No. 2006- 09-A

OFFICE OF ECONOMICS WORKING PAPER

 U.S. INTERNATIONAL TRADE COMMISSION

William Greene

U.S. International Trade Commission

September 2006

The author is with the Office of Economics of the U.S. International Trade Commission. Office

of Economics working papers are the result of the ongoing professional research of USITC staff

and are solely meant to represent the opinions and professional research of individual authors.

These papers are not meant to represent in any way the views of the U.S. International Trade

Commission or any of its individual Commissioners. Working papers are circulated to promote

the active exchange of ideas between USITC Staff and recognized experts outside the USITC,

and to promote professional development of Office staff by encouraging outside professional

critique of staff research.

Address correspondence to:

Office of Economics

U.S. International Trade Commission

Washington, DC 20436 USA

U.S. - China Competition in the Indian Market
i

U.S.-CHINA COMPETITION IN THE INDIAN MARKET

William Greene

U.S. International Trade Commission

ABSTRACT: This paper presents an overview of India’s external trade, with a focus on trade

with the United States and China. Since joining the WTO in 2001, China has emerged as the world’s

third largest trading nation and an emerging competitor for the United States in many emerging

markets, including India. Many analysts view President Bush’s March 2005 trip to India as part of a

long-term strategy to contain China’s expansion in Asia. However economic cooperation between

China and India has been growing and in 2005 China emerged as India’s largest single source of

imports supplanting the United States. The paper will describe India’s import market response to

China’s ascension as its leading source of imports and how that may affect U.S. exports in the Indian

market. It will also identify differences and similarities in India’s exports to the United States and

China. The paper will also explore why the United States is losing market share in India’s import

market and the role of other competitors, especially those in East and Southeast Asia, for a share of

India’s import market. The vast majority of India’s imports from the United States and China are

concentrated in Harmonized Tariff Schedule Chapter 84 (computers, components, and parts) and

Chapter 85 (telecommunications equipment, components, and parts). 
TABLE OF CONTENTS

 Page

Abstract ..................................................................... i

Introduction ................................................................. 1

India’s evolving trade profile ................................................... 1

Trends in India’s merchandise imports ....................................... 3

Trends in India’s merchandise exports ....................................... 7

India’s trade with the United States ............................................. 11

U.S. merchandise exports to India .......................................... 12

U.S. merchandise imports from India ....................................... 14

India’s trade with China ...................................................... 16

China’s merchandise exports to India ....................................... 17

China’s merchandise import from India ..................................... 20

Competition for market share ................................................. 22

Competition for Indian import market share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

 Telecommunications equipment ......................................... 22

 Computers and components ............................................ 23

China-U.S. competition for a share of the Indian import market . . . . . . . . . . . . . . . . . . . 24

 Telecommunications equipment ........................................ 25

 Computers and components ............................................ 27

 U.S.-China competition ............................................... 28

Third country import competition .......................................... 29

 Germany ........................................................... 30

 Japan .............................................................. 30

 The United Kingdom ................................................. 30

 Other competitors .................................................... 32

 Singapore ........................................................ 32

 South Korea ...................................................... 33

 Malaysia ......................................................... 34

 

Conclusion ................................................................. 37
The actual size of India’s middle class is subject to debate, but there are approximately 20 million Indian

1

who are among the richest consumers in the world.

India in Business, FICCI. 2

Paranjoy Guha Thakurta, “China could overtake US’s India trade,” Asia Times, March 15, 2006. 3

“China to displace US as India’s largest trading partner,” domain-b, March 16, 2006. 

4

Paranjoy Guha Thakurta, “China could overtake US’s India trade,” Asia Times, March 15, 2006. 5

“The mother of all FTAs,” bilaterals.org, March 31, 2005. 

6

Paranjoy Guha Thakurta, “Will China Overtake US as India’s Trade Partner?,” IPSnews, March 13, 2006. 7

1

Introduction

With a population greater than 1 billion and an estimated middle class nearly the size of the

United States India potentially represents one of the world’s largest markets for major international

producers. From a relatively low base, India is experiencing a tremendous expansion and modernization

of its economy through foreign direct investment, the importation of capital goods, and the transfer of

advanced technology. Although India’s per capita annual income is comparatively low, between 200

million and 350 million class Indians possess sufficient annual income to join a growing consumer class.

1

India’s domestic market is projected to nearly double during the 1998 to 2007 period as Indian

consumers embrace a Western style consumer culture, and as the number of “high income” households

grow to more than 44 million by 2010.2

Bilateral trade between the United States and India has grown rapidly over the last several

decades and the United States continues to be India’s largest single trading partner. Two-way trade

between the two nations grew to $15.8 billion in 2005 and in March 2006 the two governments pledged

to double bilateral trade to $40 billion by the end of 2009. Despite record trade levels between the 3

United States and India, China is poised to supplant the United States as India’s largest trading partner.

During January-September 2005, bilateral trade between India and China reached record levels of $10.5

billion, representing an increase of 52 percent from the corresponding period of 2004. Also during this

period, China emerged as India’s single leading source of imports.

In April 2005, during a state visit to India, Chinese Premier Wen Jiabao’s stated that bilateral

trade between the two nations would reach $20 billion by 2008 and $30 billion by 2010. Chinese

Commerce Minister Bo Xilai recently said that “if the present trend in trade flow is maintained by 2010,

then bilateral trade could reach $50 billion.” Some Indian analysts agree that China is set to become 4

India’s leading trade partner if bilateral growth trends continue to grow at an annual average rate of 30

percent, and “China should emerge as India’s largest trading partner overtaking the US within a year or

two, with two-way trade exceeding $30 billion by 2007.” Likewise, China’s Ambassador to India stated 5

that bilateral trade between the two nations could reach $50 billion by 2010 if all trade barriers were

removed. However, Arun Kumar of Jawaharlal Nehru University stated that “the U.S. will continue to 6

remain India’s largest trading partner despite the rapid increase in trade with China.” Kumar continued

by saying, “India-China trade is dominated by products using low or intermediate technologies. With the

U.S. it is hi-tech trade, which will grow because the U.S. is technologically superior to China.”7

India’s evolving trade profile 

In the late 1980s, recurring fiscal deficits and negative balances of payments encouraged the

Indian Government to initiate an economic reform package to move the country from central planning to
India found itself facing severe financial problems, high inflation, and plunging foreign reserves. By the 8

late 1980s, India’s foreign reserves had slipped by almost $1 billion and by 1991 its share of world trade had

dropped to 0.53 percent from 1.8 percent in the 1950s.

 Under the terms of a 1991 IMF standby loan program India moved away from self-sufficiency and 4 9

decades of central planning by initiating a series of reforms including an emphasis on international trade. India

lowered tariffs , reduced nontariff barriers, eliminated quantitative restrictions (negative-import restricted list),

delicensed most of its industries, invited foreign direct investment, and liberalized its capital markets.

G. Srinivasan, “India moves ahead in merchandise imports,” Business Line, Apr. 12, 2006. 10

Import growth continued by another 30 percent in January-September 2005 compared to 2004. 11

India’s growing imports have also been driven in part, by the growing purchasing power, lower cost of 12

borrowing, and easy access to retail credit among India’s emerging middle class. Since 1999 India’s economy has

generated a significant number of middle class jobs that have generated a sizable growth in disposable income,

especially in the business services sector, that altered middle class consumption patterns as more Indians are now

willing to purchase expensive manufactured and consumer goods such as cars, televisions, cell phones, DVD players,

and computers. Haresh Soneji and Shivom Chakravarti, “The Rising: India’s tenth largest economy, and growing,”

The Economic Times, July 14, 2005.

2

a market economy. At the behest of international financial agencies, the package of reforms instituted in 8

1991 under the “New Economic Policy” included privatization of some public enterprises, convertibility

of the currency, liberalization of rules for foreign investment, lowering of tariff rates, and reduction of

import barriers.9

Although India in 2005 had the world’s second-fastest growing economy (afer China) and was

the fourth largest in terms of purchasing power parity, India continues to be a minor player in world

trade. India moved up from the world’s 24 largest merchandise importer to the 17 largest and it rose th th

from the world’s 16 largest merchandise exporter to its 11 largest, accounting for 1.2 percent of world th th

imports and 0.9 percent of world exports. India’s trade volume as a share of GDP pales in contrast with

10

other major Asian countries, and its import tariffs remain comparably high. Indian trade in goods and

services set a series of record highs in 2003-2005. Indian imports and exports have grown at accelerated

rates over the last 3 years, and the rate of import growth exceeds the rate of export growth. 

India’s total merchandise trade has grown at accelerated rates since the late 1990s, nearly

doubling during the 1999-2004 from $80.4 billion to $172.9 billion (table 1). The increase in India’s 11

imports outpaced its growth in exports during 1999-2004, with imports growing by approximately $52

million while exports grew by nearly $40 million. Although India has experienced high rates of export

12

growth, its trade deficit continues to expand, growing from approximately $9.5 billion in 1999 to more

than $29.4 billion during the January-September period of 2005. To a large extent, India’s burgeoning

trade deficit can be tied to soaring international prices and increased demand for imported crude oil. Oil

accounted for 32 percent of India’s merchandise imports by value during 2004, and 34 percent during

January-September of 2005.
One significant policy change was the introduction of the Export Promotion Capital Goods scheme that 13

allowed duty-free or concessional duty-based imports of capital goods in exchange for a commitment to fulfill

specified export targets over an agreed upon time period. India also set up Special Economic Zones (SEZs) similar to

those in China where export production could take place unimpeded by government import-export rules or

regulations. In 2005, SEZs were located in the cities of Cochin, Kandla, Kolkata, Mumbai, Noida, Surat, and

Vishakapatnam.

Whirlpool’s Indian subsidiary is also used as an export platform exporting refrigerators and washing

14

machines to approximately 35 countries including the United States, Mexico, Hong Kong, and China. “Whirlpool

Special Section India & Asia Operations: Success in India,” Appliances Magazine.com, Apr. 2003. Richa Mishra,

“Whirlpool’s export target,” The Hindu, Apr. 25, 2003.

3

Table 1: India’s merchandise external trade with the world ($million)

Year Exports Percent

change

Imports Percent 

change

Exports +

imports

Percent

change

Trade

balance

1999 .... ...

2000 .... ...

2001 .... ...

2002 .... ...

2003 .... ...

2004 .... ...

Jan-Sept 2004

Jan-Sept 2005

 35,445

 42,299

 43,314

 49,299

 57,457

 75,631

 55,167

 67,140 

 

 

 16.2

 2.4

 14

 17

 32

 22 

 

 44,920 

 50,578

 50,143 

 56,771

 71,183

 97,313

 69,380

 96,567

 

 12.6

 -0.9

 13

 20

 37

 39 

 

 80,365

 92,877

 93,457

 106,070

 128,640

 172,944

 124,547

 163,707

 15.6

 0.6

 13.5

 21.3

 34.4

 31.4

 -9,475

 -8,278

 -6,829

 -7,472

 -13,725

 -21,682

 -14,212

 -29,427

Source: World Trade Atlas.

Trends in India’s merchandise imports: India traditionally has been one of the world’s most

protected markets. Nonetheless, India’s imports more than doubled ($51.6 billion) during the JanuarySeptember period of 2005 compared to 1999 reflecting growing consumer and business demand, as well

as the soaring price of imported crude oil. India’s import boom has been driven by a gradual

liberalization of India’s trade regime (such as a progressive reduction in tariffs and the phasing out of

quantitative restrictions); increasing demand for industrial inputs, especially goods and industrial raw

materials needed for export; a cheaper U.S. dollar; increased demand for consumer goods; and higher

imports of capital goods and move away from longstanding import-substitution policy. 

One of the lasting legacies of India’s import substitution and industrialization policies that

severely restricted imports is that many foreign companies chose to established manufacturing facilities

in India to serve that market rather than rely on exports to India. U.S. white goods producer Whirlpool, 13

for example, manufactures and markets no-frost and direct cool refrigerators, washing machines, air

conditioners, and microwave ovens through its subsidiary, Whirlpool of India. Whirlpool of India is one

of India’s leading white goods manufacturers and presently enjoys a market share of 22.8 percent in the

direct cool refrigerator segment, 17.5 percent in the frost-free refrigerator segment, and 14 percent in the

washer segment. Likewise, other global white goods manufacturers such as LG Electronics (Korea), 14

Haier (China), Samsung (Korea), and Matsushita (Japan) have set up manufacturing and marketing

facilities in India to serve the domestic market. The same is true for many other industries ranging from

cell phones (Haier) to aircraft engines (General Electric) to glass fiber (3M) to soft drinks (Coke and

Pepsi) and automobiles and parts (Ford, General Motors, Mitsubishi, Honda, Suzuki, and BMW). 

Leading imports in 2004 and 2005 included crude oil and other petroleum products, capital

goods, engineering goods (electrical and non-electrical machinery and transport equipment), uncut

precious stones (primarily diamonds), iron and steel, nonferrous metals, and chemicals (dyes, organicinorganic chemicals, fertilizers, pharmaceuticals, plastics). These accounted for 89 percent of India’s
Nearly 60 percent of all diamonds sold internationally pass through India and diamond imports were

15

valued at $6.4 billion in 2004 and $8.5 billion during January-September 2005. Harti Mehta, “Indian set to wear

crown at world’s diamond HQ,” The Economic Times, May 10, 2006. 

 The share of India’s oil imports declined from 35 percent of total imports during 1999 to 32 percent in

16

2004. India, with one of the world’s fastest growing automobile markets, has emerged as the world’s sixth-largest

consumer of crude oil, importing more than 70 percent of its needs. India consumes approximately 2.3 million

4

total merchandise imports during 2004 and 90 percent during the first nine months of 2005 (table 2).

India’s petroleum imports accounted for an average of approximately 31 percent of total merchandise

imports during 1999-2001 before increasing to 34 percent during the January-September period of 2005.

The country’s non-oil imports accounted for an average of approximately 69 percent of India’s total

merchandise imports during the 1999-2004 period before declining to 66 percent during the first nine

months of 2005. Capital goods averaged 21 percent of India’s total merchandise imports during 1999-

2004 before declining to 16 percent during the first nine months of 2005.15

Table 2: India: Leading merchandise imports from the world ($million)

Commodity 2001 2002 2003 2004 Jan-Sept.

2004

Jan-Sept.

2005

Machinery & equipment . . . . . . . . .

 Electrical machinery . . . . . . . . .

 Other machinery, computers, 

 appliances, turbines, boilers . .

 Medical & surgical equipment . .

 8,283

 2,953

 4,181

 1,139

 10,446

 4,342

 4,824

 1,280

 14,094

 6,269

 6,327

 1,498

 18,671

 8,266

 8,603

 1,802

 13,132

 6,010

 5,816

 1,306

 16,843

 6,921

 8,264

 1,685

Mineral fuel, oil . . . . . . . . . . . . . . . 15,752 17,862 21,707 31,083 23,018 32,933

Mineral, metals, mineral products

 Gems and precious metal . . . . . .

 Iron and steel .... .... .... ...

 Articles of iron and steel .... ...

 13,018

 9,689

 1,044

 333

 13,743

 10,131

 1,123

 426

 16,897

 12,486

 1,530

 553

 24,668

 17,551

 2,685

 811

 17,332

 12,355

 1,908

 575

 26,707

 18,918

 3,766

 818

Transportation equipment . . . . . . . .

 Aircraft and parts .... .... ....

 695

 144

 1,194

 284

 1,882

 504

 2,449

 476

 1,500

 352

 1,995

 682

Chemicals ... .... .... .... ....

 Organic chemicals . . . . . . . . . . . .

 Inorganic chemicals . . . . . . . . . .

 Plastics .... .... .... .... ....

 Fertilizers .... .... .... .... . .

