India - U.S. Trade Relations: Opportunities and challenges

The U.S. is the leading economy on one hand and India being the fastest growing economy on the other, has a significant impact on the global economy. Both countries complement each other in terms of factor inputs, mainly labor and capital. India, which is the secondmost populous country of the world, offers abundant labor. The U.S., on the other hand, is considered a high-income country with plentiful opportunities to make investments abroad, which in turn leads to higher returns. With a population of more than a billion, India is a lucrative market for the U.S. goods and services. This brings home the fact that the U.S. is one of the largest trading partners with India and vice-versa. The strengthening of trade relations between countries further boosts ties in other realms such as political and diplomatic relations, national security, environment, culture, and exchange. This paper analyzes the data of India-U.S. volume of trade, the flow of trade, and the direction of trade over a period of 40 years. Further, the paper also analyzes impact of this bilateral trade on the economic growth of these two countries, their major trade issues, the impact of recent trade wars on their trade relations, results of the trade negotiations, and the possibility of a trade deal or Free Trade Agreement.