New Report Weighs Challenges and Opportunities for Improved Trade with India

With a current population of 1.2 billion people, it is clear that ignoring or discounting India as a formidable and strategic economic ally would be a critical mistake for any nation. Trade with India has been and will continue to be a prominent issue on the world stage simply because the economic dividends a more robust trade environment represents are enormous. Frustratingly however, India has been slow to enact trade policy reforms that would allow it to recognize its true potential and harness the power of its growing population.

This week, the National Bureau of Asian Research published a new report that examines the current trade environment between the United States and India. The Bureau’s President Richard J. Ellings noted the many obstacles standing in the way of a mutually beneficial trade relationship with the United States including, “domestic content requirements, caps on FDI, and IPR protection,” and then mapped out a road for establishing a more constructive relationship.

Specifically, Ellings focused on India’s failure to protect innovators and intellectual property. As the report states:

The IP challenge from India, while not as significant in scope or scale as that from China, has its own worrisome components. The unpredictable use of compulsory licenses is particularly nettlesome for affected U.S. sectors, especially pharmaceuticals, where two-thirds of patented drugs are on a list of potential compulsory licenses. There is also concern that the compulsory licensing approach could be applied to new technology sectors, such as clean tech. And unease is building that using government policy to advantage national champions (companies that benefit from preferential national policies to develop their own export strategies) might be a model adopted by other emerging economies.

These issues have long been a concern for U.S. businesses and manufacturers as this important trade relationship has the potential to provide substantial economic and societal benefits for both nations. Strengthening this alliance by implementing internationally agreed upon trade policies would enable India to grow jobs, take advantage of new innovations and expand its economic growth potential. Likewise, U.S. businesses would benefit from reduced trade barriers and the opportunity to reach new markets. As AFTI continues to encourage U.S. leadership to engage with Indian officials on a path toward effective reform, the recent election of Indian Prime Minister Narendra Modi presents an unprecedented opportunity to restart dialogues and improve the India-U.S. trade relationship.

Ellings echoes this sentiment, “The ‘open for business and investment’ signals that the Modi government has broadcast suggest a window of opportunity may be opening to make important progress in the U.S.-India relationship. The new government has placed great emphasis on pursuing a foreign policy rooted in economic diplomacy.”

High profile meetings between U.S. and Indian officials in the coming months, including Senator Kerry’s expected trip to India this month and Prime Minister Modi’s planned visit to Washington after, could prove a first step in significantly improving the relationship between the two countries over the next few months and years.

We would encourage elected officials in both countries to capitalize on this historic moment and engage in meaningful dialogue to put in place trade policies that will have a transformative effect on both our nations through economic opportunity and job growth.