 5,211

 1,737

 1,099

 712

 432

 5,774

 2,061

 1,111

 876

 368

 7,227

 2,846

 1,144

 1,136

 472

 9,456

 3,780

 1,502

 1,479

 683

 6,631

 2,642

 1,082

 1,040

 383

 8,716

 3,453

 1,301

 1,515

 932

Textiles, apparel, footwear 1,415 1,705 1,944 2,062 1,613 1,755

Agricultural, horticultural, food,

marine products .... .... .... ...

 Fats & oils .... .... .... .... . .

 3,197

 1,479

 3,600

 1,544

 4,545

 2,370

 5,243

 2,416

 3,573

 1,831

 4,294

 1,712

Paper, paperboard, wood . . . . . . . . 1,480 1,366 1,861 2,375 1,692 1,815

Other products .... .... .... .... 1,101 1,056 1,029 1,306 893 1,394

Total .... .... .... .... .... .... 50,152 56,746 71,186 97,313 69,384 96,452

Source: World Trade Atlas.

At the commodity level, India’s merchandise imports are dominated by petroleum oils and

related products that accounted for 28 percent of total import during 2004 (table 3). Other leading 16
barrels of oil per day, representing approximately 3 percent of world daily oil production. In 2004-2005, India

imported 95.9 million tons of crude oil and 10.5 million tons of petroleum products (cooking gas, kerosene, petrol,

and diesel). “Oil import bill swells 52% to $44.64 bn,” Business Standard, May 24, 2006.

“India could harvest bigger summer oilseed crop,” Daily Times, Jan. 22, 2006. 17

In value terms, India dominates the world’s cut and polished diamond market, supplying approximately 18

55 percent of the world’s polished diamond market and 9 percent of its jewelry market. India is the world’s secondleading diamond cutting and polishing destination as it imports primarily low- and middle-quality rough diamonds

for processing and re-export. India’s Gem and Jewellery Exports.

5

imports included vegetable oils (soybeans and palm oils), unwrought gold; civilian aircraft and parts;

steel inputs (coal, ores, coke, scrap, and concentrates); parts of computers and telecommunications

equipment; and oil tanker ships. India is the world’s fourth largest producer of vegetable oils and its

largest importer relying of foreign sources for nearly 40 percent of annual domestic consumption of

approximately 11 million tons. India is the world’s largest importer of palm oil, which it imports from 17

Indonesia (crude palm oil) and Malaysia (refined, bleached and deodorized oil). India is also a large

consumer of imported soybeans oils produced by Argentina, Brazil, and the United States.18

Important imports by country of origin include: diamonds (Belgium, United Kingdom, United Arab

Emirates); gold (Australia, South Africa, Switzerland, United Arab Emirates (UAE); computers and parts

(Germany, China, Singapore, Korea, United States); telecommunications equipment (Germany, United

States, Singapore, China, Korea); aircraft and parts (United States, France); organic chemicals (United

States, China, Singapore, Germany); and ores, slash, and ash (China, Australia).

Table 3: Leading Indian commodity imports from the world ($billion)

HTS No. Commodity description 2001 2002 2003 2004

2709.20

7102.31

7108.12

7108.13

2710.00

7102.39

8525.20

2701.19

8473.30

1511.90

1511.10

2704.00

2809.20

8708.99

7204.49

2603.00

8905.90

4403.49

1507.10

2711.13

Crude oil .... .... .... .... .... .... .... .... .... ....

Diamonds, unworked .... .... .... .... .... .... .... . .

Unwrought forms of gold .... .... .... .... .... .... ...

Other non-monetary semi-manufactured forms of gold . . . .

Oil (not crude) obtained from bitumens . . . . . . . . . . . . . . . .

Other non-industrial diamonds . . . . . . . . . . . . . . . . . . . . . . .

Radio -TV with reception apparatus . . . . . . . . . . . . . . . . . . .

Other coal .... .... .... .... .... .... .... .... .... ...

Parts-accessories for computers . . . . . . . . . . . . . . . . . . . . . .

Other palm oil .... .... .... .... .... .... .... .... ...

Crude palm oil .... .... .... .... .... .... .... .... ...

Coke & semi/coke of coal/lignite/peat w/n agglomerated;

 retort carbon .... .... .... .... .... .... .... .... . .

Phosphoric acid & polyphosphoric acids . . . . . . . . . . . . . . .

Other parts of motor vehicles . . . . . . . . . . . . . . . . . . . . . . . .

Other ferrous waste and scrap . . . . . . . . . . . . . . . . . . . . . . .

Copper ores & concentrates .... .... .... .... .... .... .

Tankers .... .... .... .... .... .... .... .... .... .... .

Other tropical wood .... .... .... .... .... .... .... ...

Soybean crude oil .... .... .... .... .... .... .... ....

Liquified butanes .... .... .... .... .... .... .... .... .

 12,865

 3,809

 4,481

 506

 1,080

 342

 252

 935

 654

 374

 395

 188

 632

 162

 292

 299

 14

 340

 369

 132

 14,557

 5,407

 3,423

 252

 1,478

 426

 577

 930

 599

 87

 882

 207

 664

 192

 272

 321

 74

 192

 365

 113

 18,054

 5,537

 4,104

 1,283

 1,539

 892

 1,661

 1,072

 737

 357

 1,224

 263

 586

 264

 301

 332

 209

 264

 503

 337

 24,579

 6,350

 5,595

 3,068

 2,724

 1,869

 2,346

 1,576

 1,502

 928

 742

 726

 728

 472

 530

 677

 465

 472

 509

 562

Other.. .... .... .... .... .... .... .... .... .... .... . 22,031 25,728 31,667 40,893

Total .... .... .... .... .... .... .... .... .... .... ... 50,152 56,746 71,186 97,313

Source: World Trade Atlas. 
India’s shifting trade patterns have given rise to recent free trade agreements (FTA) with Sri Lanka 19

(1998), Singapore (2002), and Thailand (2005) and ongoing FTA negotiations with MERCOSUR, COMESA,

Indonesia, Malaysia, China, and South Africa.

India’s imports from Switzerland consisted primarily of gold , accounting for 87 percent Switzerland’s 20

exports to India during 2004 and 97 percent during the January-September period of 2005. India’s entire demand for

gold is met through imports. It currently consumes approximately 25 percent of the world demand for gold.

6

There has been a significant change in the makeup of India’s import suppliers over the last 10

years. India has shifted away from a reliance on traditional partners like the United States, the European

Union, and Japan, toward developing countries, especially those of Southeast and East Asia. With this

diversification, the value of India’s imports from its Southeast and East Asian countries grew from $10.5

billion in 1999 to $22.8 billion during 2004, or by $12.3 billion (table 4), while imports from the United

States increased by $2.3 billion and imports from the European Union increased by $5.8 billion during

the same period.19

Table 4: regional distribution of India’s merchandise imports ($million)

Region 1999 Percent of total 2004 Percent of total Percent change

European Union .... .... .... .... .

Former USSR & Eastern Europe . . . .

Sub Saharan Africa . . . . . . . . . . . . . . .

North America .... .... .... .... . .

East Asia..... .... .... .... .... . .

Southeast Asia .... .... .... .... . .

South Asia .... .... .... .... .... .

Middle East - North Africa . . . . . . . . .

Latin America .... .... .... .... ...

Unspecified country . . . . . . . . . . . . . .

Other.. .... .... .... .... .... ....

 10,461

 954

 4,940

 4,166

 5,795

 4,294

 363

 7,097

 703

 0

 6,147

 23.4

 2.1

 11.0

 13.0

 13.0

 10.0

 0.8

 15.8

 1.6

 0

 13.7

 16,345

 2,136

 2,978

 6,437

 14,522

 8,234

 860

 8,028

 1,739

 27,522

 8,512

 16.8

 2.2

 3.1

 6.6

 14.9

 8.5

 0.9

 8.2

 2.8

 28.3

 8.7

 59.1

 123.9

 -39.7

 54.4

 150.6

 91.8

 136.9

 13.1

 147.1

 NA

 38.5

Source: World Trade Atlas.

China emerged as India’s single largest supplier of imports in 2004, and this trend continued

during January-September 2005. As seen in table 5, the share of India’s imports originating from the

United States declined from 6.1 percent of the total in 2001 to 5.9 percent during January-September 

2005, whereas; China’s share grew from 3.6 percent to 6.2 percent during the same period. Of non-oil

imports, China accounted for 9 percent of India’s merchandise imports during 2004 and 10 percent

during the January-September period of 2005; and the United States accounted for 9 percent of India’s

non-oil merchandise imports during 2004 and 8 percent during the first nine months of 2005. As seen in

table 5, Switzerland emerged as India’s second-leading source of imports during the January-September

period of 2005. If greater China is considered (China and Hong Kong), then China’s share of India’s 20

total merchandise imports grew from 5 percent in 1999 to 8 percent during the January-September

period of 2005. 
Ministry of Commerce & Industry. 21

Manoj Pant, “Off the cuff,” The Financial Express.

22

According to India’s Gem and Jewellery Export Promotion Council (GJEPC) Chairman Bakul R. Mehta,

23

“the gem and jewelry sector continues to be the forerunner and highest contributor to the total value addition of the

country, contributing $3.5 billion in fiscal year 2006.”“India gem, jewelry exports up in fiscal 2006,” National

Jeweler, Apr. 13, 2006.

Abhrajit Grangopadhay, “SARS, war take sheen off diamond exports,” Business Lines, Apr. 16, 2003. 24

7

Table 5: India’s merchandise imports, top 16 countries, value ($million), (percent of total)

Country 2001 2002 2003 2004 Jan-Sept 2004 Jan-Sept 2005

China .... ....

Switzerland . . . .

United States . .

UAE .... .... .

Belgium . . . . . .

Germany . . . . . .

Australia . . . . . .

United Kingdom

S. Korea . . . . . .

Japan.... .... .

Singapore . . . . .

South Africa . . .

Indonesia . . . . .

Malaysia . . . . . .

Hong Kong . . . .

1,809 (3.6)

3,420 (6.8)

3,059 (6.1)

 910 (1.8)

2,481 (5.0)

1,885 (3.8)

1,217 (2.4)

2,733 (5.5)

1,132 (2.3)

1,756 (3.5)

1,334 (2.7)

1,397 (2.8)

 951 (1.9)

1,127 (2.3)

 709 (1.4)

2,586 (4.6)

2,233 (3.9)

3,751 (6.6)

 868 (1.5)

3,565 (6.3)

2,285 (4.0)

1,321 (2.3)

2,639 (4.7)

1,219 (2.2)

2,091 (3.7)

1,324 (2.3)

1,932 (3.4)

1,209 (2.1)

1,255 (2.2)

 927 (1.6)

3,570 (5.0)

3,103 (4.4)

4,813 (6.8)

1,429 (2.0)

3,660 (5.1)

2,721 (3.8)

2,015 (2.8)

2,969 (4.2)

2,342 (3.3)

2,321 (3.3)

1,800 (2.5)

1,933 (2.7)

1,819 (2.6)

1,862 (2.6)

1,358 (1.9)

6,008 (6.2)

4,421 (4.5)

5,712 (5.9)

3,766 (3.9)

4,306 (4.4)

3,525 (3.6)

3,221 (3.3)

3,221 (3.3)

3,044 (3.1)

2,930 (3.0)

2,428 (2.5)

3,944 (1.8)

2,370 (2.4)

2,203 (2.3)

1,565 (1.6)

4,167 (6.0)

3,612 (4.4)

3,971 (5.7)

2,404 (3.5)

3,187 (4.6)

2,421 (3.5)

2,455 (3.5)

2,422 (3.5)

2,117 (3.1)

2,114 (3.1)

1,699 (2.5)

1,192 (1.7)

1,784 (2.6)

1,573 (2.3)

1,106 (1.6) 

6,193 (6.4)

5,800 (6.0)

5,090 (5.3)

4,053 (4.2)

3,913 (4.1)

3,574 (3.7)

3,184 (3.3)

3,026 (3.1)

2,654 (2.8)

2.373 (2.5) 

2,077 (2.2)

1,947 (2.0)

1,830 (1.9)

1,607 (1.7)

1,555 (1.6)

Source: World Trade Atlas.

Trends in India’s merchandise exports: Although India’s share of world exports is low,

accounting for less than one percent of global exports, its exports have grown at one of the fastest rates in

the world, especially after the Indian government abandoned its import substitution polices in favor of

export promotion. India’s merchandise exports more than doubled from $33.5 billion in 1999 to $67.1

billion in 2004. India’s exports have grown to account for between 10 and 11 percent of GNP. Although 21

the technological sophistication of India’s export basket is still rather low when compared with that of

China or the United States, India has made progress in transitioning from an export regime based on raw

materials and natural resources to one featuring more sophisticated value-added products such as textiles

and garments, chemicals, pharmaceuticals, manufactured goods, and machinery and transport equipment. 

India’s expanding exports can be linked to the worldwide recovery after the 2000-2002

recession, increasing international prices for metals and mineral ores; expansion of India’s domestic

manufacturing sector; various government policy initiatives for export promotion and market

diversification; and by China’s demand for raw materials and semi-finished items.22

India’s exports consisted mainly of cut and polished diamonds and gold jewelry; textiles,

garments, and footwear; electrical and non-electrical machinery and equipment; and chemicals (table 6).

These products accounted for 56 percent of India’s total exports in the January-September 2005 period.

Diamond exports, a leading source of foreign exchange, accounted for nearly 17 percent of India’s nonoil merchandise exports in 2004. Approximately 50 percent of India’s cut and polished diamond exports

23

are shipped either directly to the United States, India’s largest-single diamond export market, or

indirectly through jewelry design centers such as Singapore and Hong Kong.24

In the post-quota environment for textiles and apparel after January 2005, India’s textile and

apparel exports dropped by 10 percent to $4.7 billion during the January-September period of 2005
“Textile imports from China up 600%,” India Biznews, Feb. 14, 2006. 25

8

compared to the corresponding period of 2004. India, the world’s 6 leading exporter of textiles, saw its

th

exports of garments also declined by approximately 2 percent to $5 billion. India’s exports of textiles to

the EU, which represents nearly 35 percent of India’s total textile exports, increased to $3.4 billion, by

only 3.7 percent during the January-September period of 2005. India’s textile exports to the United

States grew by 24 percent during the aforementioned period of 2005. Exports of textiles and garments 25

increased in value terms, but declined as a percentage of India’s exports from 26 percent in 1999 to 18

percent during the January-September period of 2005.

During January-September 2005, India’s exports of primary products such as mineral fuels, iron

and steel and articles of iron and steel, and transportation equipment more than doubled in value. India is

one of the world’s leading exporters of iron ore with a significant presence in the Chinese market, the

world’s largest market for iron ore.
9

Table 6: India: Leading merchandise exports to the world ($million)

Commodity 2001 2002 2003 2004 Jan-Sept. 2004 Jan-Sept. 2005

Machinery & equipment . . . . . . . . . .

 Electrical machinery, parts . . . .

 Other machinery, computers, 

 appliances, turbines, boilers . . .

 Optic, photo, medical instruments

 3,121

 1,281

 1,541

 299

 3,410

 1,378

 1,684

 348

 4,351

 1,771

 2,168

 436

 5,417

 1,949

 2,917

 551

 3,962

 1,453

 2,115

 394

 4,790

 1,643

 2,709

 438

Mineral fuel, oil . . . . . . . . . . . . . . . . 2,157 2,365 3,595 6,111 4,048 6,725

Mineral, metals, mineral products . .

 Gems and jewelry . . . . . . . . . . . . .

 Iron and steel .... .... .... ....

 Articles of iron and steel .... ...

 11,025

 7,013

 911

 1,007

 14,216

 8,878

 1,449

 1,073

 17,292

 10,441

 2,301

 1,347

 23,672

 12,708

 3,499

 2,027

 16,929

 9,300

 2,457

 1,429

 22,620

 12,446

 2,930

 1,820

Transportation equipment . . . . . . . . .

