US Should Forge New Relationship With India Under ‘Make in India’ Umbrella

India’s Prime Minister Narendra Modi had one main aim in his visit to the US that is to promote and secure the economic development of his country. In this context, Modi has invited US businesses to come and invest in India and his slogan has been “Make in India.’’

Why should the US invest in India and rev up its economy? Simple logic. India will grow into the third-largest economy by 2030 and will be “the market” for the US. It will be the same year when India’s middle class is expected to have a purchasing power of almost US$13 trillion annually, 23% of global spending.

Of course, over the last ten years and more, ties between the US and India have not been very cordial politically. India had been relegated to the background in terms of investment and economic development. Today, trade between the US and India stands at US$97 billion as compared to US$19 billion in 2000.

This growth is very minimal when compared to the trade between the US and China, which stands at US$600 billion.

Ironically, the world oldest democracy’s biggest trading partner is the world’s most authoritarian regime.

Despite the entire high-brow trumpeting of values, the bottom line is profitability and Americans are notoriously pragmatic when it comes to profit.

Surprisingly, (despite the large successful Indian Diaspora in the US) the US has always been lukewarm to India. The US has pursued a biased policy inimical to India in its relationships and trade ties with China and Pakistan, both hostile to their neighbour, India.
India is offering all the advantages China has of low-cost of production, skilled workforce and so on.

However, the stumbling block as seen from the American viewpoint is the notorious Indian bureaucracy that makes investment a long drawn out and complicated procedure. American investors will also require attractive tax laws and the assurance that there will be no retrospective levies before they commit to investments in India. The sub-continent also needs to improve its infrastructure to fuel economic growth and development and according to Prime Minister Narendra Modi, this will be remedied.

Of course “Make in India” seems contrary to the American intention of bringing production back home to tackle unemployment, but the high production costs there will not make it easy.

By investing in the “Make in India’’ the US will be creating more business opportunities and more high-end jobs in America and the profits will, of course, boost its economy.

America should also not overlook India’s growing clout. Contrary to earlier governments, Mr. Modi is the Prime Minister by an overwhelming mandate and is known for his the economic development of his home state -- Gujarat. Now, Hhe plans to use bring about the same economic growth and development for his mantra for the entire country.

A practical leader, Mr. Modi, as a practical leader, is well aware of India’s strength and the changing power equations on the global stage. Hee is looking for is now eyeing partnerships with US businesses for technology transfer. He is not coming as supplicant but rather as a promoter of the various strengths of his country.

.Modi has proved that the US, despite its strengths in innovation and technology, is not the only solution to India’s requirements. His strong position at BRICS, which is all set to set up a counter to the World Bank and his bilateral relations during his recent visit to Japan and the visit by Chinese President Xi Jinping to India, hasve led to impressive investment promises in India by both countries.

Japan will be offering, over a period of five years, in development assistance worth US$35 billion and China will be assisting in infrastructure and industrial parks with an investment of US$20 billion.

As the US Government has little say in how private American businesses deal, Mr. Modi has rightly targeted the business giants who can help his country’s economy. The high powered breakfasts of the Indian Prime Minister with American business giants PepsiCo, Master Card, Goldman Sachs, and Boeing (a lot of the CEOs are of Indian origin and are already doing business in India) is bang right on.

Of course the US will try its best to wring concessions from India in the form of defense contracts and that it toes the US line in the WTO and supports it on ISIS. However, it is doubtful that Mr. Modi will give much away; he does know his bargaining strength.

On the political front, India too expects the US to relook its relationship with Pakistan, Afghanistan and China. On the economic front, the vexed visa issue will also have to be sorted out. India resents the new visa rules that make it difficult for Indian professionals to work in the US and will ask for concessions and revisions. The US will have to change its perceptions and misconceptions about India.

Investing in ‘`Make in India’’ will have symbiotic benefits for the US and India both economically and politically.