Discusses key economic indicators and trade statistics, which countries are dominant in the market, and other issues that affect trade.
Indian-origin foreign direct investment (FDI) into the United States was valued at $12.7 billion in 2020, a slight decrease of $179 million from the previous year. As of 2020, India’s direct investment in the United States supported over 70,000 U.S. jobs. Newly announced Indian FDI projects were clustered in the software and information technology services, business services, pharmaceuticals, and industrial equipment sectors. U.S. FDI into India was valued at $41.9 billion in 2020; however, much U.S. investment enters India from third-country destinations.
Most major U.S. companies are active in the market. The Indian government has promoted the concept of “self-reliance” as a means to develop and support Indian businesses and employment, which is making it more difficult for U.S. companies to sell their goods and services in India. This is particularly true for Indian Government procurement when Indian equivalents are available. U.S. exporters may also be pressured to start manufacturing their products locally to retain market access, particularly if similar goods are not produced in India. As part of its self-reliance movement, India has enacted various market access barriers in the form of tariffs, localization requirements, indigenous standards requirements and labelling practices, price controls, and import restrictions.
The aforementioned market challenges notwithstanding, India offers significant opportunities for U.S. companies, and the potential to increase bilateral trade is enormous. Indian conglomerates and high technology companies are generally equal in sophistication and prominence to their international counterparts, and in certain industrial sectors—such as information technology, telecommunications, pharmaceuticals, textiles, and engineering—are globally recognized for their innovation and competitiveness. U.S. companies operating in India emphasize that success requires a long-term planning horizon and a state-by-state strategy to adapt to the complexity and diversity of India’s regional markets.