by Gazi Hassan
China’s aggressive behaviour in the Indo–Pacific has impelled the Americans to look for partners other than their traditional allies in Asia. India, because of its geographical location, territorial size and democratic political system, is the best-suited candidate for the job of handholding the global power in the region. Thanks to China, the US and India share common security challenges in the Indo–Pacific region, but this mere threat perception cannot be the basis of building a strategic relationship.
Keeping in view the changing geopolitics, India and the US have pledged to increase their strategic partnership in trade to $500 billion in the next 10 years, which overrides the current $100 billion trade partnership. It is an ambitious initiative of former US President Barack Obama and Prime Minister of India Narendra Modi. By building momentum on this pledge, the Atlantic Council of India Caucus in the American Senate has taken an initiative to increase engagement in trade relations with India.
US Senators John Cornyn and Mark Warner of the India Caucus in the American Congress have pitched for harnessing the full potential of Indo–US cooperation to increase the bilateral trade and economic opportunities for the benefit of the companies in both countries.
Investments to the tune of trillions of dollars can be tapped, which is required for infrastructure building, modernising railways and ports facilities, smart cities, power, telecommunication, healthcare, energy and schooling, among other developmental projects in India.
United in Defence
Defence sphere is the most important sector, where both parties have signed various agreements. India has already replaced Russia as the largest defence-trading partner of the US. Defence supplies close to $14 billion from the US in the form of C-130, E-17 aircrafts were used for humanitarian assistance and evacuation operations in Yemen. This shows the eagerness of increasing the overall engagement in defence between the two countries.
The visit by former Defence Secretary Ashton Carter to India in the summer of 2016 set the tone for effective engagement, which eventually led India to signing the Logistic Exchange Memorandum of Agreement (LEMOA) with the US for furthering the deepening of relations. By signing the LEMOA, India can avail itself of logistic support from any American base facility in the world for defence production and technical assistance. Defence Technology and Trade Initiative is yet another initiative between India and the US, which focuses on the opportunities and challenges associated with the growing defence partnership. The aim is to strengthen cooperative research, co-production and co-development of capabilities required for the modernisation and long-term sustainment of military forces.
Cooperation through New Technology
The seven core areas of development that India wants the US to address are smart cities, infrastructure development, defence sector, financial institutions, trade agreements, intellectual property rights and insurance. Joint fight against terrorism is opening up the opportunity for both the countries to collaborate effectively. The US already has an investment of $28 billion in various infrastructural and developmental projects with $12 billion equity investments in India. On the contrary, India has $15 billion of investment in the US, which has led to creation of jobs and trade partnership between the two nations.
Indian workers are an integral part of new technology or the digital technology of America. Expanding digital infrastructure and digital technology will help raise the standards of living and ease of doing business in both countries. There is a huge potential for American companies to harness the requirement of building up digital infrastructure in India. American technological advancements in this sector can benefit India immensely, especially in areas like tourism, e-commerce, banking etc, and help eliminate the intermediaries and develop India’s infrastructure and retail space. More importantly, investments from the US can give a lift to providing digital infrastructure to remote areas of India. Meanwhile, the US can learn from the innovative banking policies of India taking cue from the Jan-Dhan Yojana, to integrate more and more people to the banking system across America.
Presently, India is building 20 km of roads comprising highways and expressways everyday, which can be increased to 40 km with the investment and advancement from the American expertise. Skill development is another core area for India, where the US can help in training people for requirements in the developmental sector.
Potential Areas in Future
Renewable energy will see massive expansion in India in the coming decades. This can be achieved with at least 8 per cent of growth in GDP. Innovation, start-ups and relative resources abilities are other areas of interest, where there is a huge potential for both countries to engage and benefit from each other. Lifting further caps in FDI, financial sectors, insurance and defence production can prove beneficial for attainting the ambitious goal of increasing the strategic partnership to $500 billion.
The present government in India is business friendly, doing all it can for bringing structural reforms in the economy, thereby making India an attractive destination for investments. India should take advantage of the opportunity by further liberalising trade restrictions and bringing reforms in the land acquisition rights. The US should also lean forward by making India a partner in higher and lower political engagements. To increase the sustenance and promotion of positive developments between the two countries, the Atlantic Council should develop policy proposals, working papers and strategic initiatives, and convene various trade workshops for policymakers, bureaucrats and private sector investors. On its part, India should try to overcome its bureaucratic inertia for making this ‘Mission 500’ a grand success.
*This article is written by Gazi Hassan (Research Assistant, Centre for Public Policy Research). Views expressed by the author is personal and does not reflect that of CPPR.