 Vehicles, except railway or 

 tramway, parts .... .... .... 

 963

 848

 2,022

 1,023

 1,608

 1,484

 2,634

 2,248

 1,915

 1,639

 2,690

 2,124

Chemicals ... .... .... .... .... .

 Organic chemicals . . . . . . . . . . . . .

 Tanning, dye, paint, putty, inks . . .

 Plastics .... .... .... .... .... .

 Misc. Chemical products .... ....

 4,950

 1,619

 503

 761

 436

 5,901

 1,979

 566

 951

 469

 6,587

 2,518

 1,130

 622

 1,538

 9,456

 3,290

 1,902

 678

 1,895

 6,617

 2,358

 505

 1,276

 454

 7,934

 2,986

 521

 1,482

 663

Textiles, apparel, footwear . . . . . . . .

 Woven apparel .... .... .... ...

 Knit apparel .... .... .... ....

 Cotton, yarn and woven fabric . .

 Misc. textile articles .... .... . .

 11,007

 3,238

 1,792

 2,077

 1,080

 11,803

 3,276

 2,106

 2,087

 1,200

 13,031

 3,253

 2,202

 2,033

 1,485

 14,916

 3,747

 2,601

 2,472

 1,828

 11,965

 2,496

 2,104

 1,938

 1,392

 12,249

 3,300

 1,889

 1,541

 1,509

Agricultural, horticultural, food,

marine products .... .... .... ....

 Fish and seafood . . . . . . . . . . . . .

 Cereals .... .... .... .... .... .

 8,061

 1,231

 897

 8,305

 1,340

 897

 8,874

 1,235

 1,354

 10,752

 1,140

 1,811

 7,227

 1,341

 782

 7,725

 1,605

 887

Paper, newsprint, wood . . . . . . . . . . 266 266 386 491 428 493

Other.. .... .... .... .... .... ... 1,722 1,776 1,739 2,189 1,650 1,918

Total .... .... .... .... .... .... . 43,314 49,299 57,457 75,631 55,167 67,140

Source: World Trade Atlas.

At the individual product level, India’s top 20 exports in 2004 (including principal markets) were

dominated by: cut and polished diamonds (Belgium, Hong Kong), jewelry (United States, United Arab

Emirates), petroleum oils and products (Indonesia, Singapore, Sri Lanka, UAE) , iron ores (China),

organic compounds (United States), oil-cake from soybean oil (Netherlands, UAE), cashew nuts (United

States), frozen prawns and shrimp (United States, Japan, Belgium), rice (Bangladesh, Saudi Arabia), and

textiles and clothing (United States) (table 7). Other important exports included coffee and tea,

insecticides, cotton yarn and fabrics, products of high speed steel, wire or refined copper, castor oil,

granite and aluminum oxide, and mendicants. 
10

Table 7: Leading Indian exports to the world ($million)

HTS No. Commodity description 2001 2002 2003 2004

7102.39

2710.19

7113.19

2601.11

1006.30

2942.00

7210.49

6109.10

2701.11

6206.30

0306.13

6205.20

3004.90

6304.92

2304.00

0801.32

7117.19

6105.10

3902.10

8708.99

Diamonds .... .... .... .... .... .... .... .... .... .... .

Oil (not crude) from petroleum . . . . . . . . . . . . . . . . . . . . . . . .

Jewelry from precious metals (other than silver) . . . . . . . . . . .

Other iron ores & concentrates . . . . . . . . . . . . . . . . . . . . . . . . .

Semi/wholly milled rice w/n polished/glazed . . . . . . . . . . . . . .

Other organic compounds .... .... .... .... .... .... ....

Other flat-rolled products of iron or non-alloy steel, width of 

 600 mm or more .... .... .... .... .... .... .... .... . .

T-shirts , singlets, tank tops, ect of cotton . . . . . . . . . . . . . . . .

Light oils and preparations .... .... .... .... .... .... ....

Blouses, shirts & shirt-blouses of cotton . . . . . . . . . . . . . . . . .

Shrimp & prawns - frozen .... .... .... .... .... .... ....

Men’s & boys’ shirts of cotton . . . . . . . . . . . . . . . . . . . . . . . . .

Other pharmaceutical products . . . . . . . . . . . . . . . . . . . . . . . . .

Other furnishing articles of cotton . . . . . . . . . . . . . . . . . . . . . .

Soybean residue .... .... .... .... .... .... .... .... ....

Cashen nuts fresh/dried shelled . . . . . . . . . . . . . . . . . . . . . . . .

Other jewelry .... .... .... .... .... .... .... .... .... . .

Men’s-boy’s knit shirts of cotton . . . . . . . . . . . . . . . . . . . . . . .

Polyethylene .... .... .... .... .... .... .... .... .... ...

Other parts of motor vehicles .... .... .... .... .... .... . .

 5,615

 ( )1

 1,051

 339

 604

 454

 146

 531

 ( )1

 479

 804

 596

 483

 429

 384

 361

 12

 371

 169

 200

 7,189

 ( )

1

 1,303

 703

 878

 550

 114

 642

 ( )

1

 658

 869

 586

 647

 481

 363

 388

 13

 376

 213

 235

 8,427

 1,653

 1,599

 686

 878

 826

 129

 722

 609

 601

 813

 584

 827

 532

 389

 347

 19

 343

 255

 303

 8,696

 4,011

 2,720

 1,943

 1,158

 1,106

 874

 776

 1,338

 735

 755

 645

 1,011

 638

 767

 491

 572

 409

 402

 458

Other.. .... .... .... .... .... .... .... .... .... .... ... 30,286 33,091 36,915 46,126

Total .... .... .... .... .... .... .... .... .... .... .... . 43,314 49,299 57,457 75,631

( ) HTS subheading 2710.10 and 2701.11 first appeared in 2003; previous imports of these products appeared elsewhere in 1

Chapter 27. Source: World Trade Atlas.

India is in the process of shifting away from its traditional reliance on North America and the EU

as its largest export markets. India’s exports to North America increased from approximately $8.7 billion

in 1999 to nearly $14.3 billion in 2004, representing an increase of 63 percent. The decline in importance

of the North American and EU markets has been offset by a shift to East Asia, particularly China, which

more than doubled its imports of Indian products. The value of India’s exports to its Southeast Asian,

East Asian, and South Asian neighbors grew from $9 billion in 1999 to $24 billion in 2004, growing

from 21 percent of total exports to 32 percent (table 8).
11

Table 8: Regional distribution of India’s merchandise exports ($million)

Region 1999 Percent of total 2004 Percent of total Percent change

European Union .... .... .... .... .

Former USSR & Eastern Europe . . . .

Sub Saharan Africa . . . . . . . . . . . . . . .

North America .... .... .... .... . .

East Asia..... .... .... .... .... . .

Southeast Asia .... .... .... .... . .

South Asia .... .... .... .... .... .

Middle East - North Africa . . . . . . . . .

Latin America .... .... .... .... ...

Unspecified country . . . . . . . . . . . . . .

Other.. .... .... .... .... .... ....

 9,087

 1,266

 1,369

 8,698

 5,315

 2,078

 1,646

 4,459

 474

 0

 8,922

 21

 3

 3

 20

 12

 5

 4

 10

 1

 0

 21

 15,974

 1,735

 3,964

 7,866

 11,028

 7,542

 5,444

 6,749

 1,385

 404

 13,540

 21

 2

 5

 10

 15

 10

 7

 9

 2

NA

 18

 76

 37

 190

 -10

 108

 263

 231

 51

 192

 NA

 52

Source: World Trade Atlas.

The United States continues to be India’s largest-single export market, accounting for 17 percent

of its merchandise exports in 2004 (table 9). India’s exports to the United States grew annually through

2004 before declining during the January-September period of 2005. Also, the U.S. share decline from 21

percent in 2002 to 17 percent in 2004; and from 18 percent during the January-September period of 2004 

to 16 percent during the January-September period of 2005. India’s other leading export markets include

the UAE, that accounted for 8 percent, and the EU that accounted for 21 percent of Indian exports during

the January-September period of 2005.

Table 9: India’s merchandise exports to top 15 countries, by value ($million) (percent of total)

Country 2001 2002 2003 2004 Jan-Sept 2004 Jan-Sept 2005

United States . .

UAE .... .... .

Hong Kong . . . .

UK .... .... . .

China .... ....

Germany . . . . . .

Belgium . . . . . .

Singapore . . . . .

Japan.... .... .

Italy .... .... .

Bangladesh . . . .

Netherlands . . .

Sri Lanka . . . . .

France .... ....

Saudi Arabia . . .

8,310 (19)

2,551 (6)

2,407 (6)

2,165 (5)

 916 (2)

1,758 (4)

1,383 (3)

 910 (2)

1,532 (4)

1,254 (3)

1,001 (2)

 848 (2)

 610 (1)

 972 (2)

 780 (2)

10,329 (21)

 3,100 (6)

 2,333 (5)

 2,384 (5)

 1,473 (3)

 1,994 (4)

 1,613 (3)

 1,411 (3)

 1,763 (4)

 1,257 (3)

 825 (2)

 952 (2)

 829 (2)

 1,012 (2)

 905 (2)

10,986 (19)

 4,131 (7)

 3,229 (6)

 2,685 (5)

 2,473 (4)

 2,256 (4)

 1,743 (3)

 1,687 (3)

 1,684 (3)

 1,543 (3) 

 1,350 (2)

 1,187 (2)

 1,186 (2)

 1,124 (2)

 999 (2)

13,072 (17)

 6,683 (9)

 3,338 (4)

 3,390 (5)

 4,107 (5)

 2,671 (4)

 2,207 (3)

 3,414 (5)

 1,846 (2)

 2,035 (3)

 1,567 (2)

 1,453 (2)

 1,401 (2)

 1,553 (2)

 1,373 (2)

9,737 (18)

4,865 (9)

2,501 (5)

2,486 (5)

2,715 (5)

2,040 (4)

1,660 (3)

2,429 (4)

1,300 (2)

1,488 (3)

1,152 (2)

1,021 (2)

 994 (2)

1,193 (2)

1,020 (2)

10,813 (16)

 5,665 (8)

 3,377 (5)

 3,133 (5)

 4,262 (6)

 2,202 (3)

 2,036 (3)

 3,801 (6)

 1,628 (2)

 1,724 (3)

 1,195 (2)

 1,413 (2)

 1,280 (2)

 1,432 (2)

 1,210 (2)

Source: World Trade Atlas.

India’s trade with the United States

The United States and India have seen their bilateral trade relations improve steadily since

India’s economic liberalizations of the 1990s. Two-way bilateral trade continues to be relatively modest,

but it has been growing at an increasing rate. In 2006, U.S. Trade Representative Rob Portman indicated
 USTR, “India, US agreed to an action plan to increase bilateral economic engagement Fourth Meeting of 26

the US-India Trade Policy Forum,” May 30, 2006.

12

that bilateral India-U.S. trade is expected to reach $60 billion by 2009.26

India makes up a small fraction of total global U.S. trade and accounted for 0.9 percent of U.S.

exports and 1.1 percent of U.S. imports during 2005. India ranked as the United States’ 24 largest 2-way th

trading partner, its 18 largest import supplier, and 21 largest export market during 2005. Total bilateral th nd

trade between the two nations grew from $11.7 billion in 1999 to $18.8 billion in 2004, representing an

increase of 60 percent. The United States continues to be India’s single largest merchandise trading

partner and foremost export market, accounting for 17 percent of total bilateral merchandise trade in

2004 and 10 percent during the January-September period of 2005. Although the value of India’s external

merchandise trade with the United States continued to grow during the January-September period of

2005, as a percent of India’s total external trade, the United States’ share declined from18 percent in the

January-September period of 2004 to 16 percent during the January-September period of 2005. The

United States has experienced a long-standing trade deficit with India that grew from $4.2 billion in 1999

to $7.4 billion in 2004 (table 10). 

Table 10: U.S. merchandise trade with India, 1999-Sept 2005 ($million)

Year U.S. exports to India Percent

Change

U.S. imports from 

India

Percent

Change

U.S. Trade

balance

1999 .... ...

2000 .... ...

2001 .... ...

2002 .... ...

2003 .... ...

2004 .... ...

Jan-Sept 2004

Jan-Sept 2005

 3,754

 2,859

 3,059

 3,751

 4,813

 5,712

 3,971

 5,090

 -24

 7

 23

 28

 19

 33

 7,994

 2,699

 8,310

 10,329

 10,986

 13,072

 9,737

 10,813

 -66

 208

 24

 6

 19

 11

 -4,240

 -160

 -5,251

 -6,578

 -6,173

 -7,360

 -5,766

 -5,723

Source: World Trade Atlas.

U.S. merchandise exports to India: With the opening up of the Indian economy and

continued trade liberalizations, India’s imports from the United States have grown from $3.8 billion in

1999 to approximately $5.7 billion in 2004, or by 50 percent. Despite the extraordinary growth in U.S.

exports to India, India remains a relatively small market for U.S. manufacturers that accounted for less

than one percent of total U.S. merchandise exports during 2004. U.S. merchandise exports to India are

heavily concentrated in chemicals, electrical machinery (recording and sound media and

telecommunications equipment), other machinery (computers and components, gas turbines), and

minerals and metals that accounted for 75 percent of total U.S. exports in 2004. The growth in U.S.

exports of machinery and equipment contributed to much of this increase as this category grew from $1.3

billion in 2001 to approximately $2.5 billion in 2004, representing an increase of 93 percent (table 11).
13

Table 11: Leading U.S. merchandise exports to India ($million)

Commodity 2001 2002 2003 2004 Jan-Sept 2004 Jan-Sept 2005

Machinery & equipment . . . . . . . . .

 Electrical machinery, sound 

 equipment .... .... .... . .

 Other machinery, computers, 

 appliances, turbines, boilers . .

 Optical-surgical instruments ...

 1,303

 446 

 584

 273

 1,749

 726

 700

 323

 2,209

 882

 934

 393

 2,494

 945

 1,098

 451

 1,776

 679

 775

 322

 2,071

 718

 937

 416

Mineral fuel, oil . . . . . . . . . . . . . . 25 41 133 286 208 269

Mineral, metals, mineral products

 Gems and jewelry . . . . . . . . . . . .

 Iron and steel .... .... .... ...

 Iron-steel products .... .... ...

 404

 197

 74

 30

 411

 196

 82

 42

 562

 329

 68

 62

 646

 386

 151

 88

 523

 276

 114

 

 63

 753

 386

 198

 66

Transportation equipment . . . . . . . .

 Aircraft and parts . . . . . . . . . . .

 Ships & boats .... .... .... . .

 119

 65

 36

 266

 161

 82

 373

 142

 189

 248

 40

 169

 162

 9

 126

 239

 12

 184

Chemicals ... .... .... .... ....

 Organic chemicals . . . . . . . . . . . .

 Inorganic chemicals . . . . . . . . . .

 Plastics .... .... .... .... ....

 Fertilizers .... .... .... .... . .

 Misc. Chemical products .... ...

 598

 186

 60

 98

 107

 621

 212

 32

 123

 136

 830

 271

 40

 156

 134

 1,134

 390

 73

 187

 243 

 773

 267

 42

 131

 192

 1,065

 328

 90

 181

 194

Textiles, apparel, footwear . . . . . . . 37 164 174 123 43 72

Agricultural, horticultural, food,

marine products .... .... .... ... 314 195 186 218 168 185

Paper, paperboard, wood . . . . . . . .

Books, newspapers . . . . . . . . . . . . .

 162

 94

 167

 109

 198

 130

 221

 137

 154

 96

 167

 101

Other.. .... .... .... .... .... . . 100 137 143 263 162 264

Total .... .... .... .... .... .... 3,059 3,751 4,813 5,712 3,971 5,090

Source: Wold Trade Atlas.

