Prime Minister Modi’s visit to the US solidifies the foundation of the India-US trade relationship, opening doors for collaboration across sectors
India can leverage its strengths in various sectors, including information technology, pharmaceuticals, textiles, and automotive, to attract American businesses looking to expand their presence beyond China.The India-US trade relationship stands to benefit significantly from the ‘C+1’ landscape. Shifting production facilities and supply chains to India presents immense opportunities for both countries. Media reports state that the government, through its overseas missions, has reached out to over 1,000 US companies seeking to move their manufacturing base from China. India can leverage its strengths in various sectors, including information technology, pharmaceuticals, textiles, and automotive, to attract American businesses looking to expand their presence beyond China. Additionally, India's ambitious initiatives like “Make in India” and “Digital India” align with the US focus on reshoring and boosting domestic manufacturing, providing a solid foundation for collaboration. Furthermore, the India-US synergy extends beyond trade in goods. Services, such as IT outsourcing, software development, and business process management, have been integral to the India-US bilateral trade relationship. The US has been a significant market for Indian services exports, and the evolving dynamics of the ‘C+1’ strategy can further enhance these trade opportunities. With their complementary strengths and shared focus on innovation, India and the US can forge closer ties in the services sector, opening avenues for growth and job creation in both countries. The burgeoning India-US trade relationship holds immense potential for the future. As the US emerges as India's largest trading partner, the economic ties between the two nations are poised to grow stronger. The opportunities presented by the China+1 landscape, coupled with the bilateral collaborations in various sectors, lay the foundation for a mutually beneficial trade relationship.
With their complementary strengths and shared focus on innovation, India and the US can forge closer ties in the services sector, opening avenues for growth and job creation in both countries.However, some challenges need to be addressed to ensure sustained growth. Issues such as trade barriers, intellectual property rights, regulatory harmonisation, and market access must be tackled through constructive dialogue and negotiations. A balanced and fair trade environment will foster trust and confidence, enabling businesses to seize available opportunities.
India-US is all set to close an acquisition deal on 31 predator drones—such collaborations not only enhance defence capabilities but also contribute to economic growth through joint ventures and offsets.Defence cooperation has been a cornerstone of India-US relations, with defence trade between the two countries experiencing significant growth. Prime Minister Modi's visit presents an opportunity to deepen defence ties, including defence equipment procurement, joint exercises, and technology transfers. India-US is all set to close an acquisition deal on 31 predator drones—such collaborations not only enhance defence capabilities but also contribute to economic growth through joint ventures and offsets. Another crucial aspect of the visit is renewable energy cooperation. Both India and the US recognise the urgency of addressing climate change and transitioning to a sustainable future. Collaborative efforts in renewable energy research, development, co-production and deployment can create significant business opportunities and help achieve shared environmental goals. This can include investments in clean energy projects, technology transfers, and knowledge sharing to drive the green transition. The US emerging as India's largest trading partner marks a significant milestone in their economic relationship. The China+1 strategy has played a pivotal role in reshaping global trade dynamics, with India emerging as a key beneficiary. The visit of Prime Minister Modi to the US further solidifies the foundation of the India-US trade relationship, opening doors for collaboration across sectors. While definitely, China happens to be a common source of contention for both the US and India from both geopolitical and geoeconomic perspectives, PM Modi’s visit is a reinforcement that bilateral engagements as also engagements in multilateral forums need to emerge to be a “win-win” solution for both nations. On the one hand, Indian exports find a ready product market in the US which is largely a “consumptive economy” (an economy with high consumption propensity and high purchasing power). On the other hand, the US economy finds a cheap, abundant factor market in India that presents itself with massive potential. India’s demographic dividend lies in its cheap skilled labour force with labour costs being 10 per cent of those of China. On the other hand, the massive facelift in India’s physical infrastructure in recent years has reduced the transaction cost of doing business.
India’s demographic dividend lies in its cheap skilled labour force with labour costs being 10 per cent of those of China.The Indo-Pacific Economic Forum (IPEF), an economic initiative launched by the Biden administration with a total of fourteen participating founding member nations including India again presents a massive opportunity for India in case there is a possibility for developing the Forum into a Regional Trade Agreement framework. This is because of two reasons: first, this forum is devoid of China thereby resulting in a China-free RTA; second, if it at all comes to force, it can highly compensate for India’s withdrawal from the Regional Comprehensive Economic Partnership (RCEP) that has often been thought as a lost opportunity for India to provide access of its MSMEs to unexplored markets. The “economic complementarities” in the forms of trade and investment between the US and India are extremely evident from what we discussed in this essay. By harnessing the opportunities presented by the ‘China+1’ landscape and nurturing a balanced and fair-trade environment, both countries can forge a formidable partnership that drives economic prosperity and strengthens their broader strategic ties. As the curtain rises on this new chapter with PM Modi’s visit, the stage is set for a thriving trade relationship between the two large democracies of the world.
The views expressed above belong to the author(s). ORF research and analyses now available on Telegram! Click here to access our curated content — blogs, longforms and interviews.
Debosmita Sarkar is a Junior Fellow with the SustainableRead More +
Dr. Nilanjan Ghosh is a Director at the ObserverRead More +