As geopolitically aligned nations, India-US are focused on finding ways to streamline trade partnership and integrate India into the global supply chains: Mukesh Aghi, President & Chief Executive Officer of the US-India Strategic Partnership Forum (USISPF) to the Sunday Guardian
Q1 You have been working in the US and India to strengthen trade and business ties between the two countries. How do you assess the current relationship?
Well you have to look at the relationship broadly, geopolitically. We are saying that India and the UAS are quite aligned specifically vis a vis China and if you see what is happening in the Middle east both in Israel, Gaza and also in the Red Sea, we are saying that India and the US are completely aligned and both are trying to restore the maritime sea lanes as international free trade takes place.
A lot of India’s exports — rice and other items — go through the Red Sea and so it is important to understand that this does have an impact on India’s exports to European and African nations. As a democratic nation it becomes a partner from a democratic perspective on a global basis. Today India has 10 navy ships patrolling the Red Sea to make sure there is smooth passage of goods transported.
That shows a very responsible India. forward looking roadmap for enhanced cooperation. In a move to keep the momentum of the positive outcomes achieved in the G20 Trade and Investment Working Group related to the adoption of the high level principles on digitalization of trade documents, India and the US agreed to further pursue support for the implementation of these principles in other forums so as to strengthen the pathways for digitalization of trade documents.
An important part of the bilateral engagement is that our trade is touching over USD 2 billion and the USA is one country with which Indian trade is positive at USD 23 billion as per my most recent information. We are seeing some of the technology transfers which were happening, moving along in the right direction. Katherine Tai’s visit to New Delhi for the India-US Trade Policy Forum will see more discussions there. There is a momentum and there is a substance behind the momentum. We see things moving in the right direction.
Q2 How important is Katherine Tai’s visit amidst election season in India & US? What is the focus?
The focus is on reducing friction on the tariff side, looking at how we can work together on standards and how we can basically streamline for example India’s integrated and robust supply chain. For example we have GE which will start manufacturing GE jet engines but a lot of parts will still come from various parts of the world. A key thought is how to integrate India into that global supply chain also. Discussions on those areas is beneficial to both India and the US.
Q3 What is being discussed at the Trade Policy Forum? What is new?
The discussions which are taking place are about how to increase trade which is more effective, efficient, profitable for both countries. You have to understand the US is kind of scarred by trading with China. There is a trade deficit of over 500 bn on an annual basis. I think the whole discussion is on finding a more viable proposition.
It could be that India exports more agriculture and the US exports more farm products itself. The other idea is that India could export steel with less tariffs or aluminium into the US and the US ships out some other items. That’s the whole objective. India and US are geopolitically aligned, hence the focus is on finding ways to streamline our trade partnership, ensure we have less irritants, more trade and jobs between the two countries.
Q4 Is there more in terms of trade and investment we can work on?
Our estimate is that the US is one of the largest FDI investors and FII investor in India but we see a trend taking place where the US investment is not just setting up back offices and moving to R&D centres. What we are seeing now is the US setting up innovation centres. India is going up the supply chain and the momentum is picking up as the stress grows with China and almost every company is looking at a strategy.
India becomes a pivotal layer not only from just from a China strategy but also the growing market of India provides that opportunity. On people to people relations we are seeing an almost 5 million resurgent Indian American community which constitutes only 1.5 per cent of the population but generates 6 per cent of the GDP of the US and very keen to drive the relationship in a positive manner.
Investments from Indian companies into the US is going up, be it in pharmaceutical area, steel plants, IT sector, smaller manufacturing and also Defence. It is not at the same level what the US companies are doing in India but there is a momentum which is impacting job creation in the US.
Q5 How can the India-US supply chain collaboration be strengthened?
I will give an example from the pharmaceutical side wherein 13 per cent of the US generic drugs come from India. And it brings billions of dollars of savings to the US Government because they are cheaper drugs but 70 per cent of the API of those drugs comes from China into India.
So USA is looking at how to basically make that supply chain more secure and less dependent on China. We are seeing a lot of effort being put there to start building API in India itself. I will give a passing example. We have one of the pharma companies which got shut down because of quality issues and they were producing some of the prominent cancer treatment drugs for the US market.
The US is keen to streamline and create a much more productive dependability coming into the US to India. There is a lot more collaboration taking place to ensure that the supply chain is secure between India and the US and its external partnerships.
Q6 You have been here for the Vibrant Gujarat. Can you share your agenda?
This is now almost 20 years of Vibrant Gujarat led by Prime Minister Modi and other states are now following on that. We had roughly 100,000 participants in the event. The USISPF led with a delegation of 50 plus companies which was the largest group from the US in this event. The whole objective has been to network, connect and have a conversation with the leadership on the future, present and how the American companies are investing.
We had the presence of the UAE President and so many other heads of state. It is becoming what I would call the ‘Davos of India’. Q8 What about policy initiatives like PLI and ease of doing business? How do US companies view them? Well I think the PLI scheme has been quite effective. You look at the consumer electronics. Apple came in leveraging the PLI scheme or others like Samsung are leveraging.
So I think the PLI incentive scheme is working well as Apple plans to have 25 per cent of the iphone 16 be manufactured in India itself. I think the Government has to keep the momentum going and keep on drawing investors into the area. India has made a lot of progress in the last 10 years in ease of doing business. A lot of things have been streamlined like leveraging of the digital platform so there is more transparency in fulfilling taxation and getting returns back on corporate level, getting investments and competition among states to attract these companies.
There has been tremendous amount of progress and you always room to improve because I think we should not benchmark ourselves with other states. Each state should benchmark themselves against countries like Denmark, Norway and Singapore. There is still some more to come, in areas like land reform, labour reforms are some areas to keep up the work.