barriers.

Project Limitations

The project is based on the past trend and data of previous years

The research is literature based

Availability of recent information is missing

The practical approach may vary from the stated

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Introduction

From modest $ 5.6 billions in 1990, the bilateral trade in

merchandise goods has increased to $ 21.68 billion in 2004

representing an impressive growth in a span of 14 years.

Indias merchandise exports to the U.S.A. grew at 19.28 %

from US $ 13.05 billion in 2003 to US $ 15.57 billion in 2004.

US merchandise exports to India increased from US $ 4.98

billion in 2003 to US $ 6.11 billion in 2004, an increase of22.69%.

US exports to India recorded a 22% plus growth for second

consecutive year. 1

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Economic and trade relations between the United States andIndia

Number of ups and downs since Indias independence in 1947.

During much of the 1950s, the United States was a leading

trading partner for India

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INDIAU.S. TRADE RELATIONS

1993 1994 1995 1996 1997 1998 1999 2000

Indias

Exports

4551 5320 5736 6169 7322 8237 9071 10686

Indias

Imports

2761 2296 3296 3318 3608 3564 3688 3663

Turnover 7312 7598 9032 9487 10931 11801 12759 14349

Balance (+) 1790 3005 2440 2851 3715 4673 5383 7023

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INDIASSHARE IN US TRADE

In 1991,U.S identified India as one of the 10 majoremerging markets.

India-US bilateral trade also started to grow.

US is the destination of one-fifth ofIndias exports.

India's percentage share in US imports has remainedmore or less stable over the last few years.

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I NDI A - USA TRADE COMPOSITION

Increases in the exports of diamonds, textiles and

ready-made garments, carpets, footwear and leather

products, dyes, iron, edible fruit and nuts and spices,coffee and tea

The chief items imported from the U.S. at present are

machinery including project items, fertilizers, aircraftand aeronautical equipment, medical equipment, and

organic chemicals.

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BILATERAL AND MULTILATERAL TRADE RELATIONS

Bilateral relationships :

Civil Nuclear Cooperation

U.S. Generalized System of Preferences

U.S.-India Economic Dialogue

Verified End User Program/Trusted Customer Program

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Multilateral Relationships:a. WTO

b. IMF

c. WIPO

d. Asian Development Bank

But U S and India also oppose each other in:

1. Doha Round Negotiations

2.Proposed Regional Free Trade Agreements10

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Item Years

2001 2002 2003 2004 2005

Indias exports to US 9737 11818 13055 15572 12002

US exports to 3757 4101 4980 6109 5210

Total Bilateral Trade 13494 15919 18035 21681 17212

Bilateral Merchandise Trade (2001 to 2005) (In US $ Millions)

Source: U.S. Department of Commerce

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Major items export from India to U.S.

Diamonds &

precious stones 29%

Textiles-25%

Iron & Steel-5.73%

Organic Chemicals-

3.46%

ElectricalMachinery-3.24%

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Major items of export from US to India

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Insurance sector in India is opened up for up to26% FDI, proposals to hike this limit to 49%.

Emergence of Business Process Outsourcing.- American Express, Citicorp, Microsoft, Dell, Hewlett-Packard, HSBC,

Standard Chartered and Convergys etc are taking advantage of theopportunities offered by India's IT Sector.

Telecom industry- Amongst major US companies that haveentered the Indian market are AT&T and Qualcomm.

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India has also made progress in expanding theirinvestment base in the United States of America.e.g. - Dr. Reddy's Laboratories and Ranbaxy have boughtpharmaceutical manufacturing units in the US.

According to some surveys conducted in the US,Indians living there contribute a lot to USeconomy and are among the most highlyeducated class in America.

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INDO-US TRADE BARRIERS

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US EXPORT RESTRICTIONS ON INDIAN

COMPANIES1.Bureau of Export Administration (BXA) in the US

Department of Commerce imposed restrictions onexports to four Indian organizations

Bharat Electronics Ltd

Bhaba Atomic Research Center (BARC)

Indira Gandhi Center for Atomic Research

Indian Rare Earths Ltd

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2.Export licensing became stricter with the USimposition of sanctions in May 1998, after ournuclear tests.

According to a BXA notification issued in June

1998:BXA will deny all export and re-export applications to

India under the Export Administration Regulations

(EAR).

BXA will publish a list of Indian Government and

Private entities involved in nuclear and missile

activities.

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3.GENERALIZED SYSTEM OF

PREFERENCES (GSP)

Under the Generalized System of Preferences (GSP),Indian exports worth about US $ 1.1 billion enjoy dutyfree access or reduced duty access to the U.S.

market.

In 1992, the US removed GSP benefits for a largenumber of products from India, mainly agriculturalchemicals and pharmaceuticals.

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INDOUS CONTROVERSIES..

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1.INTELLECTUAL PROPERTY RIGHTS

In April 1991, India was designated as a Priority Countryunder Special 301 for alleged inadequate protection ofintellectual property rights.

After several rounds of consultations, differences between the two sides on

the issues of Copyright, Trademarks and Access for Motion Pictures were

largely resolved to have market access to US motion pictures.India agreedto move some amendments to its Copyright and Trademark laws take steps

for better enforcement and substantially improve market access for U.S.

motion pictures.

In its April 1996 determination, the USTR (United StatesTrade Representative) indicated that USA would take upthe case in the WTO against India.

Due to failure in pharmaceutical and agricultural chemical products, as

required under the TRIPS Agreement.

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2.ANTIDUMPING (AD) & EXCESSIVE CUSTOM

DUTY(ECD) CASES AGAINST INDIAN PRODUCTS

Rise in the number of AD/ECD casesagainst Indian companies.

In1998, 3 AD & 1ECD cases were initiatedagainst Indian products while 21 cases fromother countries.

preserved mushrooms

stainless steel round wire

elastic rubber tape

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CURRENT TRADE SITUATION India has recently agreed to lower tariffs for

pharmaceutical products from the United States.

India has recently eliminated tariffs for soft drinks from

the United States. Current Indian law allows for up to 51 percent of its retail

sector to have support from foreign investors.

United States and India have recently agreed to

establish exchange programs between small businessesin each country.

Trade in food and other agricultural products hasincreased between the United States and India.

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Steps taken up by India Enhancement in Indian technological capabilities.

Ensure high quality packaging.

Aggressive marketing of competitively priced products.

Timely delivery and consistent maintenance of minimumand rising quality standards

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Indias Trade Performance

(in US $billion)Year Exports %change Imports %change

1990-91 18.1 9.25 23.5 10.59

1991-92 18.0 -0.55 19.6 -16.60

1992-93 18.5 2.78 21.9 11.73

1993-94 22.2 20.00 23.3 6.39

1994-95 26.3 18.47 28.7 23.18

1995-96 31.8 20.91 36.7 27.87

1996-97 33.5 5.35 39.2 6.81

1997-98 35.0 4.48 41.5 5.871998-99 33.2 -5.12 42.4 2.17

1999-00 36.8 10.84 49.8 17.45

2000-01 44.2 20.11 50.1 0.60

2001-02 44.0 -0.45 51.6 2.99

2002-03 52.7 19.09 61.4 18.99

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Opportunities for US India's Telecommunication sector, expected to continue to

provide substantial opportunities to US investors.

Reduction of regulatory charges by Govt. of India

Moving to licensing policy.

Revamping of national telecom policy.

India's energy sector - an important destination for USinvestment.

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RECOMMENDATIONS

India is required to further relax its trade andinvestment regimes.

Stop piracy.

India can look to join APEC (Asia PacificEconomic Co-operation).

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