US-India relations in 2021: Post-pandemic world order and a new American leadership

December 30, 2020 11:09 AM

As President-Elect Biden seeks to restore “normalcy” in America’s relationships with its closest allies, the administration will face a tumultuous world in which a pandemic still continues to upend lives and economic activity, fractured relationships with global institutions, and a rising China taking advantage of the chaos to gain more power and influence.

narendra modi, joe bidenThe Biden administration much like the Obama administration will likely have a less hostile, more nuanced approach to trade. (Photo source: AP)

By Mukesh Aghi, 

As President-Elect Biden seeks to restore “normalcy” in America’s relationships with its closest allies, the administration will face a tumultuous world in which a pandemic still continues to upend lives and economic activity, fractured relationships with global institutions, and a rising China taking advantage of the chaos to gain more power and influence. Amidst these challenges facing the President-elect, the US-India relationship will constitute a bright spot. Regardless of other global issues, the US-India relationship has maintained an even keel and the list of achievements range from a robust strategic partnership designating India as a “Major Defense Partner” to various pacts that facilitate information-sharing between the security, military, and intelligence agencies of the two countries. Additionally, a growing strategic energy partnership underlines India’s position as a strong partner in the Indo-Pacific region. We expect these areas of collaboration to continue and even get stronger in the next couple of years.

While the complementarity in the interests of the two nations have guided the relationship and the fundamentals are strong, there are some immediate opportunities to ramp up cooperation in 2021.

First, on the trade front, it would be beneficial to restore India’s GSP benefits and get a preferential trade agreement across the finish line. The two sides have had persistent disagreements in areas such as intellectual property protection, worker mobility, and digital trade, but trade and investments have increased from $25 billion in 2006 to over $149 billion in 2020. Indian procurement of American defence products too has increased from $0 to over $18 billion and counting in the last decade and a half. And we are only beginning to scratch the surface. India for its part, will have to unfailingly build on transparency and consistency in its policy and regulatory framework to attract long-term investment.

The Biden administration much like the Obama administration will likely have a less hostile, more nuanced approach to trade. Given the rapidly changing economic dimension of the Indo-Pacific, a US-India bilateral trade agreement sends a clear signal about the enduring nature of the relationship. Reconvening the US-India Trade Policy Forum will be an important tool to underscore the importance of the trading partnership.

As trade burgeons between India and the US, it is also worth looking into a broader collaboration on services. While service exports are a minuscule part of the trade relationship between India and the US, India has expanded its share in global service exports from 2% in 2005 to 4% by 2018. This is a considerable feat given that service exports are usually dominated by developed economies such as the US, UK, and Germany.

Both countries also have a mutual interest in creating a stronger partnership in the education sector. India’s New Education Policy allows institutions of higher learning to open campuses within the country along with a booming EdTech market that is expected to reach $1.96 billion by 2021. It is an opportune moment for both countries to explore a hybrid model of education that is able to reach the maximum number of Indian students with quality education at affordable costs. On the American side, restrictive immigration laws from the Trump administration have caused concerns regarding the prospects of obtaining jobs and H1-B visa sponsorships and resolving this issue in the near-term could prove to be beneficial to the relationship.

Healthcare collaboration is proving to be another important strategic dimension of US-India ties. Even before the pandemic, Indian pharmaceutical companies supplied close to 40% of the generic formulations marketed in the United States. This has allowed American consumers to save billions and enjoy enhanced access to quality medicines. During the current health crisis, American and Indian firms have collaborated on some key vaccine development programs. Furthermore, India has the largest vaccine-producing capacity of any country in the world, making it a key contributor in the race to mass-produce the COVID-19 vaccine for quick distribution. However, the progress and efforts at collaboration stand to be threatened by “vaccine nationalism”— a study shows that the deaths from monopolization of vaccines by wealthy nations could cause almost twice as many deaths as distributing them equally. Leaders from both countries have the capability and public goodwill to lead a globally coordinated vaccine distribution response that should include financing mechanisms, knowledge sharing on public health programs, developing resilient healthcare supply chains so as to stem the transmission of the disease and prevent the outbreak of future pandemics.

Lastly, with the rapidly changing geopolitics of the Indo-Pacific region and a Biden administration that is likely to be more multilateral in its approach, it behoves the two countries to expand their economic calculus by building an economic alliance among Quad nations. The reasons for this are two-fold – the alliance will be an indispensable part of decoupling from China. Secondly, the four Quad nations together represent a quarter of the world’s population and over $30 trillion in combined GDP. An economic alliance adds heft and significant counterweight to China’s global ambitions.

2021 will present challenges that no country will be able to solve alone. Both the United States and India should work with renewed vigour to work on an already strong US-India bilateral partnership for the benefit of both countries and the world.

(The author is the President and CEO of the US-India Strategic Partnership Forum. Views are personal.)

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