Politically and economically, India and the United States (US) play a significant role in the global arena. The US is India's largest export destination and also one of the leading foreign investors in India. Further, with the Indian economy estimated to grow to 90 per cent of the US economy by 2050, the growing Indo-US relationship will be a decisive force shaping the contours of the world economy in the 21st century.

India may soon attract huge investments from American companies in the solar energy sector. Fourteen American companies visited India in late March 2009 to explore business opportunities in solar energy sector in the country, as part of the first official trade mission of the new administration of the US President Barack Obama.

Recently, as part of the India-US Green partnership, the US has agreed to help India set up the National Environment Protection Authority (NEPA). The move is part of efforts to strengthen cooperation and partnership between the two countries on environment and climate-related issues.

Moreover, US fund houses are showing great confidence in the Indian economy. They have launched five more India -specific exchange-traded funds (ETFs) to tap India's growth potential.

On other fronts too, India and the US continue to enter into agreements. They recently concluded three agreements including the creation of a science and technology endowment fund and a technical safeguard agreement for the launch of civilian satellites incorporating US components.

On Prime Minister Dr Manmohan Singh's US visit in November 2009, the Obama-Singh 21st Century Knowledge Initiative was set up to strengthen linkages between American and Indian universities.

Other key outcomes as a result of the visit include partnership for global peace and security and cooperation in energy security, food security and climate change.

Trade

According to the Ministry of Commerce, bilateral trade between India and US amounted to US$ 39.71 billion in 2008-09.

Imports from the US form 6.11 per cent of India's total imports.

India imports aircraft and aviation machinery, nuclear reactors, optical and medical instruments, precious stones and metals, fertilisers and organic chemicals from the US. Indian imports from the US dropped by 11.89 per cent to US$ 18.56 billion in 2008-09 as against US$ 21.02 billion in 2007-08.

Exports to the US form 11.41 per cent of India's total exports. India mostly exports gems and jewellery, organic chemicals and engineering goods and textiles to the US.

During 2008-09, merchandise exports from India to the US went up by 2.02 per cent to reach US$ 21.14 billion against US$ 20.73 billion in 2007-08.

The Indo-US services trade is likely to grow to an ambitious US$ 150 billion in the next six years, according to a Confederation of Indian Industry (CII) estimate. Last fiscal, services exports to the US touched US$22 billion. "Given the growing demand for services in the US and assuming that the demand for outsourcing will continue to grow from American corporations, the country should expect larger market access in this sector," said the CII study.

US Investments in India

India's rapidly expanding economy along with a booming consumer market and easy availability of skilled personnel has been instrumental in attracting several American companies to invest in India. The overall foreign direct investment (FDI) equity flow into India from the US during April 2000-March 2009 was US$ 6.3 billion. During 2008-09, FDI inflow from the US was US$ 1.8 billion.