At the individual commodity level, the majority of U.S. exports to India consisted of high valueadded items like gas turbines, computers and components, wireless and fixed line telecommunications

equipment, recorded media, electronic circuits and switches, oil and gas field machinery, civilian aircraft

jet engines and parts, heavy industrial equipment, optical and medical instruments as well as precious

stones and diamonds, mineral fuels, jewelry, cotton, peas and almonds, wood pulp and newsprint, and

chemicals (table 12). 
 India’s textile exports to the United States have benefitted from the phase out of the Multi-fiber 27

Arrangement (MFA). India is now on place to challenge Mexico as the second leading source of textiles for the

United States. Prince Mathews Thomas, “Textile exports to US grow 25%,” Business Standard, Apr. 19, 2006. 

On June 29, 2005, a Presidential proclamation was issued terminating the suspension of duty-free

28

treatment of certain articles imported from India under the GSP program. For more detail see Federal Register, Vol.

70 No. 125, June 30, 2005.

In 2005, the U.S. imposed anti-dumping duties on imports on noncanned, warm-water shrimp and 29

prawns from India and 5 other countries. The U.S. imposed an import duty of 9.5 percent on Indian shrimp in 2004.

“US imposes a 9.45% duty on shrimp from India,” The Economic Times, Dec. 22, 2004.

14

Table 12: Leading U.S. merchandise exports to India ($million)

HTS No. Commodity description 2001 2002 2003 2004

2707.99 

7102.39

2701.19

4707.90

8471.50

3105.20

8525.20

8473.30

8803.90

8529.90

8524.91

0802.12

8517.90

8517.50

8431.43

5201.00

2926.10

3815.90

7113.19

7204.49

Other oil & oil products of distillation of

 high temperature coal tar .... .... .... .... .... ...

Diamonds .... .... .... .... .... .... .... .... .... .

Other coal, not agglomerated . . . . . . . . . . . . . . . . . . . . . .

Other recovered waste and scrap paper . . . . . . . . . . . . . .

Central processing units .... .... .... .... .... .... . .

Dominum hydrogen .... .... .... .... .... .... .... .

Cell phones, transceivers, radio-TV apparatus

 incorporating reception apparatus . . . . . . . . . . . . . . . .

Parts-accessories for computers . . . . . . . . . . . . . . . . . . . .

Other parts of airplanes and helicopters . . . . . . . . . . . . . .

Other parts for radio-tv equipment . . . . . . . . . . . . . . . . . .

Other recorded sound media..... .... .... .... .... . .

Almonds, fresh or dried in shell . . . . . . . . . . . . . . . . . . . .

Parts of telecommunications equipment . . . . . . . . . . . . . .

Other telephone apparatus for carrier or digital line 

 systems .... .... .... .... .... .... .... .... ....

Parts of boring-sinking machinery . . . . . . . . . . . . . . . . . .

Cotton, not carded or combed . . . . . . . . . . . . . . . . . . . . .

Acrylonitrile .... .... .... .... .... .... .... .... ...

Other reaction initiators .... .... .... .... .... .... . .

Jewelry of gold .... .... .... .... .... .... .... .... .

Other ferrous scrap and waste . . . . . . . . . . . . . . . . . . . . .

 24

 97

 1

 60

 17

 55

 39

 74

 33

 17

 2

 36

 14

 17

 18

 102

 13

 18

 8

 13

 37

 108

 3

 67

 35

 19

 92

 83

 77

 17

 10

 35

 42

 34

 10

 90

 22

 16

 16

 26

 128

 184

 2

 93

 48

 83

 34

 125

 160

 47

 57

 52

 56

 52

 18

 121

 33

 16

 26

 10

 192

 216

 89

 87

 56

 94

 58

 115

 145

 96 

 134

 79

 83

 81

 58

 58

 56

 56

 50

 49

Other.. .... .... .... .... .... .... .... .... .... ... 2,401 2,912 3,468 3,860

Total .... .... .... .... .... .... .... .... .... .... . 3,059 3,751 4,813 5,712

Source: World Trade Atlas.

U.S. merchandise imports from India: U.S. imports from India grew from approximately $8

billion in 1999 to approximately $13.1 billion during 2004. The value of India’s exports to the United

States is concentrated in minerals, metals, and related products; jewelry; and textiles and apparel that

accounted for 66 percent of U.S. imports from India during 2004 and 65 percent during the JanuarySeptember period of 2005 (table 13). These products dominated India’s exports to the United States 27

averaging approximately 66 percent of total U.S. imports from India during 2002-2004. India’s exports 28

of agricultural, marine (mainly frozen shrimp), and other food products to the United States declined in

value from approximately $1.1 billion in 1999 to $990 million in 2004. 

29

During 2004, India’s exports of textiles and apparel to the United States grew from $2.5 billion

in 2001 to $3.3 billion in 2004, or by 32 percent. According to industry sources, India’s exports of

textiles and apparel to the United States increased at a slower pace than China’s during the January-
15

September period of 2005 due to declining prices of Chinese exports in the U.S. market. India’s textile

and apparel exports to the U.S. market grew by 12 percent in volume and 18 percent in value.

Table 13: Leading U.S. merchandise imports from India ($million)

Commodity 2001 2002 2003 2004 Jan-Sept 2004 Jan-Sept 2005

Machinery & equipment . . . . . . . . .

 Electrical machinery, sound 

 equipment .... .... .... . .

 Other machinery, computers, 

 appliances, turbines, boilers . .

 Optical-surgical instruments ...

 553

 235

 227

 91

 577

 183

 292

 102

 737

 246

 370

 121

 944

 276

 517

 151

 689

 207

 378

 104

 901

 512

 284

 105

Mineral fuel, oil . . . . . . . . . . . . . . . 2 143 151 247 179 422

Mineral, metals, mineral products

 Gems and jewelry . . . . . . . . . . .

 Iron and steel .... .... .... . .

 Iron-steel products .... .... . .

 2,987

 2,426

 95

 264

 4,188

 3,325

 305

 305

 4,427

 3,704

 133

 301

 5,409

 3,911

 630

 485

 3,984

 2,844

 494

 351

 4,114

 3,066

 271

 443

Transportation equipment . . . . . . . .

 Vehicles, not railway . . . . . . . . .

 Aircraft and parts .... .... ....

 118

 103

 13

 287

 154

 13

 208

 199

 7

 302

 266

 6

 204

 197

 4

 260

 257

 2

Chemicals ... .... .... .... ....

 Organic chemicals . . . . . . . . . . . .

 Tanning, dying, paint, ect . . . . . .

 Plastics .... .... .... .... ....

 Pharmaceutical products .... . .

 644

 227

 102

 71

 123

 738

 252

 101

 91

 156

 933

 280

 101

 112

 289

 1,101

 374

 99

 144

 312

 796

 280

 73

 108

 212

 907

 319

 73

 129

 185

Textiles, apparel, footwear . . . . . . .

 Woven apparel .... .... .... ...

 Textile floor coverings . . . . . . . . .

 Knit apparel .... .... .... .... .

 Misc. textile articles .... .... ...

 2,532

 1,122

 257

 413

 396

 2,829

 1,157

 293

 471

 515

 2,706

 1,156

 307

 237

 606

 3,261

 1,248

 351

 522

 734

 2,150

 1,024

 250

 410

 559

 2,860

 1,178

 284

 486

 605

Agricultural, food, marine products

 Fish and seafood . . . . . . . . . . . . .

 Edible fruit and nuts . . . . . . . . 

 Lac, gum, resins, veg. sap . . . . .

 Misc. grain, seed, fruit .... ....

 1,096

 243

 205

 76

 61

 892

 361

 223

 91

 52

 937

 384

 174

 89

 52

 1,030

 338

 238

 90

 71

 990

 245

 170

 67

 55

 954

 238

 175

 95

 35

Paper, paperboard, wood . . . . . . . . 33 42 51 57 55 50

Other.. .... .... .... .... .... . . 345 633 836 721 690 345

Total .... .... .... .... .... .... 8,310 10,329 10,986 13,072 9,737 10,813

Source: World Trade Atlas.

At the individual commodity level, the majority of U.S. imports from India were dominated by

cut and polished diamonds, jewelry, and textiles and apparel (clothing and textile floor coverings) that

accounted for 74 percent of the top 20 U.S. merchandise imports from India during 2003-2004 and 72

percent during 2004-2005 (table 14). Other products of note are chemicals and pharmaceuticals, food

products (cashews, other nuts, spices, edible fruit), iron and steel products (hot rolled, galvanized coated

steel, stainless steel, household items, cast iron, tubes, and pipes), machinery (taps, valves, transmission
Relations between India and China were severely hampered by a short border war in 1962. Border trade 30

did not resumed until July 1992 with the opening of consulates in Mumbai and Shanghai in December 1992 and June

1993. 

16

shafts, gears, and pistons), seafood (mainly frozen shrimp), and vehicle parts.

Table 14: Leading U.S. merchandise imports from India ($million)

HTS No. Commodity description 2001 2002 2003 2004

0306.12

0801.32

2710.19

2942.00

3004.90

6105.10

6109.10

6205.20

6206.30

6302.60

6304.92

6307.90

6802.23

7102.39

7113.19

7210.49

7225.20

7325.99

8708.99

9701.90

Shrimp & prawns- frozen .... .... .... .... .... .

Cashen nuts fresh-dried shelled . . . . . . . . . . . . . . . .

Oil (not crude ) of petroleum . . . . . . . . . . . . . . . . . .

Other organic compounds . . . . . . . . . . . . . . . . . . .

Other pharmaceutical products . . . . . . . . . . . . . . . . .

Men’s-boy’s shirts of cotton . . . . . . . . . . . . . . . . . . .

T-shirts, singlets, tanktops; of cotton . . . . . . . . . . . .

Men’s or boys’ shirts of cotton . . . . . . . . . . . . . . . . .

Blouses, shirts & shirts-blouses of cotton . . . . . . . .

Toilet-kitchen linen of terry toweling . . . . . . . . . . . .

Other furnishings articles of cotton, not knitted or

 crocheted .... .... .... .... .... .... .... ...

Other made up textile articles . . . . . . . . . . . . . . . . . .

Simply cut-swn granite with a flat-even surface . . . .

Diamonds .... .... .... .... .... .... .... .... .

Gold jewelry .... .... .... .... .... .... .... . .

Flat rolled products of iron/nonalloy steel otherwise

 pltd/coated with zinc .... .... .... .... .... . .

Flat rolled products of high speed steel, width

 less than 600 mm .... .... .... .... .... ....

Other cast articles of iron or steel of malleable

 cast iron .... .... .... .... .... .... .... ....

Other parts & accessories of cars, buses, and 

 trucks .... .... .... .... .... .... .... .... . .

Collages, ect .... .... .... .... .... .... .... ...

 213

 178

 () 

1 

 77

 51

 126 

 126 

 143

 236

 18

 179

 84

 78

 1,731

 559

 5

 14

 64

 52

 0.1

 324

 205

 ( )

1 

 110

 70

 143

 145

 192

 297

 27

 235

 120

 108

 2,423

 751

 21

 41

 67

 68

 0.1

 342

 170

 50

 121

 138

 125

 136

 194

 276

 45

 226

 158

 120

 2,652

 881

 3

 48

 68

 84

 136

 294

 234

 142

 178

 155

 127

 156

 230

 285

 76

 239

 186

 114

 2,323

 1,387

 311

 111

 121

 119

 139

Other.. .... .... .... .... .... .... .... .... ... 4,376 4,982 5,013 6,145

Total .... .... .... .... .... .... .... .... .... . 8,310 10,329 10,986 13,072

( ) HTS subheading 2710.19 first appeared in 2003; previous imports of these products appeared elsewhere in Chapter 27. 1

Source: World Trade Atlas.

India’s trade with China

Bilateral trade between India and China is among the fastest growing in the world. China has

emerged from being an insignificant trading partner in the early 1990s to one poised to supplant the

United States as India’s largest single trading partner. In 2005, China became India’s 3 largest trading

rd

partner, behind only the United States and the UAE, and its single leading source of imports. Although

bilateral trade started from a low base, trade between India and China grew at an exponential rate from

approximately $1.7 billion in 1999 to nearly $6 billion in 2004. During the January-September period 30

of 2005, China supplanted the United States as India’s single largest source of imports.

China’s share of India’s total merchandise trade also grew from 2 percent of the total during

1999 to approximately 6 percent during 2004. China has experienced a long-standing trade surplus with

India, which grew from $678 million in 1999 to $1.9 billion in 2004 (table 15). Bilateral trade between
In April 2005, Chinese Premier Wen Jiaboa announced plans to boost bilateral trade between China and 31

India to $30 billion from the present $13 billion. China’s Ambassador to India, Sun Yuxi, asserted that bilateral trade

between the two countries has the potential to reach $100 billion within the next 5 to 8 years. Biswajit Dhar of the

Indian Institute for Foreign Trade stated that, "China has consistently enjoyed a favorable trade balance vis-a-vis

India, which in 2003-04 was almost 50 percent higher than the level recorded in the late 1990s. Furthermore, the

commodity composition of India-China trade has been such that it is China which, on balance, stands to benefit."

Indrajit Basu, “China willing, India shy,” Asia Times, Apr. 14, 2005. 

P. Vaidyanathan Iyer & Amiti Sen,“India yes to Bipa, no to FTA/RTA,” Financial Express, April 11, 32

2005.

Anil K. Joseph, “China’s exports to India zoom 40.8% in 2002,” rediff.com, March 31, 2003. 33

“China charges India with creating trade obstacles,” Press Trust of India, March 16, 2006. 34

17

India and China is highly concentrated among a small number of products. India’s leading 20 individual

imports from China accounted for 74 percent of India’s total imports and its leading 20 individual

exports to China accounted for 46 percent of India’s total exports to China during 2004. China’s imports

from India are dominated by low value-added primary and semi-finished products (minerals, iron and

steel), whereas India’s imports from China consist principally of high value-added machinery and

electrical goods.

31

Table 15: China’s merchandise trade with India, 2001-Sept. 2005 ($million)

Year China’s imports from India Percent

Change

China’s exports to India Percent

Change

China’s 

trade

balance

1999 .... ...

2000 .... ...

2001 .... ...

2002 .... ...

2003 .... ...

2004 .... ...

Jan-Sept 2004

Jan-Sept 2005

 497

 732

 916

 1,475

 2,475

 4,105

 2,715

 4,262

 47

 25

 61

 40

 66

 57

 1,175

 1,465

 1,809

 2,586

 3,758

 6,008

 4,167

 6,193

 25

 23

 43

 45

 60

 49

 678

 733

 893

 1,113

 1,283

 1,903

 1,452

 1,931

Source: World Trade Atlas.

China’s merchandise exports to India: In anticipation of Chinese Premier Wen Jiabo’s

state visit to India in April 2005, the China Council for Promotion of International Trade called for a Free

Trade Agreement (FTA) between India and China. The two governments announced the initiation of a

joint feasibility group to study a possible China-India FTA. Noting objections from the Indian business

community, the Government of India countered with a Bilateral Investment Promotion and Protection

Agreement that would provide China with Most Favored Nation (MFN)status, accord national treatment

to Chinese companies, and allow for free repatriation and transfer of returns of investment. Previously, 

32

both countries had agreed to abide by the Bangkok preferential trade arrangement rather than by the

MFN tariff rates with China offering India a preferential tariff line on 217 items in order to promote

bilateral trade.33

The Chinese alleged that India was creating unnecessary obstacles to trade because of India’s

refusal to grant China ‘market economy’ status. Likewise, Chinese officials were worried by Indian

accusations that China was either dumping or subsidizing its exports and receiving an unfair price

advantage in the Indian market. These accusations resulted in India initiating more than 90 anti34

dumping investigations, two investigations on safeguards measures, and one investigation on special
“Anti-dumping duty on Chinese silk imports,” The Economic Times, May 24, 2006. 

