The Promising Future of India US Economic Cooperation
July 28, 2023
The strategic alliance between the United States and India is built on a set of common ideals, economic cooperation, including support for democracy and the rule-based order of the world. Through commerce, investment, and connectivity, the US and India have a common interest in advancing world security, stability, and economic success. The promising future of India US economic Cooperation is all too evident.
Recently, however there has been a dynamic shift between the bilateral relations of these two powerhouse economies with senior national security and economic officials meeting in the ‘President’s Palace’ to hold the first ever- strategic trade dialogue on June 7. The focal point being on how Washington and New Delhi can facilitate the development and trade of technologies in censorious conditions and domains, as reported by the Indian foreign ministry.
As per Reports by the WTO, another significant buildout between India-US has been the settlement of six trade disputes, including a dispute over former Republican President Donald Trump’s tariffs on steel and aluminium and India’s retaliatory duties. The agreements are unexpected, given that National Security Council spokesperson John Kirby told reporters earlier this week not to expect “a specific resolution on trade issues in the coming days.” He also highlighted the depth of an economic cooperations between the countries noting that “President and PM Modi reaffirm that the partnership between India and the United States is deeper and more expansive than ever.”
Considering the numbers and data, India’s major exports to the US include gems and jewellery, pharmaceutical products, light crude oil and petroleum, electrical and electronics goods, engineering products, apparel, frozen marine products, and others. Between April and November of 2022, bilateral commerce between India and the United States amounted to $87,342 million. USA is the 3rd largest investor in India with cumulative FDI inflows of US$ 56,753 million from April 2000 to September 2022.The bilateral trade between India and the USA stood at US$ 87,342 million from April to November 2022 which is a significant improvement from the last decade. In FY 2023, the US became India’s largest trade partner for merchandise products, resulting in a total bilateral trade value of $128.78 billion. Shared strategic policies spanning the Indo-Pacific to West Asia have further strengthened this alliance.
A new dimension however, has definitely been the focus on technology and the sustainability goals aligned with the same. President Biden and Prime Minister Modi affirm that technology will play a pivotal role in the expansion of our partnership. The leaders waxed lyrically about the January 2023 launch of the Initiative on Critical and Emerging Technology (ICET) as a significant turning point in U.S.-Indian relations. They urged their respective governments, enterprises, and various academic as well as trade institutions to implement their vision for the strategic technology partnership. The leaders reaffirmed the United States and India’s commitment to fostering an open, accessible, and secure technology ecosystem that is based on mutual confidence and trust and reinforces the shared values of sustainability and democratic institutions. In a joint statement, Biden and Modi emphasised India’s desire to rejoin the U.S. Generalised System of Preferences programme, which exempts thousands of products from developing countries from U.S. import duties something which can be seen as a positive development for all growing economies including India.
India’s export subsidy programmes, such as the Merchandise Exports from India Scheme (MEIS), Export Oriented Units Scheme, and various sector-specific schemes like Electronics Hardware Technology Park Scheme, Special Economic Zones, and Export Promotion Capital Goods Scheme, were one of the primary points of contention between India and the United States.
Reuters reported on June 20 that India had granted Micron permission to establish an assembly testing marking and packaging (ATMP) unit (also known as an OSAT facility) in the state of Gujarat. Micron will be eligible for production-related incentives totalling $1.34 billion (110 billion INR).
The establishment of a robust semiconductor manufacturing ecosystem in India will be facilitated further as a key strategic outcome of the visit. Two prominent American companies will soon initiate a significant workforce development initiative. This initiative seeks to equip a large number of Indian engineers with the fundamental semiconductor industry skills.These collaborative efforts will significantly contribute to India’s semiconductor industry’s development and advancement which will help New Delhi strategically deal with the dominant Chinese Semi-conductor Industry and it’s prolific trade along the south-China sea.
As leaders in climate action and clean energy, Washington and New Delhi share a common and ambitious vision to rapidly deploy renewable energy at scale, foster economic growth, and contribute to the achievement of global climate objectives. They acknowledge the importance of the U.S. Inflation Reduction Act and India’s ambitious production-linked incentives scheme for innovative clean and renewable technologies. As evidence of this commitment, the leaders cited the U.S.-India Climate and Clean Energy Agenda 2030 Partnership and Strategic Clean Energy Partnership (SCEP).
As prime Minister, Narendra Modi looks forward to the visit of the US- President Joe-Biden to the G20 Leaders’ Summit in New Delhi in September 2023, Diplomacy and bilateral relations between the two Countries is surely shifting dynamics and towards a promising future of India US economic cooperation with focus on economic goals and sustainability; Representing the shared goals and the vision of advancements that these two nations possess. With the rising frequency in bilateral talks between the nations it is clear that both the administrations and people of the respective democracies are committed to achieving this goal in the present and in the future and enhance global trade at a much higher level.
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