The United States and India: Raising the bar on trade and economic cooperation

Anyone who has traveled to India recently will have noticed New Delhi’s amazing, new airport. Not only is it shiny and efficient and so unlike the dreary older airport it replaced, there is a Parsons Brinkerhoff-designed, world-class metro connecting you directly to the central business district.  Similarly, the new Hyderabad and Bangalore airports rival those in the U.S. The point: India is on the move.

Likewise on trade, India isn’t waiting for some grand bargain to be worked out at Doha. Instead, India is reaching out to implement bilateral trade agreements to achieve mutual goals. A deal with Japan went into force in August. South Korea and Singapore, too, have executed agreements with India, while negotiations with Australia, Canada, and New Zealand continue. An expansion of an agreement with ASEAN is in the offing. Never to be accused of thinking small, India is pressing ahead to negotiate an FTA with Europe. The point: India’s trade agenda is really on the move. 

This leaves us in a quandary, as even clearing the pending FTAs with Columbia, Panama, and Korea proves difficult. By not moving forward, American businesses stand to suffer even more than they already have. Magnify this ten-fold or more relative to India, and just imagine the lost opportunity as other economies pair up with the world’s largest free-market democracy, leaving the U.S. behind. 

India’s leadership arrived in the U.S. this week. American business and government officials should reach out and remind them of the promise of the U.S.-India partnership – a close friendship that will shape the economic destiny of the 21st Century.  We must embrace India as our knowledge partner by endorsing movement of technical professionals, an activity essential to our common, bright future. Acknowledging that American companies can more effectively compete on the world stage by teaming with Indian counterparts is a smart way to start this constructive conversation. Such knowledge partnering will propel growth, enabling our companies to maintain their primacy. A ‘win-win’ dynamic of job creation will accrue to both sides.  

President Obama’s November 2010 visit to India was historic, building on the momentum generated by Presidents Bush and Clinton. To take the relationship to an entirely new level, the next step should be to secure a Bilateral Investment Treaty (BIT) between our countries. This will protect U.S. investment into India, where our firms can tap into India’s vast market, while providing an incentive for Indian investment flowing into the United States. Reliance Industries’ investment in Pennsylvania and in Texas will benefit, as will the $1.5 billion investment of Essar in Minnesota and West Virginia. The Tata Group will be more inclined to increase investment in the U.S., as will Wipro, Mahindra, Infosys, Wellspun, Ranbaxy, Thermax and a dozen others. 

A BIT between the two countries will facilitate greater two-way opportunity for investment, leading to export-led growth and jobs – for both sides. Boeing has already sold nearly $20 billion in civilian and military aircraft to India in the last five years, including a recently clinched $4.1 billion sale of transport aircraft. Lockheed Martin concluded a similar sale of aircraft to India last year. The U.S. Export-Import Bank is on the verge of achieving financial closure for one of the world’s largest combined cycle gas-fired power plants based in India, which will use GE turbines. Honeywell, UTC, Caterpillar, and even California almond and pistachio farmers all have similar export stories to share. The bounty is limitless. 

Ultimately, though, we need to engage in a much bigger project: USIBC has formed a working group to flesh out the contours of a bilateral trade and investment arrangement. Such an arrangement should consider movement of technical professionals, facilitating ‘round the clock’ innovation where intellectual property is rewarded and protected and where market access is enjoyed by both sides, and, importantly, where environment and labor are respected. The people of both countries will benefit. Such an economic cooperation arrangement between the world’s largest free-market economies will make the world a more secure place, underpinned by our open democracies. 

The U.S.-India relationship exemplifies the best characteristics of democracy, demonstrating what can be achieved when imagination, properly motivated commerce and trade and our common spirit of entrepreneurship are set free.      

Ron Somers is president of the U.S.-India Business Council, the premier business advocacy organization representing the United States’ and India’s top-tier companies.    

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