India remains one of the world’s fastest growing major economies although it faces challenges common to many other countries such as inflationary pressures, commodity price volatility, and supply chain disruptions in the aftermath of the COVID-19 pandemic and Russia’s ongoing war in Ukraine. The United States-India relationship remains resilient, with total trade in goods and services topping $191 billion in 2022, almost double the amount recorded in 2014. India’s economy grew at 7.2 percent over the April 1, 2022-March 31, 2023, India’s fiscal year (IFY), with growth particularly strong, at 8-9 percent, in the five states of southern India (Telangana, Andhra Pradesh, Tamil Nadu, Karnataka, and Kerala). The five southern states of India account for 30 percent of India’s GDP; Maharashtra and Goa account for another 20 percent of India’s GDP. The IMF projects India’s economy will grow by 6.3 percent over the 2023-2024 fiscal year, higher than the global average.
Indian government FDI initiatives are concentrated in sectors such as information technology services, software, business services, pharmaceuticals, and industrial equipment. U.S. stock of FDI reached $103 billion during IFY22-23, and the U.S. remained the largest single source of FDI in India for the second consecutive year.
Following a minor decline of Indian-origin foreign direct investment (FDI) into the United States in 2020, total stock of Indian FDI in the United States reached $14.4 billion in 2021. India’s direct investment in the United States sustains more than 72,000 U.S. jobs.
India is the United States’ ninth-largest trading partner, with U.S. goods and services worth $73.1 billion sold to India in 2022. The United States maintained its position as India’s largest trading partner, with $118.8 billion of imported goods and services. The United States is expected to continue its trade deficit with India in 2023. India partnered with the United States and eleven other countries to launch the Indo-Pacific Economic Framework for Prosperity in May 2022, a high-standard agreement that aims to produce benefits that fuel economic activity and investment, promote sustainable and inclusive economic growth, and benefit workers and consumers.
A wide array of U.S. companies are active participants in the Indian market, across most sectors. However, the Indian government’s focus on fostering “self-reliance” as a means of bolstering domestic businesses and employment present challenges for U.S. enterprises seeking to sell their goods and services within India. This is particularly evident in Indian government procurement, where heavy preference is given to domestically produced options. As part of its self-reliance initiative, India has introduced various market access barriers in the form of tariffs and taxes, localization requirements, indigenous standard mandates, labeling practices, price controls, and import restrictions.
Despite market access concerns, India remains an attractive destination for many U.S. exporters. Many Indian conglomerates stand on par with their international counterparts in sophistication of operations and market prominence. In sectors like information technology, telecommunications, pharmaceuticals, textiles, and engineering, Indian companies are renowned for their ability to innovate and compete. U.S. companies operating in India emphasize that success requires a long-term planning horizon and the ability to adapt strategy to regional conditions. While complex and challenging, the Indian market offers significant opportunities for U.S. companies.
Political Environment
Please find information on the political environment in India at the State Department’s Countries & Areas website.