Deeper trade ties will benefit both India and US

News: The first US-India Trade Policy Forum in over four years begins.

Over the past two decades, the partnership between India and US has strengthened tremendously. From strategic cooperation to our deepening people-to-people ties, the gains have been impressive.

However, the current stakes for a growing economic partnership are greater as we experience a volatile and uneven global economic recovery from the pandemic.

What is the significance of the US for India?

India is trying to move up its value chains and reach ambitious development targets. The aims are to grow to a $-5 trillion economy by 2025, become a hub for high-tech manufacturing, and install 500 GW of renewable energy by 2030.

These goals can be achieved with US capital and investment and continued access to the US market.

What are the steps taken by India and challenges thereon to boost investment?

The recent moves to raise FDI caps in key sectors and the repeal of the retroactive tax law have boosted investor confidence.

However, the implementation of unpredictable tariffs and regulatory regimes targeting foreign firms should be avoided.

What should be the way forward for India and US?

Both governments can make real progress by pursuing negotiations on two parallel tracks:

One dedicated to removing and resolving longstanding irritants and disputes.

Second focused on building a 21st-century trade framework starting with the key sectors that are driving growth and innovation across the economic corridor. Some of them are:

– Healthcare sector

Governments should embrace market-based approaches to innovative medical products. It must ensure that public procurement policies do not discriminate against foreign firms, and speed up the approval of medical devices and pharmaceuticals so that critical and lifesaving therapies can get to the market faster.

–Digital sphere

we must address several foundational issues, such as the digital service tax, cross-border data flows, and common cellular standards.

It’s important that on the digital services tax, India accords with emerging global agreements that will accelerate trade.

Similarly, it is important that India and the US come to a common ground on 5G standards so that it can operate in an integrated telecommunications ecosystem.

 New data regulations should also facilitate the flow of information and respect internationally recognised intellectual property rights that serve as the cornerstone for innovation worldwide.

What are the potential benefits of these actions if taken?

Progress on these fronts can facilitate the movement of the goods, services, technology, talent, and capital necessary to fortify the world against climate disruption, prepare it for future pandemics, and build an economy ready for the challenges of the 21st century.

Source: This post is based on the article “Deeper trade ties will benefit both India and US” published in Indian Express on 22 November 2021.