‘According to official figures, the overall US-India bilateral trade in goods and services reached a record $157 billion, a drastic increase from the 2020 trade figures,’ says Mukesh Aghi.
Washington DC: India-US business and trade relations are on a new high in the post-Covid era. Particularly after India has got its coveted membership in the world’s top five economies, which has made the South Asian tiger the new Asian emerging giant. The Sunday Guardian spoke to Mukesh Aghi, CEO and President of US-India Strategic Partnership Forum (USISPF), the apex platform for all business, trade and investments between the two democracies. “India has emerged as an economic behemoth, and a South Asian tiger, opening prospects for a constructive India-US business diplomacy”, says Aghi. Excerpts:
Q: How do you imagine India-US business diplomacy in the current post-Covid scenario?
A: The US-India relationship has been dubbed as the most important strategic partnership of the 21st century. I have witnessed how the relationship has moved beyond symbolic platitudes between the world’s oldest and largest democracies to robust engagements across trade, defence, climate and technology. While we celebrate 75 years of US-India relations, it is important to note that the economic story has been shorter, only over 30 years since India’s economic reforms of 1991. Despite economic blips during the pandemic, the bilateral trade between India and the US has crossed the $100 billion mark in 2021. According to official figures, the overall US-India bilateral trade in goods and services reached a record $157 billion, a drastic increase from the 2020 trade figures.
The pandemic presented an opportunity for India and the US to collaborate on vaccine delivery, India with its pharmaceutical sector strengths and the US with its logistics network, and now the post pandemic era has thrown economic synergy across climate, technology, rebuilding resilient supply chains and continuing vaccine through the Quad, I2U2 and now collaboration on IPEF.
There is deep collaboration between various ministries. Secretary Janet Yellen of Treasury is in India meeting with her counterpart, Finance Minister Nirmala Sitharaman. Minister for Petroleum and Natural Gas, Hardeep Singh Puri recently worked with his counterpart, Secretary of Energy, Jennifer Granholm on the Strategic Clean Energy Partnership, and Commerce Minister Piyush Goyal and USTR Katherine Tai are in regular conversations on trade.
Q: Do you see new strength areas emerging as India and the US try to build a strong narrative on strategic relationship?
A: Supply chain focus is a major issue since the pandemic has evinced that companies need a China Plus One strategy. The fact that Apple is looking to make the iPhone 14 in India shows that Government of India’s focus on manufacturing in form of PLI schemes and Make in India strategy is succeeding in wooing top American tech companies. There is also room for synergy not just in tech but space collaboration, as India and the US both have scientific prowess and with increased privatization and a growing list of unicorns in India, space tech startups will be a new engine of economic growth and scientific synergy.
Q: Coming to India’s new status as the top five global economies, how is that going to affect India’s status in the global markets?
A: The US understands India’s economic potential as Asia’s third-largest economy and the fifth largest in the world. India’s robust economy and thriving workforce present lucrative market opportunities for American enterprises. US multinationals are allured by the size of the market, a young demographic largely under the age of 35, tech prowess, and a vast English-speaking demographic, which gives India a distinct advantage and can compete with the China market.
India has emerged as an economic behemoth, a South Asian tiger and this has helped forge a close economic partnership between our two countries. Of course, one of the priorities for this government has been to improve the ease of doing business environment in the country, which has traditionally baffled overseas investors. New schemes like PM Gati Shakti, the National Logistics Pipeline will help solidify infrastructure and logistics constraints and attract more overseas investors.
Q: Will the current US media reports on India-US ties getting affected in the context of India’s stand in the Ukraine-Russia war have any significant effect on the current relationship?
A: Far from it. In the last three decades, the bilateral relationship is truly bipartisan across political ideologies on both sides. While India has made it clear that its abstentions on the war at the UN were not a vote for Russia, but merely following India’s path of strategic autonomy. On the defence side, even Secretary Antony Blinken has acknowledged that for 50 years, there was no defence relationship with India, therefore, there was a large dependence on Soviet-era weaponry. Also, India is one of the world’s largest energy importers and has a population of 1.4 billion people, and hence India rightly prioritises energy security for its most vulnerable populations.
The important caveat is that the relationship is so robust, that while we both may not have the same position on all issues, we understand each other’s geographic constraints and national interests, and hence that does not impede our collaboration on defence, commerce, and people-to-people ties.
Q: Will the isolation of China in the global demand-supply chain help India to establish itself in global markets? How much that would help India to enter in strategic business with the US?
A: As mentioned, one of the core aspects has been a China Plus One strategy. American companies not only are price sensitive but want transparent markets. It’s here that the political systems of India align closely with the shared democratic values of the United States, and investors find this transparency and strong government-to-government relations as a bonus when it comes to dealing with India over China.
While business is not a zero-sum game, but Apple’s main iPhone assembler, Foxconn will be manufacturing the devices at its Sriperumbudur factory on the outskirts of Chennai. The overarching reasons are, Beijing’s strict Covid protocols that have slowed down business processes, the need to find alternative manufacturing sources apart from China, and Government of India’s PLI and Make in India initiatives that seek to woo high-end tech manufacturing.
India, apart from its young demographic dividend, presents a cost-effective market for Apple to gain a stronger foothold in India, where the consumer is price sensitive and Chinese mobile phones have long dominated one of the largest mobile markets.
Apple’s entry and as the leading tech giant will set a precedent for many other companies.
Q: What is the status of current India-US investments both ways?
A: India and the US have restarted the Trade Policy Forum (TPF) last year after a hiatus of four years. This presents a unique forum where Commerce and Industry Minister and USTR Katherine Tai can work on unresolved trade issues. New Delhi has inked several key deals with partners like the UAE and Australia and one is in the works with the UK. The TPF presents a unique forum to address specific issues to increase our bilateral trade partnership. The US has overtaken China to be India’s largest trading partner with bilateral trade of well over $100 billion. Minister Goyal has stated at past USISPF Leadership Summits that he would like that figure to touch a $1 trillion in bilateral trade by the year 2030. Minister Chandrasekhar says India’s digital economy alone can be a $1 trillion in the six to seven years, and for that, the US as the leading tech market will have to lead with investments. Our joint collaboration on the Indo-Pacific Economic Framework (IPEF), Quad and I2U2 presents opportunities to strengthen bilateral trade through mini-lateral forums.