This week, Secretary of State John Kerry and Secretary of Commerce Penny Pritzker travelled to India to participate in the 5th U.S.-India Strategic Dialogue with India’s External Affairs Minister Sushma Swaraj. While there, Kerry will also meet with Prime Minister Modi, marking the first Cabinet-level contact with India’s new leader and laying the groundwork for Modi’s visit to the United States in September.
Manufacturers in the United States have much to contribute to a more open Indian economy focused on jobs and growth. As Secretary Kerry noted in his remarks this week at an event hosted by the Center for American Progress, “American companies lead in exactly the key sectors where India wants to grow: in high-end manufacturing, in infrastructure, in healthcare, information technology, all of them vital to sort of leapfrogging stages of development so you can provide more faster to more people.”
Kerry spoke of the historic potential of this visit to reinvigorate a sometimes troubled bilateral trade and investment relationship and promote expanded dialogues that give India’s new government a chance to demonstrate its commitment to reform and a mutually beneficial trade and investment partnership. By breaking down barriers and leveling the playing field, India could not only increase trade and foreign investment, but also spur entrepreneurship and drive innovation among its own businesses and industries.
Renewed dialogues are a welcome step in the right direction. But whether or not these exchanges deliver progress and real results will depend on India. Will the new Modi government take steps to boost trade by abandoning forced localization policies and ensuring its trade policies conform to international norms? Will it work to encourage entrepreneurship and technological advancement by strengthening intellectual property protection and enforcement? Or will it let these opportunities slip by?
Over the past few months, the global business community has seen early developments in India that, if continued and expanded, have the potential to transform its economy and trade relationships with countries around the world. In his budget speech earlier this month, Indian Finance Minister Arun Jaitley spoke of incentivizing overseas investment and announced plans to raising foreign investment caps for defense and insurance to 49 percent.
But India’s actions to block progress on the WTO Trade Facilitation Agreement are a devastating step in the wrong direction – harming global growth and the trade potential of other developing markets. The OECD estimates that a successful trade facilitation deal would cut international transaction costs for low and middle income countries by as much as 15 percent. Recent decisions in India to deny patents and uphold compulsory licensing of cancer medicines have the troubling look and feel of business as usual.
During their visit to Delhi this week, the NAM urges Secretaries Kerry and Pritzker to squarely and frankly address outstanding bilateral trade and investment concerns that are preventing the U.S.-India economic and commercial relationship from achieving its full potential. India has much to gain in the bargain. As Kerry remarked earlier this week, “India’s willingness to support a rules-based trading order and fulfill its obligations will help to welcome greater investment from the United States and from elsewhere around the world.”
Will the Modi government seize this chance to show the work it is open for business? Manufacturers will be watching.