India-USA economic relations have a long history of continuity irrespective of the changes in the White House. In 2020, a new dynamism in the US- India relation was demonstrated, given the rising tension with China. Following the border violence, US secretary of state Mike Pompeo endorsed New Delhi’s stand that China’s PLA “escalated border tension”. He pledged to work closely with India to counter an increasing aggressiveness by China. The 2+2 dialogue between two countries yielded a significant outcome and that was with the signing of Communication Compatibility and Security Agreement (COMCASA). This was the beginning of journey for consolidation of military power between the two countries. COMCASA paved the way for supply of equipment with transfer of technology. The signing of COMCASA was a breakthrough in defence partnership, albeit India has a strong military partnership with Russia. The decision to start exchanges between US Naval Forces Central Command (NAVCENT) and Indian navy was another milestone for strengthening maritime cooperation in the Western Indian Ocean. The strengthening of military ties, coupled with strong economic relation paved the way for a new synergy in US-India relation.
Now with Joe Biden all set to take over as the new President of USA– India’s strategic partnership with USA will not change dramatically. America’s relative power vis-à-vis China has declined in Asia over the periods with China’s BRI initiative and consolidating trade power through RCEP. It will haunt America’s power, if it does not step up to counter China. India under Narendra Modi is making use of US-India strategic partnership to fight China’s expansionism in Asia. USA is now the biggest export destination for India. USA plays an important role in India’s external economy. It accounts for 16 percent in the exports of goods exports and 50 percent of IT and BPO services. India targets US $ 5 trillion economy by 2024-25. To achieve this, India targeted export at US $ 660 billion by 2024-25. Exports to USA attach greater significance to weed out various domestic economic problems, which are shadowing the economy. Trump’s trade balance obsession exacerbated US-India trade dynamism. Although, trade between USA and India increased, trade tensions also intensified. One of the reasons was India’s unabated trade surplus with USA. Given the fact that USA is the biggest export destination, USA ensures a potential destination for achieving the export target. India’s crude oil import from USA made a steep increase. Eventually, it impacted trade balance. India’s trade surplus declined from US $ 21 billion in 2017-18 to US $ 16 billion in 2018-19. Oil is vulnerable to India’s economy. Over 90 percent of crude requirement is imported. It is also a springboard for export, such as exports of refinery products.
India-US economic relations have a long history and India is one of the biggest markets for India. So the US administration under the Democratic Party is expected to continue the policies with some small changes and twists here and there. One good thing is that there will be a stability in Biden’s policies unlike Trump and that works well for India-US relationship.