Tag Archives | Trade

India’s unusual trade pattern with the United States

Richard Rossow (via Milan Vaishnav) shared the latest US-India trade in goods data updated by the US Census Bureau.

India has a running trade deficit in goods: where it imports more goods than its exports. It is wrong to simplistically judge whether a trade deficit is good or bad – however, India does do ‘better’ when it comes to its services.

However, today this blogger learnt that the trade relationship that India has with the United States of America is quite different from that with many other big trading partners. India’s large software and services exports to the US are well-known, but India exports more goods to the US as well. Little wonder that American businesses lobby hard in Washington to be able to trade more and operate more in India.

In 2014, for the first time since 2006, India’s exports to the US are more than double its imports. It is currently unclear as to what to attribute this towards and pass judgement on whether this is a good or a bad thing. The broad trends in the two economies in the last 4 years has been one of revival and renewed growth in the United States, and faltering growth and investment in India.

India-US Trade1The timeline of imports and exports from the 1980s onwards has a few points of interest from recent years. The most prominent of these is the dip in 2009 of both Indian exports and imports, with the former affected far more than the latter. This was preceded by a sharp rise in 2007 in Indian goods imports from the US.

While Indian exports to the US bounced back since 2010, Indian goods imports plateaued in 2011 and have dropped a little in real terms since then.

The USTR website on India-US trade relations says that India’s largest goods exports to the US are precious stones (diamonds), pharmaceuticals, mineral fuel, organic chemicals and others. India’s largest goods imports are again precious stones (diamonds and gold), aircraft, machinery and optical and medical instruments.

A closer examination of export and import trends in types of goods (using the US Census Bureau’s “end use” dataset) provides the following:

1. Since 2009, the largest growth in highly traded Indian goods exports to the US as of 2013 are:
– Petroleum products, other
– Tobacco, waxes, etc
– Fish and shellfish
– Fuel oil

2. Since 2009, the largest growth in highly traded Indian goods imports from the US as of 2013 are:
– Complete military aircraft
– Gem diamonds
– Nonmonetary gold
– Newsprint
– Parts for military-type goods

3. Since 2009, the largest fall in highly traded Indian goods imports from the US as of 2013 are:
– Civilian aircraft, engines, equipment, and parts
– Chemicals-fertilizers
– Steelmaking materials
– Computers
– Drilling and oilfield equipment

I encourage readers to comment on the significance of some of these observed changes.

There’s a lot more information waiting to be unearthed from these datasets, including information on when Indian defence imports of US equipment really increased and to what extents. The defence angle is particularly interesting as the Indian ministry of defence is quite opaque in defence spending and is known to defer capital payments while making large announcements.

Readers are welcome to use the full rich XLS spreadsheet that I have compiled on all the data from the US Census Bureau relevant to the last couple of decades of India-US trade.

Addendum: The US$-Indian Rupee exchange rate has been steadily rising, making imports from the US less competitive. This could perhaps explain a part of the slump in US goods imports by India.

PS. All years used in this post are calendar years and not financial years.

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Warfare in ancient India and high school football

I’ve spent the last week reading KA Nilakanta Sastri’s magnum opus, the History of South India, that spans from prehistory to the fall of the Vijayanagar empire. Among the many insights and curious facts that the book reveals, it throws some light on military prowess of kingdoms and empires over the ages.

By the 13th century, warfare in South India was internally competitive but had lost the edge to armies from the north of the Vindhyas. This was certainly not the case earlier – notable examples of southern victories include the Chalukya Pulakeshi II defeating Harshavardhana of Kannauj in the 7th century and Chola Rajendra I conquering up to the Ganges in the 11th century. Southern armies were no longer competitive after the formation of the Delhi sultanate.

The Khilji and Tughlak sultanates from Delhi began making inroads south of the Vindhyas starting in the latter half of the 13th century. One finds that the southern kingdoms did not offer a whole lot of resistance immediately. Allaudin Khilji’s famous slave general, Malik Kafur raided deep into the Deccan and Tamil heartlands, and they are referred to repeatedly as daring. they caught almost everyone off-guard. For example, kings like the Hoysala Veera Ballala III appear to have capitulated almost immediately, instead of putting up a fight. Ballala was busy trying to sort out affairs in Tamil country while Kafur came marching up to his capital Dwarasamudra (present day Halebeedu near Hassan, Karnataka). On full reading, it appears that extended supply lines, the limited objectives of the initial incursions and an increasingly hostile Hindu populace were the major reasons why Kafur and his successors did not fare better. Nothing that can be pinned to a competitive armed force.

This reminded me a little of the way a few of us played football (soccer) while in high school and later. A few of us friends played regularly with each other on a basketball court and the games were fun and competitive, and continued that way for years. But if we had to play with other groups, or play on a full-size football field, the game suffered immensely. While we were enjoying the sport within our little group, we were not even remotely competitive against anyone good outsiders.

Warfare in south India appears to have become equally stultified – there were known kingdoms, empires and fiefdoms spread across the land whose relative power varied with time. But by and large there was a code of the conduct for warfare. For one thing, temples were rarely destroyed. They were deprived of their wealth at best, and the priestly class were rarely harmed. For another, governance and civilian life continued without too much change. Caste groups, village leaders and corporate guilds provided much of the governance (iniquitous as it might have been) – from dispute resolution and policing to developmental works like irrigation and road building. The entry of new forces changed this status quo irrevocably.

Even if you were to discount the earlier example of Malik Kafur as having the advantage of surprise, the story remains the same even a century later. While Harihara and Bukka Raya of Vijayanagara were rapidly consolidating their hold on regions south of the Krishna river in the 14th century, they barely met with any success in military engagements with the rival Bahmani sultanate. If anything, only the incessant in-fighting and intrigue between various ruling muslim factions in the Deccan appears to have blunted the impact of their victories against Vijayanagara. It is only by the time of Krishnadeva Raya in the early 16th century that Vijayanagara starts winning large scale victories on the Northern border of their empire that were not quickly reversed.

Clothing of Bisnagar (Vijayanagar), a Dutch engraving by Cornelius Hazart, 1667.

Clothing of Bisnagar (Vijayanagar), a Dutch engraving by Cornelius Hazart, 1667.

Krishnadeva Raya managed to achieve this only by creating a more martial state, fostering a competitive military culture with games and contests of physical feats, as well as a modernisation of the army with gunpowder technology and horses via the Portuguese, and other sweeping changes.

North Indian powers were equally blind to events outside the subcontinent, as noted by historian KM Panikkar in a speech in 1961, ‘Before the enemies reach Panipat‘. They probably paid for it a lot more. South Indian states paid for this blindness to people outside the basketball court less frequently, but this deserves no excuse. Perhaps a key failure was in not looking for military technology through oceanic trade routes and restricting trade largely to luxury items and commodities. The only major defence import via the seas was the horse – and it is quite telling that south Indian armies never developed the ability to care for horses well, with many of them dying regularly of disease. Not even the Vijayanagara empire managed to change that. For Arab and Persian traders, south India remained a happy export destination for horses, with an ever-present demand.

Religious taboos on sea voyages likely resulted in a complete lack of parity in trading ability, and it is little wonder that maritime powers from Europe conquered India from the south. With the exception of the Cholas, Indian powers never had a blue water navy. One can only imagine the possibilities if an Indian power had developed a blue water navy after the invention of gunpowder.

Though India sort of has a blue water navy in the 21st century, we should really be asking ourselves – have we really left the basketball court?

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