by SS&SS

INDO-US ECONOMIC SCENARIO IN THE NEXT DECADE

BY:Prof Nisha Singh

& Prof.Ashok Sinha

In recent years, India and US have most prominently partnered in innovation; India has catalyzed technological development in the US by offering skilled labor and IT solutions. A partnership that was “a distant dream in the 80s” has grown over the past few years as both countries realize their shared vision of the future: economic and social stability, tapping alternative energy, improving public health and combating terrorism, to name a few. At Asia Society’s headquarters in New York, panelists discussed the need for deepening existing economic and political ties between the two countries.

According to the panel, India represents significant market growth opportunities for American businesses. Sunil Bharti Mittal, chairman and group CEO of Bharti Enterprise, noted that Indian youth, which account for 55 percent of the total population, are a potential market for American companies. And while automotive sales are down, the fast moving consumer goods (FMCG) sector is doing fairly well according to Vijay K. Thadani, CEO of NIIT Limited. He stressed the need for the two countries to move towards greater trade cooperation noting that any protectionist policies, originating from either country, would not be the answer to financial recovery.

,Tarun Das, chief mentor confederation of Indian Industry and president, Aspen Institute India, believes that there will not be a significant change in the top priorities of the country’s political agenda – development in infrastructure, insurance, multi-brand retailing, defense and human capital. C.K. Birla, chairman of Hindustan Motors Ltd., warned of an initial slowdown in the implementation of policies but assured that there would not be a retrograde of initiatives that are already in place to help recover the economy.

The US India Business Council, Confederation of Indian Industries and other organization are taking steps to make a case for a US partnership with India. Frank G. Wisner, international affairs advisor at Patton Boggs LLP, believes that India’s proposal will be well received in Washington, noting that there is no constituency amongst American businesses that is opposed to having an open trading system and strong relations with India.

 Travel is growing very rapidly in developing nations around the world. Increasing population, standards of living, vehicle ownership, massive infrastructure investments, and economic and recreational opportunities are just some of the factors contributing to increases in travel demand. While the rate of increase in travel demand may begin to slow in some developed economies of the world, the rapidly developing economies (such as China and India) are just beginning to experience the rapid increases in travel demand that the developed economies experienced several decades ago. Thus, there are challenges and issues in the development of multimodal transport systems, understanding of travel behavior and drivers of growth in travel demand, and deployment of advanced analysis tools that are common to both the developed and developing economy contexts. Resource and data constraints, as well as workforce training and development issues, confront transportation professionals both in USA and rapidly developing INDIAN environments. At the same time, there are socio-economic, cultural, and demographic differences that persist across geographical contexts.  This is one area which has been overlooked by both the countries. There can be a joint partnership both at the Government level as well as private enterprises

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The new US administration under President Barack Obama proposes greater interaction with Pakistan and Afghanistan for security reasons. This need not divert focus from further strengthening of the special relationship of the US and India forged since 2000. India is a large emerging economy, a key driver of the global economy, and a major player in Asia. It is deeply engaged in the reconstruction of Afghanistan. It has been active in global negotiations on trade, climate change and economic crisis, and articulates the views of many developing countries.

It is therefore important that going forward, the strategic partnership of India and the US be strongly reiterated, and the two countries develop mechanisms for working together on emerging global challenges, as India would be a key part of global response. This would also balance US’ increasingly Sino-centric approach to Asian affairs.  

The US can play a role in facilitating greater economic exchanges between India and its neighbors by helping develop ‘gateways’ or trade infrastructure. This may have to be sequenced in a manner that builds confidence and takes into consideration on-the-ground security and political situation.

NEXT DECADE:INDO-US ECONOMIC  VISION

As strong democracies rooted in diversity and common aspirations for peace, prosperity, and freedom, India and the USA agreed in the Vision Statement of March 2000 “to reduce impediments to bilateral trade and investment and to expand  commerce between us, especially in the emerging knowledge-based industries and high-technology areas.”

India-US economic relations in ten years can attain the following dimensions:

1• Strategic shift from high-technology trade to frontier technology – India and USA can be close partners in expanding knowledge frontiers in science and technology, including space, robotics, nuclear energy, defense, etc. and their business applications. India can play a key role in signature multi-country projects in space, oceanography, polar exploration, etc.

2• Robust trade in mass-market and niche products – Comprehensive Economic Cooperation Agreement, including goods, to be set in place to take advantage of complementary competitiveness. Set a target of 0 billion in ten years, with robust bilateral investments leading the way for high volume turnover. Quality and safety would be the basis for exchange.

3• High interface in services trade – Strong bilateral engagement across diverse services sectors. This would involve significant liberalisation of the Indian services economy on the one hand, and easy movement of personnel across borders on the other.

4• Preferred investment destinations – Scale up mutual investments massively. An investment treaty should be  rapidly negotiated. US investors should have a leading role in the economic transformation of India. US companies can emerge as key partners for Indian business.

Sports: There is huge potential for collaboration in the field of sports, sports goods andfitness, which will capture public imagination in a positive way. The hosting of the Commonwealth Games 2010 in India will also give a strong boost to sports and fitness. Possibilities of institutional collaboration for promotion of sports and other extra curricular activities should be considered. 

Other areas: There needs to be greater interaction at the functional level through institutionalized platforms of cooperation in different sectors, such as space, polar exploration, disease-control, etc. 

Both governments can encourage such dialogue  and cooperation, while private sectors can cultivate such platforms for taking innovation to the marketplace.India-US Economic   

 5• Building infrastructure in India – India needs over 5 billion in investments over the next 5 years to sustain a high growth rate of 8-9%. The US private sector can find a big opportunity in the next decade in India’s need for capacity building in infrastructure. Collaboration in this regard would prove to be a mutually beneficial partnership.

6• Collaboration on clean energy and climate change – India’s rapid development makes it one of the fastest-growing energy users and carbon emitters. US is the largest energy user and highest carbon emitter after China. Both countries can collaborate closely on energy security, emissions, efficiency, and renewable energy as well as on global discussions on mitigating climate change.

7• Collaboration in healthcare:  US and India to collaborate in making healthcare more affordable and accessible worldwide. Healthcare market in India was nearly at $ 38 billion in 2007, expected to grow at 15% p.a., to reach $ 79 billion by 2012. Tremendous opportunities can be found in providing healthcare services, building healthcare infrastructure and developing related technologies.

8• Seamless cross-continental cooperation in knowledge economy sectors – India and USA to be anchors for global interaction in sectors such as biotechnology, nanotechnology, drug development, renewable energy, green products, etc. R&D, innovation, and academic collaborations to be close and continuous, rooted in strong IP protection. 

9• Strong cooperation in education and academia – Participation in each other’s higher education and research sectors. Centers of educational excellence should open campuses in the other country to offer students the best of education in their place of residence. This would also enable high-level continuous exchange of professors, researchers and  academics, and cross-cultural educational interchange. It is crucial to engage the private sectors of  both countries in a strong partnership at all enterprise and sector levels. Governments can guide and aid private sector partnerships.

The two countries can truly set a new paradigm for global economic cooperation based on mutual respect, commitment to democracy, and global prosperity and development.

We are more than confident that the tremendous economic potentialities between the two countries can move very fast if taken up seriously and without wasting any time.Best part of this is that both the country have admiration for each other ,but an awareness drive to this effect is the call of the day.The next decade could be a new ,powerful and solid economic Indo-US achievements.

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