Potential of the India-US dynamic Editorial 4th Aug'18 Financial Express

Headline : Potential of the India-US dynamic Editorial 4th Aug'18 Financial Express

Details :

India poised for fast growth:

India’s growth story has been bold, transformative and sustainable.
Prudent monetary and fiscal policies, along with the implementation of several domestic structural reforms, have helped strengthen the macroeconomic fundamentals.
States and cities are transforming into regional powerhouses and multi-billion dollar economies.
India today is probably the only large growing economy with the potential to achieve double digit growth on the back of rising consumption-led demand and rapid infrastructure development.

India's pivotal role in Indo-Pacific:

With the gradual shift in economic activity from the West to East, and the emergence of the Indo-Pacific as an important geopolitical construct, India has a vital role to play in shaping the future of this region.
There is potential and value in this regard for both the countries in the India-US relationship.

India-U.S dynamic: Contextualising today

Can become a defining partnership:

India-US bilateral trade has grown significantly, and efforts are underway to achieve a more balanced trade relationship.
Both countries today are focusing on collaborating in core areas such as aerospace, defence, infrastructure and energy.
It is expected to impact large scale job creation, increased technology transfer, and a bilateral security advantage in the Indo-Pacific, while strengthening people-to-people ties.
Though nascent, these well-calibrated steps might go a long way in reinforcing the equilibrium and defining the economic partnership of the century.

But there are gaps that need to be addressed:

The relationship is still developing and there are certain gaps which require attention.
Issues US companies have with India:

High tariffs, enforcement and protection of intellectual property and limited market access in services are a few pressing issues for US companies in India.
India’s insistence on localisation in the manufacturing sector is at times viewed by foreign companies as detrimental to the growth and collaboration in key sectors such as electronics, medical devices and solar.
Even in infrastructure where there is much scope, attention is needed in simplifying the processes around construction permits, land acquisition and other areas.

The recent US tax reforms caught the global business community unawares, including corporate India which has been forced into a rethink in the operating strategies.
The US ongoing tariff posturing on traded goods, ranging from steel to walnuts, has added to the uncertainty.

Driving forward the relationship:

There should be a sustained effort by both governments to move fast on at least a few areas that are currently up for debate.

With regions and cities becoming individual markets requiring specific solutions, state-state and city-city collaboration could be the way forward.

US’s alignment with India’s Blue Economy ambition offers comprehensive partnership opportunities, including all forms of energy, technology and infrastructure necessary to ensure this goal is met.
The Indo-Pacific region has abundant natural resources and a growing untapped target population, contains significant synergies for both nations to drive a market-driven Blue Economy framework for growth and development.

Clear opportunity areas such as grid modernisation, energy efficiency and renewable technologies are becoming more real every day.
A start has been made with the recent dialogue on energy cooperation, and the policies that New Delhi and Washington pursue hereon could define the future.

Conclusion:

The India-U.S. bilateral dynamic is unique as it rests on both strategic and commercial interests.
The two countries must join hands to address the gaps and increase cooperation in strategic interest areas (defence, infrastructure, cyber, energy) to propel the bilateral dynamic in the times to come.

Importance:

GS Paper II: International Relations

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