While India offers the US strategic collaboration opportunities to trade, invest and grow, the ensuing US-China trade rift can further provide unprecedented opportunity for India to provide alternatives for US investments in this region.
By Naveen Aggarwal
From time immemorial, India has dazzled the world with its contrasting yet peaceful coexistence, making it one of the most unique modern day economic growth stories. So, if I were to tell you that India is perhaps a country that not only hosts the earth’s largest human congregation beating the Vatican City and Monaco in sheer size, but also boasts of housing the world’s fastest growing population of millionaires, it shouldn’t come as a surprise. Now imagine this, while on the one hand, as a nation, we are expected to become the world’s largest consumer of fossil fuels by 2030, on the other, it is clear that we will be the front runners on climate advocacy and action to help drive a more sustainable future for the planet. Contemporary India is more assertive and growing with a sense of responsibility and inclusiveness.
Taking a cue, our balanced monetary and fiscal policies, along with several structural reforms, have ushered the country to a new era of abundance, economic growth and sectoral opportunities. KPMG in India’s latest report ‘US-India Partnership: Road to Prosperity’ provides a glimpse of this massive opportunity across sectors and themes such as agriculture, manufacturing, healthcare, jobs, people-to-people ties, etc, and are all befitting opportunities for natural allies like the US to explore and participate in, as India moves forward with its ambition to become a $10 trillion economy by 2030.
With India evolving as a prominent factor in international geopolitics and economic policy, it is increasingly finding its relevance in the Asia Pacific region, where the global fulcrum of power is seen to be shifting. Being an important conduit of this evolving geopolitical construct, it is creating unprecedented opportunities of strategic and commercial collaboration.
The Quad (partnership between the US, India, Australia and Japan) has emerged as a coalition for economic and technological modernisation in the Asia Pacific. No coalition is complete without a purpose, which, in this case, rests on the values of ‘look and act East ideology’ for an inclusive Indo-Pacific. Besides traditional areas of cooperation, the partnership is exploring opportunities to collaborate in social development, maritime security, energy cooperation, advanced technology, etc.
Partnership for change
While India offers the US strategic collaboration opportunities to trade, invest and grow, the ensuing US-China trade rift can further provide unprecedented opportunity for India to provide alternatives for US investments in this region. While the race to become the alternative destination amongst South Asian countries is gathering steam, India’s multilayered partnership with the US can play the true differentiator in this evolving landscape.
While there have been some trifling trade issues between the countries over the past few years, diplomatic ties have continued to remain strong. Last month saw the US-India commercial dialogue and a new CEO forum delivered successfully in Delhi, bringing with it the promise of concerted efforts from both ends to converge on unresolved issues ranging from trade, tariff and immigration, which seem to have caught the attention of policymakers and industry alike. The recent announcement by the US to build six nuclear power plants in India exemplifies the commitment of both nations to boost the bilateral civil nuclear energy cooperation. Having said this, Indian administration has certainly shown its displeasure with the recent indicators of GSP withdrawal for India and will likely leave a temporary unsavoury after-taste in the otherwise palatable relationship.
First, it is imperative to put a bilateral investment and trade treaty in place to accelerate trade ties in focus sectors like infrastructure, aerospace, defence and energy. This move will aid competitiveness for Indian industry in the global arena.
Second, it is becoming increasingly clear that the enterprise segment of business (SMBs) will play a critical role in this bilateral dynamic and, therefore, more efforts needs to be made in creating a conducive ecosystem for cross-border engagement and investments.
Third, there needs to be an increased focus for creating a bridge in growth sectors such as agriculture, clean tech, renewables, infrastructure (Smart Cities), advanced manufacturing, among others.
Fourth, both nations thrive on competitive federalism where states play a prominent role in driving growth. Drawing from this, state-state and city-city partnerships would be vital in steering bilateral ties at a cultural (people-to-people), business and diplomatic level. The evolution of Indian states and cities into multibillion dollar economies would provide a transformative opportunity for US states.
Lastly, to sustain India’s growing digital ecosystem, partnership with US technology firms will be ideal for infrastructure development and helping propel further the fast-paced digital transformation that India is already experiencing.
In recent years, several positive levers have not only helped stabilise but also further this two-country dynamic, to arrive at a foundation on which rests the future leadership, growth and business sentiment steering our global economic future.
The author is partner, US-India Corridor, KPMG in India