A Rising India, in Waltz Dance Steps with the U.S.

June 20, 2023

Context:

India and America need each other more than ever before today, both are united by powerful mutual interests.

India’s Statistics:

Growth & GDP: India is estimated to reach $25 trillion by 2047 (according to Pricewaterhouse Coopers), 100 years after Independence.
- In 1700, India accounted for over 35% of global GDP, making it the world’s biggest, and by the time of the economic crisis in 1991, it was down to almost 1%.
- Today, it is at around 4%-5% and rising.
- The United States needs this market desperately, and India needs America’s capital and its technology — military and non-military, both.
Population: By 2030, India will have a working population of one billion, which is more than the entire G-8 population.
Internet Coverage & Consumption: Today, India has very vast Internet coverage.
- India’s per capita mobile data consumption is ranked at one, more than that of the U.S. and China combined.

Trade and Economic Relations:

The U.S. has emerged as India’s biggest trading partner in 2022-23.
- The bilateral trade between India and the U.S. has increased by 7.65% to USD 128.55 in 2022-23 as against USD 119.5 billion in 2021-22.
- Exports to the U.S. rose by 2.81% to USD 78.31 billion in 2022-23 as against USD 76.18 billion in 2021-22, while imports grew by about 16% to USD 50.24 billion.
Multilateral Engagements: India and the US collaborate closely at various multilateral organizations, including the United Nations, G20, ASEAN, IMF, WTO, World Bank, Quad, and ISA.

Term need to know:

Geo-Economics: It refers to the use of economic factors and policies to shape international relations.
- For India, it involves leveraging trade relationships, energy security considerations, investment and infrastructure development and economic diplomacy to enhance its economic growth, regional influence and overall national interests.

Challenges between India-US Ties:

Tariff Imposition: Earlier the US imposed tariffs on Indian products and India retaliated back by increasing tariffs on the US imports.
Self-Reliance vs. Protectionism: The Atmanirbhar Bharat Campaign presented that India is increasingly becoming a protectionist closed market economy, while it’s a step towards self-reliance.
Exemption from US’ Generalised System of Preferences (GSP): GSP is the largest and oldest US trade preference programme which was designed to promote economic development by allowing duty-free entry of products from the designated beneficiary countries (developing countries).
- In June 2019, the US decided to withdraw Indian exporters under the GSP programme, affecting India’s export-oriented sectors such as pharmaceuticals, textiles, agricultural products and automotive parts.
US’ Issues with Other Countries: Some differences are not direct between India and the US, but are due to third countries like Iran and Russia.
- Example: US used sanctions on the countries purchasing S-400 from Russia.

What does India need to do?

It’s time to work upon the following points to get advantage in this World Scenario and upgrade for self-betterment:

Greater Digitalisation of Internal Processes
Better Services Delivery using India Stack
Revive stalled Agriculture Reforms
Build up Supply Chain Capability
Move Manufacturing to India as Companies Look for Other Homes outside China
Carry out Deeper Judicial Reforms

Conclusion:

Experts believe that India and the U.S. are friends, but not allies and this is the time where the journey from friendship to ally is a short one and needs to be walked by both sides as both mutually need each other.

News Source: The Hindu