35

Economic & Commercial Report March 2005, Embassy of India, Beijing. 

36

Biswajit Dhar of the Indian Institute of Foreign Trade asserted that China "stands to gain enormously 37

more [from bilateral trade with India] simply because its exports are focused on the higher end of the value chain.” 

 “Textile imports from China up 600%,” India Biznews, Feb. 14, 2006. 38

According to Assocham President Anil K. Agarwal, “Chinese textile imports to India rose because their 39

prices internationally witnessed a downturn in the period which ushered cut throat competition among all leading

economies of textile products. China survived because of its higher production of textile products with lower

prices.”“Textile imports from China up 600%,” India Biznews, Feb. 14, 2006.

18

safeguard measures, representing a combined value of $720 million. In May 2006, the Government

announced the improvision of provisional anti-dumping duties on imported Chinese silk fabric weighing

20 to 100 grams per meter and originating or exported from China, in order to remove injury suffered by

India’s powerloom industry. Anti-dumping margins on these products ranged between 57 percent to 115

percent, depending on the weight and variety of the imported fabric.35

Nonetheless, India’s imports from China grew nearly six fold from approximately $1.2 billion in

1999 to a record high of $6.0 billion in 2004. Although still a minor share of China’s total trade at only

1.5 percent, India’s imports from China’s grew by 68 percent during 2004 compared to 2003 and by 49

percent during the January-September period of 2005 compared to the corresponding period of 2004.36

With this tremendous growth, China moved from India’s third largest source of imports in 2004 to its

largest in 2004, supplanting the United States. China’s percentage of India’s total merchandise imports

also grew from 3.6 percent of the total in 2001 to 6.2 percent in 2004.

China’s exports to India’s have been dominated by organic chemicals, silk, edible vegetables and

fruits, textiles (man-made filaments), and high value-added manufactured products such as machinery,

electrical machinery, and electronics products (table 16). These products constituted about 57 percent of

India’s total merchandise imports from China during 2004 and 56 percent during the January-September

period of 2005. The fastest growing import item from China included electrical machinery and sound 37

equipment that grew more than four fold from $210 million in 2001 to $869 million in 2004. India’s

imports of Chinese textile, apparel, and footwear products grew from $224 million in 2001 to more than

$640 million in 2004. China’s share in the Indian textile and apparel market has also grown from 13 38

percent in 2000-2001 to 37 percent in 2004-2005.

39
19

Table 16: China’s merchandise exports to India ($million)

Commodity 2001 2002 2003 2004 Jan-Sept 2004 Jan-Sept 2005

Machinery & equipment . . . . . . . . .

 Electrical machinery, sound 

 equipment .... .... .... ...

 Other machinery, computers, 

 appliances, turbines, boilers . .

 Optical-surgical instruments ...

 464

 210

 215

 39

 880

 592

 227

 61

 1,459

 997

 402

 60

 2,612

 869

 1,664

 79

 1,770

 1,124

 592

 54

 2,713

 1,520

 1,107

 86

Mineral fuel, oil . . . . . . . . . . . . . . . 276 169 205 640 469 464

Mineral, metals, mineral products

 Precious stones-metals . . . . . . .

 Iron and steel .... .... .... . .

 Iron-steel products .... .... ...

 293

 79

 13

 14

 305

 131

 28

 14

 357

 102

 15

 34

 679

 98

 63 

 82

 475

 68

 33

 58

 824

 150

 193

 106

Transportation equipment . . . . . . . . 8 21 6 21 11 105

Chemicals ... .... .... .... ....

 Organic chemicals . . . . . . . . . . .

 Inorganic chemicals . . . . . . . . . .

 Plastics .... .... .... .... ....

 Fertilizers .... .... .... .... .

 224

 291

 58

 16

 8

 102

 450

 72

 26

 9

 873

 594

 102

 49

 12

 983

 762

 133

 80 

 4

 801

 565

 89

 51

 3

 1,096

 728

 124

 96

 7

Textiles, apparel, footwear . . . . . . .

 Silk; silk yarn, fabric .... .... .

 224

 132

 362

 173

 453

 202

 650

 264

 444

 184

 695

 266

Agricultural, horticultural, food,

marine products .... .... .... ... 57 102 87 101 67 88

Paper, paperboard, wood . . . . . . . . 6 12 17 34 23 41

Other.. .... .... .... .... .... . .

 Furniture and bedding . . . . . . . .

 Toys .... .... .... .... .... ...

 257

 11

 18

 91

 17

 20

 301

 23

 23

 288

 49

 33

 107

 30

 23

 167

 53

 33

Total 1,809 2,586 3,758 6,008 4,167 6,193

Source: World Trade Atlas.

At the commodity level, the majority of China’s merchandise exports to India consisted of

penicillin and antibiotics, steel inputs (coke and semi-coke of coal), computers and components, parts of

telecommunications equipment, woven fabric, silver and lead, and silk. Exports of radiotelephonic

transceivers and coke accounted for 44 percent of the top 20 Chinese merchandise exports to India during

2003-2004 and 48 percent during 2004 (table 17). 
Pallavi Aiyar, “Indo-China trade touches $12.2 billion this year,” Financial Express, Oct. 17, 2005. 40

20

Table 17: Leading Chinese merchandise exports to India ($million)

HTS No. Commodity description 2001 2002 2003 2004

2701.19

2704.00

2941.10

2941.90

2942.00

5002.00

5007.20

5007.90

5902.10

7106.91

7106.92

7801.10

8471.30

8471.60

8471.70

8473.30

5007.20

5007.90

8525.20

8529.90

Other coal w/n pulverized but not agglomerated . . .

Coke; retort carbon .... .... .... .... .... .... . .

Penicillins .... .... .... .... .... .... .... .... .

Other antibiotics .... .... .... .... .... .... ....

Other organic compounds . . . . . . . . . . . . . . . . . . . .

Raw silk (not thrown) .... .... .... .... .... ....

Other woven fabrics, containing >= 85% by weight 

 of silk or of silk waste .... .... .... .... .... .

Other woven fabrics .... .... .... .... .... .... .

Tire cord fabric .... .... .... .... .... .... .... .

Unwrought silver .... .... .... .... .... .... ...

Semi-manufactured silver . . . . . . . . . . . . . . . . . . . . .

Refined lead .... .... .... .... .... .... .... ...

PDAs, palmtops, and other portable computers . . . .

Printers .... .... .... .... .... .... .... .... ...

Disc drives .... .... .... .... .... .... .... ....

Parts-accessories for computers . . . . . . . . . . . . . . . .

Woven fabric,> 85% silk .... .... .... .... .... .

Other woven fabric of silk . . . . . . . . . . . . . . . . . . . .

Cell phones, transceivers . . . . . . . . . . . . . . . . . . . . .

Other parts of radio-TV equipment . . . . . . . . . . . . .

 115

 160

 28

 14

 53

 107

 6

 5

 5

 56

 10

 7

 2

 8

 45

 72

 6

 5

 12

 13

 72

 95

 37

 22

 83

 126

 16

 10

 8

 97

 20

 7

 3

 15

 51

 76

 16

 10

 197

 29

 78

 127

 73

 25

 108

 106

 31

 32

 30

 55

 37

 24

 15

 54

 66

 95

 31

 32

 499

 50

 136

 500

 101

 37

 147

 113

 43

 43

 46

 41

 47

 51

 64

 111

 89

 197

 43

 43

 826

 67

Other.. .... .... .... .... .... .... .... .... . . 1,080 1,596 2,190 3,263

Total .... .... .... .... .... .... .... .... .... . 1,809 2,586 3,758 6,008

Source: World Trade Atlas.

China’s merchandise imports from India: The composition of China’s imports from India

is almost unchanged, dominated by low-value primary products and industrial raw materials. India’s

exports to China are dominated by iron, steel, iron ore and concentrates, and inorganic and organic

chemicals. In 2004, India became China’s second-leading supplier of iron ore behind Australia and ahead

of Brazil. India possesses one of the world’s largest concentrations of iron ore, and in 2004 its exports

40

of iron ore grew more than seven-fold, accounting for 82 percent of India’s total exports to China (table

18). China’s demand for these products is being driven primarily by that country’s on industrial

expansion and infrastructure construction, and on construction for the upcoming 2008 Beijing Olympics,

and on construction for the Shanghai Expo 2010.
21

Table 18: China’s merchandise imports from India ($million)

Commodity 2001 2002 2003 2004 Jan-Sept 2004 Jan-Sept 2005

Machinery & equipment . . . . . . . . .

 Electrical machinery, sound 

 equipment .... .... .... ...

 Other machinery, computers, 

 appliances, turbines, boilers . .

 Optical-surgical instruments ...

 40

 9

 8

 23

 57

 12

 27

 18

 100

 24

 52

 24

 158

 35

 100

 23

 108

 25

 66

 19

 114

 28

 69

 17

Mineral fuel, oil . . . . . . . . . . . . . . . 1 4 76 16 9 8

Mineral, metals, mineral products

 Ores, slag, ash .... .... .... ...

 Salt; sulfur; earth, stone . . . . . . .

 Iron & steel .... .... .... .... .

 349

 243

 53

 25

 659

 343

 68

 211

 1,400

 531

 84

 711

 2,518

 1,817

 127

 446

 1,629

 1,157

 86

 292

 2,972

 2,203

 108

 524

Transportation equipment . . . . . . . . 2 10 19 15 13 11

Chemicals ... .... .... .... ....

 Organic chemicals . . . . . . . . . . . .

 Pharmaceutical products . . . . . .

 Misc. chemical products . . . . . . .

 Plastics .... .... .... .... ....

 154

 100

 25

 15

 0

 442

 158

 28

 12

 146

 532

 192

 24

 16

 202

 958

 311

 25

 19

 300

 659

 184

 14

 13

 277

 804

 278

 17

 17

 248

Textiles, apparel, footwear

 Cotton & yarn, fabric .... .... .

 90

 74

 79

 63

 105

 74

 153

 61

 127

 101

 140

 110

Agricultural, horticultural, food,

marine products .... .... .... ...

 Fish and seafood .... .... .... .

 274

 91

 216

 105

 232

 74

 269

 119

 153

 32

 167

 42

Paper, paperboard, wood . . . . . . . . 0 1 2 1 0 0

Other.. .... .... .... .... .... . . 7 7 9 17 13 9

Total .... .... .... .... .... .... 916 1,475 2,475 4,105 2,715 4,262

Source: World Trade Atlas.

At the commodity level, the majority of China’s merchandise imports from India consisted of

steel inputs (iron ore, coke, briquettes, melting scrap), and steel products that accounted for 49 percent of

the top 20 Chinese merchandise imports from India during 2003 and 68 percent during 2004 (table 19).
India’s telecommunications sector has undergone a significant transformation during the last decade 41

emerging from a highly regulated, state-owned monopoly to a moderately competitive fairly deregulated sector.

Realizing the importance of a modern telecommunications network and a global shift toward knowledge-based

economies, the Government of India decided that the provision of a modern, efficient, world class

telecommunications infrastructure was central to accelerating the economic development and social growth of the

country. William Greene, The Liberalization of India’s Telecommunications Sector: Implications for Trade and

Investment, USITC, Office of Economic Working Paper, Sept. 2004.

22

Table 19: Leading Chinese merchandise imports from India ($million)

HTS No. Commodity description 2001 2002 2003 2004

0303.79

7210.49

5201.00

2516.11

2601.11

2601.12

6703.00

2608.00

2607.00

2818.20

2905.31

2933.71

2942.00

3901.10

3902.10

7210.49

7219.14

7225.20

7403.11

2919.00

Other frozen fish excluding livers & roes . . . . . . . . .

Other flat rolled products of iron or steel, width

 of 600mm or more .... .... .... .... .... ....

Cotton, not carded or combed . . . . . . . . . . . . . . . . .

Granite crude or roughly trimmed . . . . . . . . . . . . . .

Iron ores & concentrates non-agglomerated other 

 than roaster iron pyrites . . . . . . . . . . . . . . . . . . . . .

Iron ore & concentrates agglomerated . . . . . . . . . . .

Human hair .... .... .... .... .... .... .... ....

Zinc ores & concentrates . . . . . . . . . . . . . . . . . . . . .

Lead ores and concentrates . . . . . . . . . . . . . . . . . . . .

Aluminum oxide other than artificial corundum . . .

Ethylene glycol .... .... .... .... .... .... .... .

6-hexanelactam.... .... .... .... .... .... .... .

Other organic chemicals .... .... .... .... .... . .

Polyethylene having a specific gravity 0.94/more . .

Polypropylene .... .... .... .... .... .... ....

Other products of iron/non-alloy steel otherwise

 pltd/cotd with zinc .... .... .... .... .... ....

HT-rolled products in coils of thickness < 3mm . . .

Products of high speed steel . . . . . . . . . . . . . . . . . . .

Cathodes & sections of cathodes of refined copper

Phosphoric salts and esters . . . . . . . . . . . . . . . . . . . .

 55

 0

 0

 40

 161

 28

 16

 0

 0

 2

 2

 4

 19

 4

 56

 0

 3

 1

 3

 0

 72

 13

 0

 51

 274

 31

 24

 0

 0

 76

 1

 14

 19

 47

 54

 14

 65

 32

 32

 0.1

 35

 62

 10

 56

 408

 73

 32

 34

 1

 67

 10

 5

 5

 72

 93

 62

 129

 166

 18

 0.1

 29

 94

 32

 89

 1,544

 209

 36

 31

 12

 165

 72

 36

 36

 183

 139

 94

 131

 27

 34

 25

Other.. .... .... .... .... .... .... .... .... ... 522 656 1,137 1,087

Total .... .... .... .... .... .... .... .... .... . 916 1,475 2,475 4,105 

Source: World Trade Atlas.

Competition for market share

Competition for Indian import market share: India’s former import substitution policies 

significantly restricted imports and encouraged foreign companies to establish manufacturing facilities in

India. For example, the Haier Group of China, a player in the international home appliance and consumer

electronics markets, established a joint ventures in India to produce cellphones and other

telecommunications equipment, televisions, microwave ovens, washing machines, and refrigerators.

Telecommunications equipment: With India’s deregulation of its telecommunications market in

1991 and the removal of restrictions on imports of this equipment in 1999, India has become a significant

market for imports of high value-added technology equipment, components, and parts. India currently 41

has the world’s fifth-largest public sector telecommunications network and Asia’s third- largest network,
Telecommunications, IBEF. 42

As a consequence, teledensity has grown from 8.8 percent in January 2005 to 11.7 percent by February

43

2006. The high end of India’s cellphone market is dominated by foreign multinationals because of their ability to

incorporate new technologies such as Bluetooth and Wi-Fi mobile commuting capabilities. 

India produces a complete range of telecommunications equipment including medium and small size

44

switches, transmission and terminal equipment, radio transmission equipment, satellite systems, high bit rate digital

subscriber lines, telecom cable, VSAT terminals, frame relay, optical fiber equipment, asynchronous transfer mode

(ATM), wireless-in-local loop equipment. Many of these products are manufactured in collaboration or as part of

joint ventures with multinational firms.

Thomas K. Thomas, “Made in India tag hot among telecom equipment buyers,” Business Line, March 6, 45

2005.

“HP targets India, non-Western markets with new technology,” Business Journal, Apr. 7, 2006. 46

PC’s are manufactured domestically by Acer (Taiwan ), HCL (India), Zenith (India ). LG (S. Korea). 47

23

only behind China and South Korea in 2004. India possesses the world’s fastest growing

telecommunications sector market and the number of fixed and wireless telephone connections has more

than doubled since 2004 to nearly 150 million in 2005. The market for mobile phones and allied 42

services has grown tremendously as millions of new subscribers are added to the rolls each month.43

Imports dominate certain segments of the telecommunications equipment market, while India’s

domestic companies supply virtually all fixed telephone terminals, cables, transmission equipment, and

feature phones. Imports dominate wireless switching and leading U.S., European, Chinese, and South 44

Korean manufacturers have or will establish production facilities in India to serve the Indian market,

especially cellphones. 

