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Two-Way Trade: Slow but Steady
More recently, as the Doha Round of global trade talks has foundered, the U.S. has rejected
Indian proposals for differentiated tariff cuts for developing and industrialized countries and has
called for repeal of export bans, announced in June 2008 in the name of food security, on certain
rice and edible oils exports.
All of these difficulties notwithstanding, there are also positive developments regarding U.S.-India trade:
• In May 2007, the U.S. reversed a 1989 ban on Indian mangoes after India agreed to use irradiation
in place of chemical pesticides and to open its market to U.S. motorcycle exports.
• In December 2006, a bilateral working group of U.S. and Indian legal experts was established,
including representatives of the American Bar Association and the Bar Council of
India, with a goal of facilitating trade in legal services between the two countries.
• Since 2002, a U.S.-India High-Technology Cooperation Group has collaborated to upgrade
information security in government and commercial operations and, subsequently,
to ease restrictions on U.S. dual-use technology exports to India.
• An Agricultural Knowledge Initiative formed in July 2005 has funded collaborative
exchanges and training programs in areas such as cold chain technology; sanitary and
phytosanitary techniques; agricultural marketing; biotech standards and regulations; and
water resources management.
Wine Trade with India: Not the Best Pairing…Yet
Despite the Indian government’s easing of some duties on imported wines in July 2007, California
shipments have not markedly improved and trade issues with India involving wine and distilled
spirits remain contentious for both the U.S and the European Union.
The wine market in India remains relatively small—an estimated 700,000 Indian consumers
drank about 7.8 million bottles in 2006—but it has been growing at a rate of 30% annually since
1999. Consumption is forecast to reach 9.76 million bottles by 2010. India also has a domestic
wine industry, consisting of some 65 wineries and 170,000 vineyard acres, mostly table grapes,
under cultivation throughout the country. Over 2004–2008, India’s vineyard acreage has increased
by 5.8%; grape production has risen by 36.1% to 1.8 million tons in 2008; and domestic
wine production and consumption have each grown by 98%. In the same period, exports rose
492% and imports rose 267%, both from small baseline levels, according to figures provided by
the Wine Institute, a San Francisco-based trade group.
U.S. wine export sales to India dropped off dramatically in 2008—to $525,000 from $1.6 million
in 2007—due in large part to impacts from the global economic downturn on luxury goods sales
and on business travel and tourism. A major share of U.S. wine sales in India (90% made up of
wines from California) are to luxury hotels and airport duty-free shops, which both enjoy a dutyfree
exemption.
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