Since 2004, Washington and New Delhi have been pursuing a "strategic partnership" based on numerous shared values and improved economic and trade relations. India is in the midst of a rapid economic expansion, and many U.S. companies view India as a lucrative market and a candidate for foreign investment. For its part, the current Indian government sees itself continuing the economic reforms started in 1991, aimed at transforming a quasi-socialist economy into a more open, market-oriented economy. However, the U.S. government is concerned that India's economic reforms are progressing too slowly and unevenly. 5682 , the Henry J. Hyde United States-India Peaceful Atomic Energy Cooperation Act of 2006 ( P.L. Despite the growth in bilateral trade and the improvement in trade relations, there are still a number of economic and trade issues between India and the United States. Both nations seek greater market access to the other's domestic markets, as well as the lowering of perceived trade barriers. India's real gross domestic product (GDP) rose by 9.2% in 2006—a growth rate second only to China among Asian nations. The following is a selected listing of key economic players in the current government:
Prime Minister Manmohan Singh , INC member and widely-respected Oxford-educated economist who, as finance minister from 1991-1995, was the architect of a comprehensive set of national economic reforms; INC President Sonia Gandhi , the Italian-born widow of former Prime Minister Rajiv Gandhi, while not formally a member of the central government, oversaw the UPA's 2004 poll victory and wields considerable influence over the coalition's policy making; Finance Minister Palaniappan Chidambaram , a Harvard-educated lawyer from the southern state of Tamil Nadu (and member a regional affiliate of the INC) who served as finance minister in the late1990s, is considered to be a highly-competent, pro-market fiscal manager; Commerce and Industry Minister Kamal Nath , an INC stalwart from the east-central Madhya Pradesh state, has launched major trade policy initiatives and is a key interlocutor for the U.S. government; Planning Commission Deputy Chairman Montek Singh Ahluwalia , a widely-respected, Oxford-educated economist who works directly under Prime Minister Singh and has close ties to Washington; Oil Minister Murli Deora , INC member and former mayor of Mumbai who was appointed in 2006, by some accounts due to pressures for a more pro-business, pro-U.S. oil minister; Power Minister Sushilkumar Shinde , an INC stalwart and former Chief Minister of Maharashtra; CPI-M General Secretary Prakash Karat , a vocal critic of many economic reforms and of India's warming relations with the United States, is the most notable leader of the UPA-supporting Left Front; BJP President Rajnath Singh , a Hindu nationalist from the Uttar Pradesh state who served in the government of former Prime Minister Vajpayee, is seen as a new-generation leader for India's main opposition party and has been critical of the UPA for slowing the process of economic reform; The Federation of Indian Chambers of Commerce and Industry (FICCI) , a nationwide grouping of corporations, chambers of commerce, and business associations that claims to speak directly or indirectly for more than 250,000 Indian business units; and The Confederation of Indian Industry (CII) , a nongovernmental industry group with a membership of more than 6,300 private and public sector organizations that employs advisory and consultative processes aimed at improving India's business climate. A byproduct of India's growth is the emergence of a relatively prosperous and substantial middle class. Balance of Trade

The overall growth of international trade has also created a potential economic problem—a growing trade and current account deficit (see Figure 3 ). Commentators often point to India's rising rate of inflation as evidence that its economy is growing too fast. As a result, India was the 21 st largest export market for the United States in 2006 and its 18 th largest supplier of imports. The United States remains India's leading trading partner on the strength of India's exports to the United States. To summarize, from both the U.S. and Indian perspective, there has been a recent rapid increase in bilateral merchandise trade flows, with India's exports to the United States our performing U.S. exports to India. Foreign Direct Investment

The recent growth in U.S. foreign direct investments (FDI) in India parallels the growth in bilateral trade. 109-401 ). However, in July, the United States and India announced having concluded negotiations 123 Agreement, calling it a "historic milestone" in the bilateral strategic partnership. The U.S. Trade Representative has also indicated that the United States would like to see India join the World Intellectual Property Organization's (WIPO) Internet Treaties. This has raised concerns about the possible import of so-called "conflict diamonds." There are currently two bills before Congress that offer additional assistance and/or protection to displaced U.S. workers.
After decades of strained political relations, the U.S. and Indian governments are currently pursuing a "strategic partnership" based on numerous overlapping interests, shared values, and improved economic and trade relations. India is in the midst of a rapid economic expansion, and many U.S. companies view India as a lucrative market and a candidate for foreign investment. For its part, the current Indian government sees itself continuing the economic reforms started in 1991, aimed at transforming a quasi-socialist economy into a more open, market-oriented economy. However, the U.S. government is concerned that India's economic reforms are progressing too slowly and unevenly.
Bilateral merchandise trade has grown from $6 billion in 1990 to $33 billion in 2006. Although India was only the 21st largest export market for the United States in 2006, the United States has become India's leading trading partner, mostly due to the growth in India's exports to the United States. However, recent increases in trade with China have made it a close second to the United States. In 2006, the U.S. bilateral trade deficit with India totaled $13 billion. In 2006, India's gross domestic product (GDP) grew by 9.2%, a growth rate second only to China among Asian nations. India's economic growth has also brought about the emergence of a sizeable "middle class" and the largest number of billionaires in Asia, but the country's mostly rural population remains comparatively poor and largely isolated from the benefits of growth. In addition, there is growing concern that the economy is "overheated," as evidenced by rising rates of inflation. Moreover, despite several years of strong growth, investment in infrastructure is lagging, creating a potential bottleneck for long-term economic expansion. Finally, attempts at additional economic reforms aimed at resolving these and other economic problems are constrained by India's political dynamics.
Despite the significant liberalization of India's trade and foreign investment policies, there remain a number of bilateral and multilateral trade issues between the United States and India. The United States seeks greater market access to India's agricultural market and key service sectors for its exports and for foreign direct investment. The United States is also concerned about "outsourcing," and would also like to see improvements in India's intellectual property rights protection. India, for its part, calls for the lowering of perceived U.S. barriers to agricultural and service imports, as well as an expansion of the H-1B visa program.
Many of the more prominent Indo-U.S. trade issues may have indirect implications for Congress. The growth of India's services exports to the United States has contributed to congressional consideration of possible legislation to provide greater assistance to displaced U.S. workers. Also, India's growing demand for crude oil has raised the possibility of boosting bilateral energy cooperation. Finally, the passage of the Hyde Act in 2006 (P.L. 109-401) has led to the negotiations of a bilateral peaceful nuclear cooperation ("123") agreement, which cannot go into effect without congressional approval. For a broader review, see CRS Report RL33529, India-U.S. Relations, by [author name scrubbed]. This report will be updated as warranted.