45

Computers and components: Although, domestic production also accounts for a significant

portion of India’s computer market, foreign multinationals have a significant presence, especially in the

higher-price niches of the market. This highly competitive and price sensitive market is very sensitive to

innovation and declining prices. For example, Hewlett-Packard (HP) announced the introduction of the

$50 “gesture keyboard” writing tablet (pen-based interface) that allows for easier entry of pen strokes

with characters from two of India’s national languages (Hindi and Kannada).

46

Significant changes are occurring in India’s PC market as demand for premium notebook

computers is increasing as prices have dropped dramatically. This growing demand among India’s 47

consumers for electronic products (DVD players, cell phones, and other wireless devices), has also

generated a growing demand for imported semiconductors, motherboards, CD ROM drives, graphics

cards, webcams, power supplies and other parts and components. As shown in tables 21 and 22, imports

of computers (including PDAs and other handheld computers) increased almost four fold between 2000

and 2004. By 2004, China dominated this market, accounting for 55 percent of the market in quantity

terms. Also, computers imported from the United States had a significantly higher average price, but was

lower in value than those imported from China.

India’s computer parts and accessories market is dominated as follows: motherboards (United

States, S. Korea), CD ROM drives (Korea, China), CD ROM parts (S. Korea, Japan), CD-R (Germany),

hard disk drives (Singapore), 3.5 inch floppy disc drives (Philippines), graphic cards (China), microchips

(United States, S. Korea), specialist video cards (United States), loudspeakers and zip drives (Malaysia),

webcams (China), power supplies (China, Malaysia), ADM processors (United States), liquid crystal

displays (Japan, S. Korea), and DRAMS (Korea).
In 2005, Switzerland also surpassed the United States as a source of imports for the Indian market. 48

However, India’s imports from Switzerland consist almost entirely of gold and rough diamonds for India’s jewelry

industry, goods which neither the United States or China export in large quantities. Likewise, during 2004,

approximately 77 percent of the UAE’s exports to India consisted of gold and diamonds and 80 percent during the

January-September 2005. 

24

Table 21: Computers (HTS 8471) imported by India from leading suppliers, (million units)

Country 2000 2001 2002 2004

China .... .... .... .... .... .... . .

Singapore .... .... .... .... .... ...

South Korea .... .... .... .... .... .

Malaysia .... .... .... .... .... ....

United States .... .... .... .... ....

World .... .... .... .... .... .... . .

 823

 2,024

 298

 983

 235

 5,434

 1,578

 1,629

 758

 743

 138

 5,961

 2,314

 1,653

 936

 335

 171

 7,020

 11,339

 2,797

 2,065

 858

 433

 20,520

Source: World Trade Atlas.

Table 22: Average price and value of computers imported by India, by leading suppliers 

Country Average price ($)

2000 2004

Value ($)

2000 2004

China .... .... ....

Singapore . . . . . . . . .

South Korea . . . . . . .

Malaysia .... .... . .

United States . . . . . .

World .... .... ....

 66

 117

 89

 97

 518

 127

 26

 128

 31

 199

 538

 68

 54

 236

 27

 95

 122

 691

 300

 359

 64

 171

 233

 1,403

Source: World Trade Atlas.

China-U.S. competition for a share of the Indian import market: In 2005, the Indian

market for foreign goods remained small, especially when compared to that of the United States, China,

the EU, and Japan. During January-September 2005, the United States was supplanted by China as

India’s single leading source of imports. Also, during 2001-2004, China became India’s third- leading

trading partner surpassing the United Kingdom, the United Arab Emirates, Hong Kong, Germany,

Belgium, Japan, and Switzerland. China became India’s second-largest two-way trading partner during 

January-September 2005 when it surpassed the UAE. Chinese exports to India grew more than three- 48

fold during 2001-2004 and by 49 percent during the January-September period of 2005 compared to the

corresponding period of 2005. Whereas U.S. exports to India only grew by 87 percent during 2001-2004

and by 28 percent during the January-September period of 2005 compare to the same period of 2004.

Similarly, China’s percentage share of India’s imports increased from 3.6 percent in 2001 to 6.2

percent in 2004 and from 6.0 percent during the January-September 2004 to 6.4 percent during the

 corresponding period of 2005. While U.S. exports to India also increased in absolute terms, but they

declined as a percentage of India’s total merchandise imports from 6.1 percent to 5.9 percent during

2001-2004 and from 5.7 percent during January-September 2004 to 5.3 percent during the corresponding

period of 2005.

China enjoys a competitive advantage over the United States in its proximity to the Indian

market, its lower labor and production costs for important products (e.g., computers and components,
“Dole: China’s Undervalued Currency Hurts NC Jobs and Manufacturers,” Press Release, May 18, 2006. 49

 HTS Chapter 84 consists of items such as nuclear reactors, computers, boilers, machinery and mechanical 50

appliances; and parts thereof. HTS Chapter 85 consists of electrical machinery and equipment and parts thereof;

sound recorders and reproducers; television image and sound recorders and reproducers; and parts and accessories of

such articles.

“Ningbo Bird launches Low-Cost GSM handsets,” EFY Times, Nov. 28, 2005. 51

Christopher Rhodes and Charles Hutzler, “China’s Forays Hit Telecom Rivals Hard - - Amid a Shaky 52

Recovery Competitive Pressures Rise for Western Manufacturers,” The Asian Wall Street Journal, Sept. 9, 2004.

25

telecommunications equipment). The United States enjoys a competitive advantage in innovation and 49

higher value-added products incorporating the latest technologies. China and the United States compete

in the Indian import market primarily in high value-added technology products such as computers and

telecommunications equipment (classified in HTS Chapters 84 and 85).

50

India’s top 15 imports in these two HTS chapters for which the United States and China are both

important suppliers are listed in table 23. China’s share in the Indian import market for these products 

grew significantly during 1999-2004 and, in aggregate, China surpassed the United States as a supplier of

telecommunications equipment and computers, components, and parts by the end of 2004.

Telecommunications equipment: Traditionally, India’s telecommunications equipment market

has been dominated by companies from the United States and the EU. Local Indian companies dominate

the customer premises equipment and via joint ventures offer some carrier equipment. However, state-ofthe art equipment is generally sourced from outside India. Leading telecommunications equipment

suppliers Lucent (U.S.), ITI (India), Ericsson (Finland), Motorola (U.S.), Cisco (U.S.), Siemens

(Sweden), and Wipro (India).

China has emerged as the world’s leading manufacturer of cellphones and it has been estimated

that approximately 70 percent of the world’s cellphone were made in China. Chinese companies have 51

entered the Indian market challenging U.S. and EU suppliers in terms of both price and competitive

technologies. Falling profit margins and increasing competition among China’s 37 foreign and domestic 52
26

Table 23: Competing exports from the United States and China in the Indian market , 1999,2004, 2005 ($million) 

HS No. Commodity description United States C

1999 2004 2005 1999 2004 

8473.30

8471.80

8411.91

8471.70

8471.60

8430.41

8479.89

8471.50

8411.99

8431.49

8409.99

8447.90

8454.90

8482.10

8415.10

8402.90

8525.20

8524.31

8538.90

8542.21

8529.90

8517.30

8517.50

8517.90

8504.40

8521.90

8507.20

8544.20

Parts-accessories for computers .... .... .... .... .... .... .... . .

Other computer units .... .... .... .... .... .... .... .... .... . .

Parts of turbojets or turbopropellers . . . . . . . . . . . . . . . . . . . . . . . . . . .

Disc drives .... .... .... .... .... .... .... .... .... .... .... . .

Printers .... .... .... .... .... .... .... .... .... .... .... ....

Boring & sinking machines .... .... .... .... .... .... .... .... .

Other machines and mechanical appliances . . . . . . . . . . . . . . . . . . . . .

Central processing units .... .... .... .... .... .... .... .... ....

Other parts of turbojets or turbopropellers . . . . . . . . . . . . . . . . . . . . .

Parts-attachments for derricks, cranes, ect . . . . . . . . . . . . . . . . . . . . . .

Spark-ignition reciprocating engines . . . . . . . . . . . . . . . . . . . . . . . . . .

Other textile knit, stitch-bond, lace machines . . . . . . . . . . . . . . . . . . .

Parts of converters, ladles .... .... .... .... .... .... .... .... ...

Ball bearings..... .... .... .... .... .... .... .... .... .... ....

Air conditioners .... .... .... .... .... .... .... .... .... .... . .

Parts of super-heated boilers .... .... .... .... .... .... .... ....

Cell phones, transceivers .... .... .... .... .... .... .... .... ...

Laser discs .... .... .... .... .... .... .... .... .... .... .... . .

Other parts of electrical appliances . . . . . . . . . . . . . . . . . . . . . . . . . . .

Digital monolithic integrated circuits . . . . . . . . . . . . . . . . . . . . . . . . . .

Other parts of radio and tv equipment . . . . . . . . . . . . . . . . . . . . . . . . .

Telephone switching apparatus .... .... .... .... .... .... .... . .

Parts of telephone and telegraph apparatus . . . . . . . . . . . . . . . . . . . . .

Parts of electrical apparatus .... .... .... .... .... .... .... .... .

Static converters for computers .... .... .... .... .... .... .... . .

Video apparatus w/o tape .... .... .... .... .... .... .... .... ...

Other lead-acid storage batteries . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Insulated coaxial cable .... .... .... .... .... .... .... .... .... .

 55

 54

 56

 11

 9

 1

 6

 28

 61

 16

 26 

 0.7 

 1

 0.3

 0.03

 2

 23

 18

 13

 (1)

 16

 7

 11

 16

 6

 0.1

 0.7

 5

 84

 69

 74

 47

 25

 87

 26

 54

 24

 13

 25

 2

 2

 7

 0.5

 3

 105

 76

 61

 37

 32

 17

 78

 91

 13

 0.5

 0.6

 7

 113

 86

 74

 51

 21

 99

 28

 48

 29

 31

 27 

 3

 2

 11

 0.2

 2

 108

 76

 41

 34

 26

 12

 75

 104

 23

 0.6

 0.3

 5

 6

 1

 (2)

 2

 16

 0

 1

 0.1

 (2)

 0.1

 0.1

 0.1

 0.4 

 9

 0.2

 (2)

 5

 (2)

 0.6

 (1)

 10

 (2)

 0.04

 2

 0.7

 1

 3

 2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) HTS subheading created in 2002. (2) Either no exports to India or trade was less than $1 million. Source: World Trade Atlas.
Ibid. 53

Huawei won a contract to supply equipment for 1.05 million CDMA lines. ZTE won a contract tender to 54

construct a national transmission backbone network (wave division multiplexing equipment) and a CDMA network

in 9 states for BSNL. “India: Chinese suppliers move in,” Global Technology Forum, Apr. 9, 2004.

Motorola manufactures its cellphones and network equipment in 4 production facilities located in 55

Singapore, Malaysia, and China (2 locations). In 2005-06, it introduced a low-cost cell phone assembled in India.

Motorola is currently India’s fourth largest cellphone supplier with 4.5 percent of India’s cellphone market.

ExportIT Report India, U.S. Department of Commerce, May 2004. 56

27

manufacturers forced Chinese manufactures to look outside in order to survive. Chinese cellphone 53

companies have been able to make inroads in India’s urban markets (New Delhi, Chennai, and Kolkatta)

with lower priced cellphones that offer more features. Ningbo Bird, China’s largest cellphone

manufacture and its leading cellphone exporter, introduced a line of low priced cellphones in western

India under the brand name of Bird.

China’s two largest telecommunications equipment manufacturers, Zhongxing Telecom (ZTE)

and Huawei Technologies, have entered the market and have won contract tenders to supply equipment

to India’s 2 state-owned telephone operators, BSNL and MTNL. Both companies market PDAs, CDMA 54

mobile phone handsets, and infrastructure gear (ATM switches, fixed network platforms data cards,

modems, fixed wireless terminals, wireless gateway and modules) in the Indian market. 

Prominent U.S. and European multinational telecommunications equipment makers active in the

India market are shown in the following tabulation.

Company Country (H.Q.) Products

Nokia .... .... .... . . Finland Base station controllers, cellphones

Sony-Ericsson .... ... Japan-Sweden Radio base stations, cellphones

Alcatel .... .... .... . France Cellphones, transmission equipment (fixed line switches, base stations,

modems, fixed and wireless boadband infrastructure)

Hughes Network .... . U.S. Satellite broadband equipment, VOIP equipment, broadband wireless radio

equipment

Motorola .... .... . .

55 U.S. Cellphones, mobile-fixed radios, infrastructure equipment (modems, data

terminals, repeaters)

Microsoft .... .... ... U.S. Webcams, digital gaming and entertainment consoles

Cisco .... .... .... . . U.S. Routers, switches, widearea networks, VOIP equipment, broadband wireless

radio equipment

Lucent Technologies . . U.S. Digital switching equipment, tower stations, semi conductors

Qualcomm .... .... . . U.S. Cellphones, cellphone chips

Elcoteq .... .... .... . Finland Cellphones, communications network equipment

Siemens .... .... .... Germany Cellphones, switch gear, ATM switches

Computers and components: Due to the high cost, ownership of personal computers (PCs) in

India remains at one of the lowest levels in Asia. Currently the Indian computer, components, and

networking equipment market is dominated by locally branded manufactures, multinationals, and

unbranded or “gray market” assemblers. These companies depend heavily on imports of key 56

components from China, Malaysia, and Taiwan. Lately, multinationals such as HP, LG, and Samsung
 HP manufactures sites are located in Australia, China, India, Japan, Malaysia, Singapore, and Thailand. 57

HP uses these locations to produce PCs, notebooks, Pocket PCs, workstations, servers, storage units, networking

products, printers, scanners, inkjet cartridges for the world market. It also maintains an assembly and R&D facility in

Bangalore. In 2005, India accounted for less than 10 percent of Hewlett-Packard’s sales.

The $1.23 billion acquisition made Lenovo the world’s third-largest PC producer, behind only Dell and 58

HP. Since IBM focused primarily on the PC market, Lenovo inherited 32 percent of the world’s PC business to go

along with its 4 percent of the Asian small business market. Although Lenovo possesses an India PC manufacturing

facility (Pondicherry) and announced plans to increase annual production from 0.9 million units to 1 million units,

however most of its PC sales will continue to imports from China. Lenovo officials anticipate that the company’s

revenues from the Asian PC market will exceed those from North America and Europe. “Levono to swamp Indian

PC market,” Indiatimes Infotech, June 13, 2005.

 “Microsoft, Lonovo launch ‘pay as you go’ computer,” Physorg.com, May 22, 2006. 59

John Riberio, “Dell’s India facility to operate this year,” Infoworld, May 25, 2006. 60

Yungkai Yang, The Taiwanese Notebook Computer Production Network in China: Implication for

61

Upgrading of the Chinese Electronics Industry, University of California, Irvine, Feb. 2006.

Kenneth Kraemer & Jason Dedrick, Enter the Dragon: China’s Computer Industry, University of 62

California, Irvine, Feb. 2002. 

Kenneth Kraemer & Jason Dedrick, Dell Computer: Organization of a Global Production Network,

63

University of California, Irvine. 

28

have established local assembly operations to regain market share lost to branded and unbranded Indian

producers. 

U.S. brands account for approximately 20 percent of the market and HP (U.S.) currently has the

largest share of the Indian PC market followed by HCL Infosystems (India) and Lenovo (China), Acer

(Taiwan), and Dell (United States). With the purchase of IBM’s PC division in May 2005 by Chinese 57

commercial PC maker Lenovo, China gained a tremendous advantage in the Indian PC market.

