Neha Dhamija

For a number of years the world’s largest economy and the world’s most dynamic economy had strained and cold economic relations prevailing between them. Despite of these conditions, the global economy is predominantly dependent on these two significant economies of the world for its effective and smooth functioning. It was only after 1991 that the economic reforms were introduced and brought in a revolutionary change in the Indian economy, which assisted the economy to grow and realize an escalation in trade flows, investments and a fall in the income poverty.

However, today world’s largest democracy and oldest democracy, Indo-US, are natural partners and share chief interests in trading. The shared interests and fundamental democratic values of these economies have facilitated their trade dealings. Regardless of the fact that USA is India’s major trading partner, India ranks 18th in US imports and 24th in US exports.

Talking about the investment sector of these economies, United States is India’s second largest source of Foreign Domestic Investment accounting to 16 percent investment flows to the Indian economy. With its investments, US has covered every sector in the Indian economy including IT, infrastructure, Energy, Telecom sector, pharmaceuticals and biotechnology that hold immense potential for boosting the economic cooperation between the two economies.

Another important aspect of Indo-US economic relations comes with the emergence of Business Process Outsourcing and India’s IT sector. These sectors help the two economies to earn huge cost benefits out of each other.

To enhance and strengthen the economic relations between the two economies a number of steps are still to be taken to convalesce the situation. The major factor that hinders the economic links of these economies is the high tariff rates on imports along with charging high taxes and surcharges on its imports. The US also criticizes Indian economy for imposing non-tariff barriers on its exports to India.