A vision to renovate India-USA economic ties

At the India Global Week held in the second week of July 2020, Indian envoy to the US Ambassador Taranjit Sandhu and US Ambassador to India Kenneth Juster had a virtual meeting; where the two delegates deliberated upon the current economic ties between India and the USA.

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The India Global Week 2020 is a mega event, focused on reviving the market structure of India at an international level. This event is viewed as an advancement of the international global markets. The theme for this event scheduled for July 2020 is “Be the Revival: India and a Better New World”. PM Narendra Modi gave the inaugural address for the event. As highlighted by Modi, India Global Week is an opportunity for India to boost its ties with the international market. He also stated that the Indian economy has been “putting up green shoots of recovery”. The opportunity was grabbed and utilised to its fullest, when Mr Modi declared that India has laid down the red carpet for foreign investors and marketers to come to India, and set up their industries while investing heavily in the Indian economy. This is an opportunity, as claimed by Modi, very few countries provide.

Bilateral trade agreements

As expressed by Mr Juster, the USA looks forward to India signing the Free Trade AgreemenIn a recent virtual meeting between Indian envoy to the U.S. Ambassador Taranjit Sandhu and the U.S. Ambassador to India Kenneth Juster, interests sparked relating to bilateral trade agreements between the two countries. As expressed by Mr Juster, the USA looks forward to India signing the Free Trade Agreement for better economic growth during the times of a pandemic. After this, Mr Sandhu mentioned that India looks forward to getting re-included in the Generalised System of Preferences [GSP] of the USA. Although clear intentions haven’t been confirmed from either side, it appears that both the countries are hung up on getting a negotiation done between them, where each party is looking forward to its interests getting accepted in absolute terms.

Lookout for India’s market share

The COVID-19 pandemic has sterilised almost all the economies across the globe. India’s economic growth rate is predicted to be somewhere around 1.9 per cent. PM Modi promoted the concept of ‘Atmanirbhar’; whereby India isn’t going to be a closed economy to the world, instead it is about being “self-sustaining and self-generating”. Given this, India has been on a lookout for multinational companies from all over the world to come and invest in India. The resources, if properly utilised, would help boost the Indian economy while subsequently generating employment opportunities for the youth.

Keeping that aside, if the international market is viewed at the moment, China can be seen thriving in most parts of the world by trying to become the manufacturing hub, unpredicted by the USA in the initial years of globalisation. Even though the USA is one of the leading economies in the technology and defence sector, it has tough competition coming from developing countries like China.

What does it mean

What can be inferred from the actions of the diplomats from the USA is that they are trying to recapture the world’s economy. And to do so, the USA will have to target the best opportunity available. India is the second-most populous country, next to China, has a larger ratio of the youth population, and an ecosystem that has a well-established service industry thriving for years now.  An amalgamation of an efficient working population with strategic planning of investment in abundant resources available, India seems like the best manufacturing hub for the USA at the moment. It has been heavily investing in the technology and defence sector of India, for some years now.

India no longer the same

However, it must not be neglected that India has become visionary. Meaning to imply is that it is no longer a mere follower of a developed nation, rather is working hard to succeed in this globalised world. Though India has time and again given assurances to the USA that it looks forward to signing bilateral trade treaties, it has also placed certain reasonable demands on the plate which are almost non-negotiable; such as, expressing interest of getting added back to the GSP list, from which the USA had removed it in 2019 with a demand to cut off economic ties with Iran.

What is GSP

In brief, GSP is a rule under the World Trade Organisation [WTO] whereby developed economies are expected to provide tariff exemptions on products equally on all the countries, without following the previously followed rule of ‘Most Favoured Nations’ [MFN]. GSP rule aimed to benefit the developing economies from getting exploited at the cost ‘high tariffs’ imposed by developed nations. Yet many developed countries seem to not have abided by the original rule of GSP; for instance, the USA has excluded a few for being communist (Vietnam), being placed on the U.S. State Department’s list of countries that support terrorism (Libya), and failing to respect U.S. intellectual property laws. The Free Trade Agreement is a bilateral treaty that the USA wants to sign with India, where the terms and conditions would be negotiated between the countries agreeing. Nevertheless, India has been more vigilant than hasty in taking decisions lately.

Many eminent personalities are going to address as the keynote speaker at the India Global Week, like the founder of ISHA Foundation- Sadhguru, External Affairs Minister of India, etc. It is an enriching event where we can only look forward to what the parties come to the table with, which would essentially benefit the Indian as well as the global economy as a whole.

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