News

By Vicki Needham

U.S. business groups are pushing Indian Prime Minister Narendra Modi to finally deliver on promises to eliminate trade and economic barriers as he arrives in Washington on Tuesday for a crucial visit.

The National Association of Manufacturers (NAM) and Telecommunications Industry Association (TIA) are among the groups pressuring India to take action on lowering tariffs and ramping up intellectual property rights protections. They say the lack of movement on those issues is undermining the U.S.-India relationship.

Linda Dempsey, vice president of international economic affairs for NAM, said that from her group’s perspective, the prime minister’s visit to Washington represents an opportunity for Modi to take steps to further open India’s economy.
“Modi needs to take concrete steps on important systemic barriers that are impeding the stronger commercial relationship we want to have with India,” Dempsey said.

“We would hope that this is an opportunity for the prime minister to come to Washington and say he wants to move forward on all his policies,” she said.

“We’ll wait and see.”

In what will be his fourth U.S. visit, Modi is scheduled to have lunch on Tuesday at the White House, where he and President Obama will aim to tie up loose ends on a wide range of issues including trade, counter-terrorism, maritime security, nuclear cooperation and technology.

On Wednesday, Modi will address a joint session of Congress and lay out his vision for the relationship between the two nations.

While U.S. businesses have no doubts about the potential potency of the Indian economy, some are wary of stepping into the market without guarantees that economic reforms will be implemented.

K.C. Swanson, director of global policy for the TIA and a member of the Alliance for Fair Trade with India, said her group’s members are frustrated by the tariffs that India slapped on technology products that are being used to increase internet connectivity in the country.

Swanson said she hopes the 10 percent tariff and other barriers on the tech industry would be addressed in Modi’s meeting with Obama.

In April, seven members of the World Trade Organization’s Committee on the Information Technology Agreement, including the United States, called on India to provide a justification for the tariffs on the technology products.

Overall, U.S. goods exports to India face an average tariff of more than 13 percent, more than six times higher than U.S. duties on Indian goods.

The U.S. Chamber of Commerce is hoping for more action on intellectual property rights during the final visit in Washington between the two leaders.

Patrick Kilbride, the executive director of international intellectual property for the Commerce’s Global Intellectual Property Center, said he would like Modi’s visit to bolster India’s commitment to intellectual property rights.

“We’re hopeful the visit will be a vehicle to relaunch the Modi administration’s commitment to IP,” Kilbride said.

“It presents a real opportunity for India to embrace concrete IP policies and take its relationship with the U.S. to the next level,” he said.

The question is how far Obama and Modi will go to cement the U.S.-India relationship after two years of intense diplomacy.

Anubhav Gupta, senior program officer at the Asia Society Policy Institute, said Monday in a blog post that “this visit affords the two leaders a final chance to make good on the immense time and political capital they have invested in the bilateral relationship.”

Gupta said that the “true test of whether Obama and Modi can elevate the relationship to a new level will be determined by whether they can secure meaningful progress on the economic front.”

Richard Rossow, a senior fellow at the Center for Strategic and International Studies, told reporters on Friday that “on the economic side, we still have, I think, a huge gap on our approaches to broad, global, economic issues, trade in particular.”

“So it’s very difficult to imagine something, one single summit bridging that gap,” Rossow said.

But Tim Roemer, Obama’s first ambassador to India, highlighted the strength of the personal and business relationship between Obama and Modi.

He said one of Obama’s legacy issues would be the pivot to Asia, with India as a lynchpin.

“The trajectory of the relationship has been growing exponentially for 15 years with bipartisan support on both sides of the ocean,” Roemer said.

Even with expected economic policy hurdles, Indian officials have said they would like to increase total trade with the United States to $500 billion over the next several years, following a five-fold increase since 2000.

But experts argue that more economic reforms are needed to make that happen.

“The bold objective of reaching $500 billion in bilateral trade appears starkly distant,” Gupta said.

“Legitimate disagreements around issues like intellectual property rights and trade policy have stifled economic policy momentum,” he said.

Arun Singh, India’s ambassador to the United States, has pushed back on the criticism, saying that “on intellectual property, I think the situation is not what it’s made out to be by interested and vested operatives.”

He said the only problem area is in pharmaceuticals and argued that tensions have been sparked there because the U.S. industry mainly makes innovative drugs while the Indian industry is based on generics.

But Dempsey argued that the issue reaches beyond medicines and into other sectors, including copyright protection.

“A strong IP policy is a chance to say, ‘Yes we embrace being an innovative economy,’” she said.

And there are other fronts where Modi and Obama might seek to make strides.

Singh said last week discussions could be renewed about a bilateral investment treaty (BIT).

“Our people are talking to each other, and we’re trying to see when we can formally launch these negotiations,” Singh said.

“Discussions are going on, but we have to see when the two sides decide that they’re ready to launch,” he said.

The United States and India began talks on a bilateral investment treaty in 2009, but negotiations were put on hold in 2013. The two nations have talked about moving forward, but there is still a large gap between their offers.

Rossow said that while the leaders may “re-announce” their intention to move forward on the BIT talks, “no matter how well-intentioned the two sides are, the real bulk of the negotiations won’t transpire until we have a new team over at the Office of the U.S. Trade Representative.”

Modi also may seek support from the United States to join the Asia-Pacific Economic Cooperation (APEC), which would provide an avenue to possibly joining the Trans-Pacific Partnership down the road.

But such an endorsement from the United States is likely a long ways off.

High stakes for Indian PM’s visit