The United States and India view one another as an important strategic partners to advance common interests regionally and globally. Bilateral trade in goods and services is about 3% of U.S. world trade. The trading relationship is more consequential for India; in 2018, the United States was its second largest exporter (16.0% share) after the European Union (EU, 17.8%), and third largest goods import supplier (6.3%) after China (14.6%). U.S.-India foreign direct investment (FDI) is small, but growing tremendously. Defense sales also are significant in bilateral trade. Civilian nuclear commerce, stalled for years over differences on liability protections, has produced major potential U.S. supply contracts.
Tariffs : Bilateral tensions have increased due to each side's tariff policies. India has relatively high average tariff rates, especially in agriculture. It can raise its applied rates to bound rates without violating its commitments under the WTO, causing uncertainty for U.S. exporters. India's tariff hikes include raising tariffs on cell phones from 0% originally to 15% to 20%. The United States and others question India's compliance with the WTO Information Technology Agreement (ITA). India also has raised duties on certain "non-essential" consumer and other goods to stem its current account deficit. The EU initiated WTO dispute settlement consultations, claiming that certain tariff hikes by India exceed bound rates. The United States and several other countries have requested to join the WTO consultations against India. U.S.'s concern over Indian market access also include price controls on medical devices, as well as investment and other non-tariff barriers India opposes the 25% steel and 10% aluminum tariffs that the United States has imposed under the national-security-based Section 232 of the Trade Expansion Act of 1962. India did not receive an initial exception like some trading partners, nor negotiate an alternative quota arrangement. India repeatedly delayed applying planned retaliatory tariffs against the United States, in a hopes of resolving the issues bilaterally. After India lost its eligibility for a U.S. trade preference program, India imposed higher tariffs affecting about $1.4 billion of U.S. exports on nuts, apples, and chemicals. The two sides are challenging each other tariff measures in the WTO.
Effective June 5, 2019, President of US terminated India's eligibility for GSP, a U.S. trade and development program, for failure to provide equitable and reasonable market access. GSP provides nonreciprocal, duty-free tariff treatment to certain products imported from qualifying developing countries. The President's determination followed a U.S. investigation into India's market access practices based on petitions by U.S. dairy and medical technology industries. In 2018, India was the largest beneficiary of GSP; over one-tenth ($6.3 billion) of U.S. goods imported from India entered duty-free under the program, such as chemicals, auto parts, and tableware. GSP removal reinstated U.S. tariffs, which ranged from 1% to 7% on the top 15 GSP bilateral imports. Services : The United States and India are competitive in certain services industries. Barriers to U.S. firms' market access include India's limits on foreign ownership and local presence requirements. A key issue for India is U.S. temporary visa policies, which affect Indian nationals working in the United States. India is challenging U.S. fees for workering visas in the WTO, and monitoring potential U.S. action to revise the H-1B (specialized worker) visa program. India also continues to seek a "totalization agreement" to coordinate social security protection for workers who split their careers between the two countries.