India-US ties hold key to addressing most important challenges facing the world today: Biswal

Asserting that it is time for the trade relationship to grow in tandem with the centrality of India-US partnership, the head of a business advocacy organisation has said that the bilateral ties hold the key to addressing the most important challenges facing the world today.

“We’re at a phase now where our partnership is no longer characterised by just potential,” Nisha Desai Biswal, President of US India Business Council told PTI in an interview on Tuesday.

"In many ways, the US- India relationship holds the key to addressing the most important challenges facing the world today— from supply chain restructuring to climate change, to security objectives in the Indo-Pacific and world at large. It’s time for the trade relationship to grow in tandem with the centrality of our bilateral relationship,” she said.

Although US-India trade has grown steadily, from a mere $16 billion in 1999 to a more robust $146 billion in 2019, long-standing disagreements over critical issues and the lack of structural trade agreements between both countries have slowed attempts to realise the full perceived potential of the relationship, she noted, ahead of next week’s India visit of US Trade Representative Katherine Tai.

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“We see this as an important moment to think bigger, and the TPF (Trade Police Forum) is the primary opportunity to cement a larger agenda. There is an urgency to this moment, with the supply chain crisis, India’s energy crisis, and the broader need for energy transition, it’s imperative that we expand the commercial relationship so we can make progress on all of these fronts,” Biswal said.

In response to a question, Biswal said business-friendly policies can unlock upwards of $200 billion in new trade over the next few years, as resolution of regulatory issues for both US and Indian companies opens the door for more expansive growth.

As leaders around the globe reconsider their approach to global trade and investment, both nations can and should do more to achieve the shared goal of $500 billion in two-way trade, she said.

Observing that the bilateral trade has grown nearly 10 times in the last 20 years – a phenomenal story of innovation and partnership, she acknowledged there are some key issues that remain.

India has promisingly shown a greater interest than ever before in a broader trade agenda, but some tariffs and regulatory policies continue to protect domestic industries rather than create the sort of predictable, investment-friendly landscape that multinationals feel comfortable making longer-run investments in, she said.

“Right now, we’re at a stage where both countries are interested in a broader trade relationship, but the US really wants to address those irritants first. India is going to be one of the world’s largest, youngest and fastest-growing markets soon, so structurally, it’s extremely attractive and American and multinational firms want to be there,” she said.

“The US government wants an enabling environment for that to happen as it aligns with broader strategic goals, and the Indian government wants this to aid with development. So it’s important to recognise that more than differences, the present is characterised by potential alignment and opportunity. What’s needed at this point is a streamlined, and predictable regulatory environment on India’s part that can open the path forward,” Biswal said.

Ahead of Tai’s maiden India visit, she called for viewing trade as a key strategic issue for the United States, for both countries. If the administration wants to prove that democracies can come together at this time of geopolitical flux, strengthening trade and investment with the world’s largest democracy is an important place to start, she asserted.

“Even though the USTR may be going in with the intention of addressing these more specific barriers first, commitment to a larger agenda and holding a trade deal as the goal can encourage the frameworks and mood necessary to make real progress, rather than backsliding into an incrementalist approach which has consistently lagged behind the partnership’s importance,” she said.

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USIBC, for quite some time, has been advocating for a Free Trade Agreement. To move forward toward a FTA, it’s really important that both countries do address the longstanding barriers, but in the context of a broader strategic frame, rather than in an insulated, piecemeal fashion, Biswal said.

“At this stage, it’s critical to find areas of consensus that can serve as stepping stones to a bigger deal. There are so many sectors with vast interdependencies where we can carve out modular agendas, and we should focus on the areas that we expect to drive growth in the future— like healthcare, and digital economy,” she added.

Responding to a question, she said although there remain concerns, the mood on India is optimistic.

“Again, structurally, India is an extremely attractive market and US companies want to be in the country. Although regulatory predictability remains an issue, and industry is watching closely for developments in matters like Press Note 3 and guidelines for direct listing on India’s exchanges, the liberalising orientation of the current administration has been promising and has encouraged businesses to pay greater attention to India,” she noted.

The government's recent moves to raise FDI caps and especially to repeal the retroactive tax did a great deal to improve investor confidence and make US companies more bullish on India, she said.

“Our members are excited about the overall trajectory; what’s really needed at this point is for the government to follow through with its expressed commitments to a consultative approach— our members want to be in India and they want to be in the policy conversation. In many ways that’s what we’re devoted to at the US-India Business Council: enhancing the dialogue and expanding the forums for collaboration,” Biswal said.

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