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.
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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
20 Jun 2023
