US pips China to become India's top trade partner

The United States has edged out China to become India's biggest trading partner in 2022-23, provisional data from India's Commerce Ministry has said. Trade between the two countries rose from from $119.5 billion in 2021-22 to $128.55 billion in the last fiscalwhich ended in March 2023.

Trade between the two countries has skyrocketed since 2020, when the Covid pandemic led to major global economic disruptions. In 2020-21, India-US trade stood at $80.51 billion, which rose by over 37 percent to $128.55 billion in 2022-23.

India's exports grew by 2.81 percent to reach $78.31 billion in 2022-23, while imports soared by nearly 16 percent to $50.24 billion in the same period. The trade surplus came to over $28 billion in the last fiscal.

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The booming trade with the United States is good news for India. United States is one of the few countries with which India enjoys a trade surplus. This means India exports more than it imports from the United States. So, trading with the United States helps India improve its foreign exchange reserves.

Trade deficit widens with China

While China has been one of the top trading partners, India's deficit has widened over the years.

Exports to China dipped by about 28 percent to $15.32 billion in 2022-23, while imports rose by 4.16 percent to $98.51 billion in the last fiscal.

Between April 2022 and March 2023, India's trade with China declined 1.5 percent to reach $113.83 billion. But the trade deficit widened from $72.91 billion dollars in 2021-22 to $83.2 billion in the last fiscal.

A trade deficit is said to happen when a country's imports are higher than its exports. Trade deficit puts a strain on a country's foreign exchange and contributes to the balance of payments problem.