A vision for US-India economic partnership 

News: Recently, there has been differences between the United States and India over India’s stand on Russia’s invasion of Ukraine. This has brought the bilateral relationship between the largest and sixth-largest global economies at the centre of debate and their expected role in the Indo-Pacific Region.   

What have been the convergence of Interests between India and the US? 

Over the past 22 years, the United States and India have steadily widened and deepened their partnership. It covers almost every area of human endeavour.  

In 2017, the US withdrew from the Trans-Pacific Partnership (TPP). In 2019, India pulled out of the Regional Comprehensive Economic Partnership (RCEP) negotiations. This has allowed China to shape the Asian trade landscape. China is already part of RCEP. It has also applied to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the Digital Economy Partnership Agreement. 

China has adopted an assertive approach. It is integrating itself with its neighbours through the Belt and Road Initiative.  

What are the issues in bilateral relations? 

Despite efforts, the US-India trade relationship remains a weak component of the strategic partnership.  

The flows of goods and services between the two countries are well below the levels.  

Way Forward 

The US and India should rethink their economic and trade strategies. This is important as China can shape the rules for trade and investment in the Indo-Pacific Region. 

There is a need to enhance bilateral trade. It is important for both economies to grow. It will provide a long-term ballast to the US-India strategic partnership. 

Both must play a central role in developing the economic framework and regional trade rules for a free and open Indo-Pacific.  

The Biden administration is going to finalize the new Indo-Pacific Economic Framework (IPEF). It will build regional economic architecture in the Indo-Pacific Region. It provides an important opportunity to build economic ties for India. 

The US should reinstate India’s Generalised System of Preferences (GSP) benefits. It will resolve outstanding bilateral issues.  

The mandate of the Quad can be expanded to include trade. At present, all the QUAD countries already have bilateral trade agreements with each other. These agreements could provide the foundation for a Quad working group on trade.  

In future, both India and the US could engage with other Indo-Pacific partners like the Association of Southeast Asian Nations (ASEAN) and the CPTPP.

Source: The post is based on an article “A vision for US-India economic partnership” published in the Business Standard on 19th April 2022.