58

To boost market share in India, Lenovo and Microsoft recently announced plans to offer PCs for

half retail price in the Indian market if customers pays the balance over time using Lenovo pre-paid cards

(FlexGo system). U.S. computer manufacturer Dell announced plans to build a PC assembly facility in 59

India by the end of 2006 anticipating that the new facility reduce costs and lower delivery time. Dell

60

and others also serve the Indian market through assembly operations in China, Singapore, and Malaysia.

In 2002, Taiwan began to shift a sizable portion of its computer hardware production to China to

compete with multinational vertically integrated firms such as Sony, Gateway, IBM, NEC, Dell, HP,

Fujitsu, Toshiba, and Siemens. By 2005, China emerged as the world’s leading manufacturer of computer

hardware surpassing the United States. Many multinational computer manufacturers rely on third tier 61

suppliers for their components and parts and some employ contract manufacturers for assembly. Dell, 62

for example, does not manufacture its own parts and components relying instead on outside suppliers for

items such as CD- and DVD-ROMs, semiconductors, monitors, keyboards, mice, speakers, and add-on

cards.63

Typically China’s domestic manufacturers concentrate on the domestic Chinese market, while

the multinationals and contract manufacturers (primarily Taiwanese owned and managed) dominate

China’s computer hardware exports. Recently Chinese companies like Legend and Lenovo have begun to

export to the Asia-Pacific region. 

U.S.-China competition: Since 1999, China’s exports to India have grown tremendously to

become the largest single supplier of India’s imports. Although Indian imports from the United States

continue to grow, China has eclipsed the United States in a number of HTS Chapter 84 and 85

subheadings. Despite a comfortable lead in parts of civil aircraft, material handling machinery, boring

and sinking machinery, and laser discs the United States lags behind China in exports of computers and
Those EU countries reporting a growing share of India’s imports include Finland, Norway, Spain, and 64

Austria. None of these countries are a leading source of imports for the Indian market. 

29

components, ball bearings, transmission apparatus for radio and television, telephone switching

equipment, lead-acid storage batteries, and insulated coaxial cable.

Although, the top 20 U.S. exports of products covered in HTS Chapters 84 and 85 grew from

$442.8 million in 1999 to over $1.1 billion in 2005 and China’s exports grew more significantly from $60

million in 1999 to approximately $1.9 billion in 2005. While U.S. exports of these products nearly tripled

in value during 1999-2005, China’s grew nearly 20 times in value reflecting the need to cut costs in a

highly price-competitive industry through the globalization of production patterns and the transfer of

assembly and production operations from the United States, the EU, Japan, and Taiwan to China and

other developing nations..

The United States continued to dominate India’s Chapter 84 imports through the JanuarySeptember period of 2005, but as a percentage the share of the total enjoyed by the United States

dropped from 13 percent in 2004 to 11 percent during the January-September period of 2005. The U.S.

continued to be a leader in advanced computers (over 85,000 million theoretical operations per second

(MTOPs)), routers, switches, semi conductors and semi conductor manufacturing equipment and other

high technology value-added product.

China’s share, on the other hand, grew from 10 percent in 1999 to 13 percent during the JanuarySeptember period of 2005. The United States also saw its position in India’s imports of goods under HTS

Chapter 85 drop from first to third during this period behind China and Germany. As shown in the tables

20 and 25, China is not a significant supplier of optical and medical equipment (HTS Chapter 90) and

thereby does not compete with the United States for market share in the Indian market. 

Third country import competition: The United States is not the only developed country to

experience increasing export values in the India market while experiencing declining market share. As

shown in table 24, Japan, Germany, and the United Kingdom, among others, also experienced this

trend. Germany and the United Kingdom are India’s two largest EU trading partners with exports

64

increasing by $2.1 billion, or by 46 percent during 2001-2004. Like the United States, both countries saw

their share of the Indian import market drop from 3.8 percent and 5.5 percent, respectively, in 2001 to 3.6

percent and 3.3 percent in 2004.

Table 24: Exports to India from selected third Country sources, 1999 and 2004 ($million)

Country Exports to India: 1999 Percent of total Exports to India: 2004 Percent of total

Germany . . . . . .

United Kingdom

Switzerland . . . .

Belgium . . . . . .

France .... ....

Canada .... ...

Argentina . . . . .

Netherlands . . .

Sweden .... ...

Japan.... .... .

 1,885

 2,733

 3,402

 2,481

 763

 516

 446

 518

 604

 2,091

 3.8

 5.5

 6.8

 5.0

 1.5

 1.0

 0.9

 1.0

 1.3

 3.3

 3,525

 3,221

 4,421

 4,306

 1,268

 646

 501

 672

 921

 2,930

 3.6

 3.3

 4.5

 4.4

 1.3

 0.7

 0.5

 0.7

 1.0

 3.0

Source: World Trade Atlas.
India’s imports from Germany consisted principally of high value-added technology products such as

65

electrical apparatus for line telephony and telegraphy; air and vacuum pumps, compressors, and fans; parts of electric

motors and generator sets; laboratory and plant equipment; pumps for liquids and liquid elevators; electric motors

and generators; textile machinery; printing machines; ships; derricks and cranes; steam and other vapor turbines;

transmission shafts, bearings, and gears; records, tapes and other recorded sound media; electrical machines;

turbojets, turbopropellers, gas turbines, and parts; refrigerators and freezers; parts of earth moving machinery; parts

of aircraft and helicopters; machines for assembling electric or electronics lamps, tubes, and flashbulbs; medical

equipment based on x-ray or alpha, beta, or gamma radiation; oscilloscopes and spectrum analyzers; and automatic

regulating or controlling instruments.

Sony shuttered its India audio manufacturing unit and suspended production of color TVs in 2004. Sony

66

presently sells TVs in the Indian market it imports from its facilities in Thailand. “Sony India suspends CTV

production,” Business Line, June 8, 2004.

30

Germany: Germany is India’s 7 leading source of imports, and trade between the two countries th

increased by $1.6 billion during 1999-2004. Important German exports to India include a wide variety of

high value-added technology machines and parts, ships, telecommunications equipment, white goods, and

automobile parts and components. During 2004, Germany’s top 20 exported items to India accounted for

18 percent of India’s total imports from Germany (table 25). Most of these products compete directly

with U.S. exports in the Indian market. Nonetheless, because Germany’s exports are much more

diversified than those of the United States no one product dominates any particular sector.

65

Japan: Japan also competes with U.S. exports in the Indian machinery and value-added high

technology goods sectors. Japan is India 10 leading source of imports and it is a leading source for th

machinery and transportation equipment, components, and parts; iron and steel; electronic machinery;

and organic chemicals. Bilateral trade between the two countries increased by $839 million during 1999-

2004. Japan is India’s leading source for weaving machines; parts for motor vehicles engines;

automobiles, buses, and vans; machine tools and interchangeable tools for hand or machine tools; selfpropelled bulldozers, graders, and scrapers; and machining centers. Japanese giants such as Hitachi,

Toshiba, Sony, and others are very active in the Indian market and as seen in the following tabulation

they provide India with a wide variety of imported products.

Company Products

Toshiba .... .... . . Flash memory chips, air conditioners, refrigerators, washer dryers, microwave ovens, electric pots,

vacuum cleaners, air purifiers and cleaners, GSM mobile handsets, Color TVs (LCD projectors),

DVD players, laptop-tablet and desktop computers, barcode printers, semi conductors, die casting

machines, injection molding machines, PC workstations, and servers.

Hitachi .... .... ... Semi conductors, air conditioners, refrigerators, washing machines, vacuum cleaners, DVD

camcorders and players, LCD and plasma TVs, display components (deflection yokes, inverters for

blacklights, projection tv tubes, STN displays, TFT displays), and power tools (hammers, dis

grinders, sanders-polishers, drills, screw drivers, wrenches, saws, blowers, nailers-staplers.

Sony .... .... ....

66 Plasma display panels, color TVs, DVD player-recorders, home theaters, portable audio devices

(MP3 and CD players, ect) , digital cameras, car audio systems, memory sticks, PC notebooks, LCD

monitors and projectors, mobile phones.

The United Kingdom: The UK supplies the Indian market with mostly primary products such as

diamonds, silver and gold, iron and steel products, non-metallic minerals, and mineral waste and scrap.

Although the United Kingdom’s exports to India grew by $487 million during 1999-2004, the bulk of its

products do not compete with U.S. exports in the India’s import market.
31

Table 25: Competing exports to India from Germany, the United Kingdom, and Japan, 2004 ($million)

Germany United Kingdom Japan

HTS

No.

Commodity description value HTS

No.

Commodity description Value HTS

No.

Commodity description

8524.91

8503.00

9018.90

8483.40

8479.89

8477.80

8906.90

8538.90

8413.90

8708.99

7225.19

8483.90

8445.40

8481.80

8411.91

8445.20

8443.19

8803.30

9031.80 

7208.90 

Other recorded media . . . . . . . . . . . . .

Parts of electric motors-generators . . .

Other medical-surgical instruments . .

Gears, ball-roller screws . . . . . . . . . . .

Semiconductor processors . . . . . . . . .

Rubber-plastic working machines . . .

Ships .... .... .... .... .... .... . .

Parts of electrical app . . . . . . . . . . . 

Parts of pumps for liquids . . . . . . . .

Parts of motor vehicles . . . . . . . . . . . .

Flat rolled steel products . . . . . . . . . .

Toothed wheels, chain sprockets . . . .

Textile winding, reeling machines . . .

Other taps, cocks, valves . . . . . . . . . .

Parts of turbojets-turbopropellers . . . .

Textile spinning machines . . . . . . . . .

Other offset printing machines . . . . . .

Other parts of airplanes-helicopters . .

Other measuring-checking instruments

Ft rolled iron-non alloy steel products

 45

 89

 52

 34

 39

 35

 60

 40

 24

 43

 32

 18

 28

 26

 25

 24

 23

 47

 26

 25

7102.31

7106.91

7108.13

7204.49

7204.21

4901.99

8803.30

8524.91

2941.10

4802.57

4707.90

7106.92

7108.12

7102.39

8529.90

8525.20

8519.00

3824.90

7602.00

7404.00

Diamonds .... .... .... ....

Silver, unwrought . . . . . . . . . .

Gold, semifinished . . . . . . . . .

Other ferrous .... .... .... .

Stainless steel waste-scrap . . .

Other printed books, ect. . . . .

Other parts aircraft-helicopter

Other recorded media . . . . . . .

Penicillin .... .... .... ....

Paperboard .... .... .... ...

Unsorted waste-scrap paper . .

Silver, semi-manufactured . . .

Gold, unwrought . . . . . . . . . .

Other nonindustrial diamonds

Parts of radio-TV apparatus . .

Cell phones, transceivers. . . . .

Turntables, cassette players. . .

Binders for foundry molds . . .

Aluminum wastes and scrap . .

Copper waste .... .... .... .

 1,499

 100

 50

 78

 32

 24

 27

 24

 16

 18

 29

 30

 29

 16

 17

 12

 11

 11

 14 

 12

8905.90

8905.20

2942.00

8708.99

8703.23

7326.90

2704.00

8479.89

8429.59

8407.34

8483.40

8408.20

8457.10

8414.90

8415.90

8481.80

8525.20

9010.10

9018.90

7208.38

Floating docks, other vessels .

Drilling-production platforms

Drugs, organic compounds . . .

Other parts of motor vehicles .

Other motor vehicles . . . . . . .

Other articles of iron & steel .

Coke, retort carbon . . . . . . . . .

Electrotechnical appliances . .

Other construction machines .

Piston engines, > 1,000cc . . . .

Gears and gearing . . . . . . . . . .

Engines for motor vehicles . . .

Machining centers . . . . . . . . .

Parts of air & vacuum pumps .

Parts of air conditioners . . . .

Other taps, cocks, valves . . . .

Pit-head winding gears . . . . . .

Photo developing apparatus . .

Other medical/surgical appara .

Ft-rolled, coils . . . . . . . . . . . .

 107

 46

 33

 88

 46

 28

 80

 32

 26

 24

 24

 22

 21

 21

 20

 20

 26

 29

 22

 21

Source: World Trade Atlas.
Including computers, accessories, and peripherals; integrated circuits; cellular phones and parts; 67

chemicals (styrene, p-xylene, polypropylene, vinyl acetate, photographic chemicals); crude oil and other petroleum

products; minerals and metallic ores (tin, aluminum, zinc, waste and scrap, iron and steel); sewing machines; ball and

roller bearings; parts of airplanes and helicopters; parts of video recorders; medical instruments and devices; parts of

motor vehicles. It also dominates world production of disc drives accounting for approximately 45 percent of total

global production.

Singapore External Trade - May 2006, International Enterprise Singapore.

68

32

Other competitors: As a part of India’s “Look East” policy, imports from India to developing

countries, especially those in East Asia and the Middle East, increased both in value terms and as a

percentage of total imports during 1999-2004 (table 26). Singapore, Malaysia, and South Korea also

compete with U.S. exports in India’s value-added import market. 

Table 26: Competing exports to India from other sources, 1999-2004, ($million)

Country Exports to India 1999 Percent of total Exports to India 2004 Percent of total

China . . . . .

Singapore . .

Australia . . .

Malaysia . . .

S. Korea . . .

Thailand . . .

Taiwan . . . .

UAE .... . .

Israel .... . .

Saudi Arabia

Qatar .... . .

Kuwait . . . .

Oman .... .

 1,809

 1,324

 1,321

 1,255

 1,219

 364

 576

 910

 391

 496

 83

 88

 8

 3.6

 3.3

 2.3

 2.2

 2.2

 0.6

 1.0

 1.8

 0.8

 1.0

 0.2

 0.2

 0.02

 6,008

 2,930

 3,486

 2,203

 3,044

 749

 973

 3,766

 828

 1,147

 529

 249

 19

 6.2

 3.0

 2.6

 2.3

 3.1

 0.8

 1.0

 3.9

 0.9

 1.2

 0.5

 0.3

 0.2

Source: World Trade Atlas.

Like China, Singapore, South Korea, and Malaysia enjoy a competitive advantage relative to the

United States in terms of proximity to Indian and suppliers;, lower labor, logistics, and production costs;

the availability of subsidies and tax holidays; as well as export processing zones that allow duty-free

entry of imported components. They also enjoy a slightly lower compensation rate for manufacturing

workers than China. Each of these countries offers potential investors with a well educated workforce,

and well-developed seaports and customs infrastructure. Additionally, South Korea and Malaysia have

evolved into assembly and manufacturing platforms for major U.S. suppliers of telecommunications

equipment, computers and components, and video monitors.

Singapore: Singapore is India’s 11 leading source of imports and its leading trading partner in th

ASEAN. In 2004, Singapore’s exports to India consisted primarily of electronic goods; organic

chemicals; and transportation equipment, components, and parts (tables 27 and 28). At the commodity

level, Singapore exported a wide variety of products. Multinational telecommunications equipment and

67

computer makers Motorola, Apple, Compaq and contract manufacture Flextronics are active in

Singapore’s computer industry. These companies manufacture cell phones and network equipment, and

PC components and parts. Also a major component of Singapore’s exports are re-exports of electronic

components and parts and in 2004 re-exports accounted for approximately 54 percent of its trade with

India. In 2005, Singapore was India’s leading source of electronic integrated circuits and micro 68

subassemblies.
 “India, Singapore Sign Trade Deal,” World Trade/Interactive, June 30, 2005. 69

In March 2006, South Korea and India began discussion on the implementation of a Free Trade 70

Agreement. The FTA is expected to be signed sometime during 2007 and is expected to increase trade by $3.3

billion, or by 60 percent. “S. Korea, India aim to sign free trade deal by end of 2007,” bilateral.org, Aug. 2, 2005. 

