Articles >Time to focus on Indo-US
Time to focus on Indo-US bilateral trade
Live Mint, May 07, 2018
By Pradeep S Mehta and Bipul
If we have to progress, we need markets for our goods and services
and access to big markets. Therefore, our policymakers have inter
alia agreed on the Indo-US “strategic partnership” to enhance
bilateral trade from the present volume of $120 billion a year to
$500 billion. This can be done if both explore comprehensive
cooperation in areas such as defence and energy.
While Indo-US trade relations have shown some good progress in
recent years, they are still bogged down in a quagmire of issues on
which there are fundamental divergences of opinion. Two major issues
are related to the application of standards and intellectual
property rights. As against counter-narratives, they require the
development of joint narratives. That will happen if, and only if,
both parties can overcome their biases and see the bigger picture
when it comes to the role that enhanced trade can play in fostering
security, particularly in the Indo-Pacific region.
Time to discuss a road map
For several months, the US has been sending signals that it is keen
to explore a comprehensive free trade agreement (FTA) with India.
This is in line with the current US administration’s position on
trade—as against multilateral or regional deals, it is more
comfortable with bilateral agreements.
India is yet to react to such calls. It appears that India Inc. is
not interested in such a deal, as it is happy with the market access
it is already getting in the US, while continuing with its defensive
stand towards FTAs. As a result, our Union commerce ministry is
hamstrung in moving forward and the external affairs ministry is yet
to properly appreciate the role of trade agreements in furthering
our foreign policy goals.
This is not to say that India and the US should immediately launch
negotiations for a comprehensive FTA. What is needed is regular
structured dialogue on contentious non-tariff issues bogging
bilateral trade relations, which can then result in a road map for
such an agreement.
This is what came out clearly from a round of deliberations in
Washington last month when CUTS launched its sixth overseas centre
there. Witnessing an overwhelming response from the relevant
stakeholders on both sides, senior officials and industry
representatives were unanimous in their conclusion that there is no
alternative to regular dialogue and joint studies on specific issues
such as standards, intellectual property rights, and customs
cooperation, to narrow differences.
Why defence and energy?
It is no secret that the industry-military complex is a major
backbone of the US economy and that India is a major market for
defence products. India is also keen to diversify the sources of its
defence products. Therefore, the decisions by major American defence
firms such as Lockheed-Martin to expand their production centres in
India is a welcome development. They need clear signals from our
government to move fast. Future development of the industry-military
complex will not just help India enhance its security, but also
assist in our big challenge of large-scale job creation. As defence
production is technology as well as component-oriented, this will
also help Indian companies get into higher stages of global value
For this to happen, India will have to improve its public
procurement as well as intellectual property rights regimes. Many
American companies are reluctant to enter the Indian market because
they are not sure of getting fair deals while bidding for government
contracts. Nor are they sure about the protection that their
technologies need in order to remain competitive in a particular
Similarly, energy is another sector where the scope for cooperation
is huge. Here again, a positive sign is that the first consignment
of American oil has been received in India. More oil imports from
the US are expected as India is keen to reduce its dependence on oil
from the Middle East.
Also, there is huge scope for trade and technology transfer in areas
such as coal, renewable energy and natural gas. Given India’s
commitment to clean energy and greater access to energy for its
population—manifested in its leadership of the International Solar
Alliance—there is no doubt that it requires enhanced cooperation
with countries like the US to get modern technologies and
In short, taken together, trade and technology transfer in defence
and energy production can leapfrog Indo-US trade volumes from their
current state of business-as-usual growth to a much higher level
within a reasonable period of time so that the stated objective of
$500 billion bilateral trade is achieved.
Other areas of cooperation
While defence and energy cooperation should be the two major pillars
on which the future story of Indo-US trade relations should stand,
India should continue its push for greater market access in the US
for its agricultural products and services. There is no doubt that
the American economy in general, and American consumers in
particular, are benefitting from such Indian products and services,
but more can be done for the benefit of citizens of both countries.
Pradeep S. Mehta is secretary general of CUTS International.
Bipul Chatterjee, executive director at CUTS International,
contributed to the article.
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