Modi’s visit to the US will bolster its relations with India

Prime Minister Narendra Modi’s inaugural State visit to the United States has been ruling the headlines. The agenda of his visit prominently includes developing stronger economic relations between the world’s superpower and the country fast-growing to prominence.

The United States holds the distinction of being the largest foreign portfolio investor (FPI) in India, accounting for approximately 38% of FPI holdings, highlighting the significant investment made by American entities in India. Moreover, India’s exports (USD 79 billion) to the United States surpass its imports (USD 50 billion) from the nation.

Over the past five years, imports from the United States have grown slightly faster than exports. Imports have witnessed an 89% increase since 2017-2018, while exports have shown a 64% increase during the same period. These imports primarily consist of crude oil, petroleum products, coal, and other commodities, making 49% of total imports in 2022-2023.

On the other hand, India’s major exports to the United States encompass pharmaceutical products, readymade cotton garments, and accessories. The top five export categories constituted approximately 36% of India’s total exports.

A corresponding surge is being observed in India’s investments into the United States in various forms, including debts and loans. The average capital outflows from India to the United States amounted to USD 1.7 billion in the five years leading up to 2018-2019, which has since risen to an average of USD 3.2 billion starting from 2019-2020.

There has been a notable influx of funds in the country in the form of fresh investments, M&As, etc., and multiple companies from all over the world, especially from the West, that have been showing interest lately in setting up factory in India, literally as well as figuratively. In fact, the average annual flow of FDI from the United States has seen a substantial increase from USD 2.7 billion to USD 8.7 billion, over the five-year period leading up to 2018-2019.

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