Samsung commands 27 percent of India’s storage media devices market and 33 percent of the liquid 71

crystal display market and also offers digital still cameras and camcorders“LG starts India’s first optical drive plant,”

Business Standard, June 21, 2006,, 2006. “Samsumg India eyes 50 pct domestic LCD market share,” iTnews, May

30, 2006. “Samsung introduces India-specific packs for storage media devices,” Business Line, July 17, 2004. 

LG-India also exports its consumer durables and home appliances to South Asia, the Middle East, and 72

Africa. 

Samsung-India exports color TVs, monitors, refrigerators to the Middle East and to the CIS and SAARC 73

countries.

33

In June 2005, India and Singapore signed a Comprehensive Economic Cooperation Agreement

that took effect in August 2005. Under the agreement, India would immediately eliminate import duties

on nearly 80 percent of its imports from Singapore, while Singapore would eliminated duties on virtually

all imports from India. Under this FTA, import duties were to be phased out in 5 stages by April 1, 2009.

As a result of this agreement, trade groups predict that bilateral trade will grow from $7.2 billion in 2004

to $50 billion by 2010. This FTA has the potential to give Singapore a slight competitive advantage 69

over both China and the United States in the Indian market.

South Korea: India’s leading imports from South Korea consist principally of electronics,

machinery, and transportation equipment. Two-way trade increased by $1.8 billion during 1999-2004 70

with South Korea’s exports to India including mobile telecommunications equipment, auto parts,

maritime vessels and rescue operations equipment, airplanes and parts, sound recorders and reproducers,

television image and sound recorders, and minerals. LG and Samsung currently dominate the Indian

market for CDMA based cell phones. India is also a significant customer of Korea’s ship building

industry, since it is one of the world’s largest buyer of oil tankers and LNG ships needed for the

transportation of India’s imported crude oil and natural gas. 

South Korea was also India’s leading source for transmission apparatus for radio and television,

parts and accessories of motor vehicles, parts of railway or tramway locomotive or rolling stock, molding

boxes for metal foundry, and mold bases. Korean’s electronic giants LG Electronics and Samsung are

very active in the Indian market. As shown in the following tabulation, LG and Samsung manufacture a

wide variety of computer, consumer electronic, and household appliances in India.71

Company (location) Products

LG Electronics (Pune, Ranjangaon,

Noida) .... .... .... .... .... . .

72

Color TVs, washing machines, air conditioners, microwave ovens, refrigerator, PC

monitors and flat panel displays, vacuum cleaners, digital audio-video systems,

cellphones, optical disc drives, DVD writer units, DVD players, notebook and

desktop PCs, optical storage units (CD-rom, CD-R/RW, DVD-rom combo drives).

Samsung (Noida) .... .... .... . .

73 Refrigerators, air conditioners, washing machines, color TVs, microwave ovens,

DVD players, LCD projection and flat color TVs, PC monitors, disc drives, laser

printers, fax machines, storage media devices (floppies, CDs, DVDs), MP3 players,

digital still cameras and camcorders, cellphones.

India’s imports from Korea are also influenced by Korean private sector investment in India’s

subway construction projects (Samsumg), transportation industry, major road repair projects (Hyundai),

fuels (power and oil refineries), electrical equipment industry, chemicals and petrochemicals, and in its
Indo-South Korea Economic Relations, Economy Watch. 74

34

commercial office and household equipment sector.74

Malaysia: Malaysia is a leading producer of micro capacitors and accounts for nearly 30 percent

of all micro capacitors sold globally (manufactured primarily by Intel in Penang). Malaysia’s imports and

exports to India are concentrated among a narrow range of products. Malaysia is India’s principal

supplier of palm oil, and bilateral trade reached an all time record in 2005 at $2.2 billion. In 2005, India’s

imports from Malaysia consisted principally of product and commodity groups including vegetable oils

(mainly palm oil), machinery and transport equipment, manufactured goods, and other food items. Dell

Computer, Gateway, and Packard Bell have computer manufacturing plants in Malaysia. Malaysia is also

the home of contract computer manufacturers Solectron and Flextronics.

Dell Computers serves the Indian market from its product facility located in Penang, Malaysia

that assembles 95 percent of Dell’s laptops. Parts and components for Dell’s computers are manufactured

elsewhere in Asia and then shipped to Malaysia for assembly. The government of Malaysia granted Dell

Computer a waiver on taxes for 70 percent of its income and it granted Dell a 5 year tax holiday.

Hewlett-Packard and IBM also has production-assembly facilities in Malaysia. 
35

Table 27: Competing exports in the Indian market from Singapore, Malaysia, and South Korea (2005), ($million)

Singapore Malaysia South Korea

HTS

No.

Commodity description value HTS

No.

Commodity description Value HTS

No.

Commodity description

8473.30

8471.70

8471.60

8471.50

8471.80

8542.29

8525.20

8517.50

8524.91

2902.50

2902.43

8905.20

8901.90

8904.00

8905.90

4907.00

4911.99

7204.49

7102.39

8803.30

Parts-components for computers . . . .

Disc drives .... .... .... .... .... .

Printers .... .... .... .... .... ....

Central processing units . . . . . . . . . . .

Other computer units . . . . . . . . . . . . .

Other monolithic integrated circuits . .

Cell phones, transceivers . . . . . . . . . .

Modems, other apparatus . . . . . . . . . .

Other recorded sound media . . . . . . . .

Styrene .... .... .... .... .... ....

Para-xylene .... .... .... .... .... .

Floating-submersible platforms . . . . .

Other ships and vessels . . . . . . . . . . . .

Tugs & pusher craft . . . . . . . . . . . . . .

Light vessels, floating docks . . . . . . .

Unused postage, checks . . . . . . . . . . .

Other printed matter . . . . . . . . . . . . . .

Other ferrous waste & scrap . . . . . . . .

Diamonds, unworked . . . . . . . . . . . . .

Other parts of aircraft-helicopters . . . .

 196

 112

 92

 55

 24

 61

 46

 33

 30

 86

 72

 56

 53

 47

 44

 110

 40

 26

 22

 42

1511.90

1511.10

8473.30

8471.50

8471.30

8471.41

8471.60

8471.70

8471.49

8471.80

4401.29

5402.43

4403.99

4403.49

8525.20

8540.40

8540.11

2902.43

2711.13

3823.19

Palm oil . . .... .... .... ...

Crude not modified . . . . . . . . .

Computer parts-components .

Other digital processing units

Portable computers . . . . . . . . .

Other computers . . . . . . . . . . .

Printers . . .... .... .... ....

Disc drives .... .... .... ...

Computer systems . . . . . . . . .

Other computer units . . . . . . .

Other rubber .... .... .... . .

yarn of polyesters . . . . . . . . . .

Wood, nonconiferous . . . . . . .

Wood, tropical, not treated . . .

Cell phones, transceivers . . . .

Data/display cathode tubes . . .

Cathode-ray tubes . . . . . . . . . .

Para-xylene .... .... .... ...

Butanes, liquified . . . . . . . . . .

Other fatty acids . . . . . . . . . . .

 286

 123

 204

 29

 29

 25

 23

 21

 15

 13

 22

 21

 177

 145

 80

 45

 42

 154

 76

 39

8525.20

8529.90

8528.12

8540.11

8540.60

8479.89

8414.30

8471.70

8708.99

7209.17

7208.36

7216.50

8471.70

3904.10

3907.99

2710.19

8901.20

8479.90

4801.00

7901.11

Cell phones, transceivers . . .

Parts of tv apparatus . . . . . . .

Color tv reception app . . . . .

Cathode-ray tv tubes . . . . . . .

Other cathode-ray tubes . . . .

Other mechanical app . . . . . .

Refrigeration compressors . .

Disc drives .... .... .... . .

Other motor vehicle parts . . .

FT rolled products, 0.5mm . .

FT rolled, coils, >10mm . . . .

Other angles, shapes, sections

Disc drives .... .... .... . .

PVC, not mixed . . . . . . . . . .

Polyesters, other . . . . . . . . . .

Oil (not crude) . . . . . . . . . . .

Tankers .... .... .... .... .

Parts of mechanical app. . . . .

News print .... .... .... . .

Unwrought zinc, 99.9% pure

 1,090

 64

 62

 57

 30

 53

 47

 36

 400

 97

 80

 43

 36

 71

 46

 224

 176

 33

 66

 47

Source: World Trade Atlas.

. 
36

Table 28: Indian imports under HTS Chapters 84, 85, 90, by major trading partner, 1999-2004, ($million)

HTS

No.

Commodity description United States Japan Germany China Singapore South Korea Malaysia

1999 2004 1999 2004 1999 2004 1999 2004 1999 2004 1999 2004 1999 2004

8418

8419

8422

8428

8451

8455

8471

8473

8479

8430

8431

8483

8482

8504

8525

8536

8532

8517

8501

8524

8544

8542

8529

8540

8541

8523

9022

9030

9032

Refrigerators & freezers . . . . . . . . . . . . .

Plant & laboratory equipment . . . . . . . .

Dishwashing machines . . . . . . . . . . . . . .

Material handling equipment . . . . . . . . .

Textile washing & cleaning machines . .

Converters, ingot molds . . . . . . . . . . . . .

Computers & components . . . . . . . . . . .

Office machine parts . . . . . . . . . . . . . . . .

Other machines .... .... .... .... ....

Earth moving and grading machines . . .

Parts of material handling machines . . . .

Transmission shafts, bearings, gears . . . .

Ball & roller bearings . . . . . . . . . . . . . . .

Elec transformers/ static converters . . . .

Switches, base stations, repeaters, ect . .

Elec. app for switching electrical circuits

Electrical capacitors . . . . . . . . . . . . . . . .

Elec. app. for Telephony-telegraphy . . .

Electric motors & generators . . . . . . . . .

Records, tapes, & other recorded media

Insulated wire and cable . . . . . . . . . . . . .

Integrated circuits & microassemblies . .

Parts of radio-tv apparatus . . . . . . . . . . .

Cold cathode/photocathode tubes . . . . . .

Diodes, transistors, ect. . . . . . . . . . . . . .

Magnetic sound tape . . . . . . . . . . . . . . . .

App. based on x-ray & other radiation . .

Oscilloscopes, spectrum analyzers . . . . .

Regulating/controlling instruments . . . .

 8

 10

 4

 2

 4

 13

 111

 78

 19 

 1

 22

 15

 12

 11

 35

 16

 4

 138

 8

 74

 13

 31

 23

 7

 16

 4

 5

 15

 22

 19

 18

 9

 6

 10

 16

 233

 125

 43

 11

 107

 32

 27

 23

 63

 31

 11

 255

 9

 179

 30

 45

 103

 8

 17

 3

 54

 32

 27 

 2

 5

 2

 11

 7

 30

 22

 16

 30

 4

 11

 25

 31

 9

 7

 11

 9 

 9

 3

 7

 7

 19

 9

 17

 11

 6

 9

 3

 5

 3

 13

 2

 1

 3

 0.9

 20

 21

 44

 1

 23

 44

 41

 14

 42

 19

 8

 8

 9

 9

 17

 31

 7

 9

 30

 10

 9

 4

 13

 3

 16

 11

 8

 16

 6

 8

 5

 24

 4

 7

 32

 26

 9

 5

 18

 4

 18

 10

 25

 6

 10

 3

 1

 6

 0.2

 13

 7

 5

 3

 19

 44

 9

 13

 4

 16

 11

 67

 4

 20

 73

 61

 34

 22

 38

 4

 33

 33

 91

 19

 15

 27

 2

 15

 0.1

 20

 11

 17

 0.9

 1

 0.3

 0.3

 4

 0.2

 40

 32

 5

 0

 0.5

 1

 3

 4

 1

 5

 2

 7

 3

 1

 3

 8

 17

 4

 5

 1

 0.3

 0.6

 0.6

 12

 14

 1

 8

 7

 2

 299

 201

 12

 2

 10

 7

 16

 78

 842

 20

 15

 107

 20

 45

 62

 33

 80

 34

 22

 12

 7 

 3

 3

 0.3

 5

 0.5

 0.6

 0.9

 0

 192

 81

 4

 0.004

 3

 2

 9

 4

 5

 18

 9

 6

 1

 42

 11

 49

 15

 15

 14

 4

 2

 1

 6

 0.9

 0.6

 2

 0.5

 1

 0

 359

 200

 8

 11

 26

 2

 14

 12

 49

 13

 15

 76

 2

 57

 17

 118

 9

 10

 30

 7

 3

 9

 13

 17

 1

 0.6

 1

 1

 5

 20

 4 

 7

 0.3

 5

 6

 0.8

 7

 3

 5

 2

 2

 1

 3

 12

 11

 22

 8

 2

 0.1

 0.5

 7

 13

 4

 2

 5

 4

 4

 64

 28

 23

 85

 6

 8

 8

 9

 808

 21

 16

 6

 18

 5

 23

 42

 40

 58

 9

 4

 0.6

 1

 21

 3 

 0.1 

0.01 

 0.5

 0.9

 0.01

 0.03

 55

 53

 1

 0

 0.01

 0

 0.4

 2

 2

 3

 1

 0.1

 1

 2

 2

 19

 8

 3

 0.4

 0.06

 0.4

 6

 0.3

 0.2

 0.9

 0.02

 0

 171

 204

 3

 0

 3

 0.2

 0.6

 3

 80

 3

 3

 0.5

 3 

 8

 34

 9

 89

 4 

 2

 3

 5

 0.9

Source: World Trade Atlas.
37

Conclusion

India potentially represents one of the world’s largest untapped markets for major international

producers. From a relatively low base, India is experiencing a tremendous expansion and modernization

of its economy and now posses a growing middle class between 200 million and 350 million. India’s

domestic economy is expected to double by 2007 as Indians embrace a Western style consumer culture. 

Despite these gains, India remains a relatively closed and small import market, especially

compared with the United States, the EU, and Japan. The United States has been India’s leading trading

partner and its largest single market for exports. Although the value of U.S. exports continues to increase,

the percentage of the Indian market enjoyed by the United States is declining as China and India’s Asian

neighbors command a larger piece of the import market.

China benefits from a competitive advantage relative to the United States in its proximity to the

Indian market, its lower labor and production costs, and its undervalued Yuan relative to the U.S. dollar.

China also benefits from globalization and changing production patters where production and assembly

of higher valued-added products was moved from the United States and other developed countries to

China. Whereas China has made tremendous strides in gaining market share in India’s import market in

commoditized -mass produced products, the United States continues to command a presence in those

areas demanding innovation and those incorporating the newest features or the latest technologies.

Although the United States and China compete head-to-head in a variety of industry segments,

competition is most intense in high value-added technology market that includes including machinery,

electrical machinery, computers, and telecommunications equipment. China leapfrogged the United

States in a number of product areas particularly computers and components and various

telecommunications equipment segments. By the end of 2004 China surpassed the United States as India

most important single import source and in its importance in the India computer and telecommunications

equipment markets. Nonetheless, the United States continued to be a dominant supplier of material

handling equipment and telephones, and enjoyed a superior position in optical and medical instruments

and equipment. 

Likewise Singapore, South Korea, and Malaysia have also made tremendous strides in gaining a

presence in the Indian market. Like China, these nations also enjoy a competitive advantage compared

with the United States in geographic proximity and lower labor and production costs. Also, Singapore

and Malaysia are used by U.S. telecommunications equipment and computer manufacturers as assembly

export platforms for Asia and the rest of the world. Today, the Asia-Pacific region is the world’s leading

producer of computers, components, and peripherals and telecommunications equipment as U.S.,

Japanese, and European companies serve the world through regional subsidiaries and assembly

operations. 

For other types of machinery and electrical-electronic products, however, the United States

continues to supply higher technology products to the Indian market while China dominates the low to

intermediate markets like household consumer goods and consumer electronics, and the United States

will continue to have a significant presence in India’s import market.