India-US bilateral trade has the potential to increase to $500 billion annually, from the current $200 billion, riding on direct investments, joint ventures, partnerships, educational exchanges and tourism, Eric Garcetti, US Ambassador to India, has said.

The two countries need to give more geographical preference to each other on trade, like India did in the case of iPhones and may do with Tesla, Garcetti said at a seminar organised by the Indo-American Chamber of Commerce on strengthening Indo-US relationship on Tuesday.

Garcetti’s reference to US EV manufacturing company Tesla indicates that the company may be close to reaching a deal with the Indian government on its entry into the country.

“Thanks to US Trade Representative Katherine Tai’s leadership, we have now resolved all seven of our WTO disputes (with India). Our relationship has gone from cynical to skeptical to neutral to positive and ambitious about what we can accomplish together. And I need you to make the same push with the government of India,” he said.

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The two need to say that let us match an ambition that is about strategic preference and geographical preference on trade, he said. “Let us just try that. Just as India did so marvelously with the iPhone and soon may do with the Tesla. Let us see if we can do with the entire country and vice versa. Ask it of us, so that India gets that preferential treatment when it comes to strategic and critical minerals that we need in our supply chain,” the US Ambassador said.

Breaking barriers

India needs to change its export policy and export controls if it wants to achieve her goals and attract more investments, Garcetti said. “We want FDI from china to shift here. FDI is not flowing in India at the pace it should be. Instead it is going to South Asia, to Vietnam..I would selfishly want to see more of that happening to India. But for that I need your help,” he said.

The US wants a self-reliant India, but no country can be totally self reliant any more. “We want to see supply chains that are critical to America coming here. The rhetoric that everything has to be made in India will slow down the pace . If you tax inputs, you are taxing your outputs. You are not taxing us. You are not protecting the market. What you are doing is limiting a market,” Garcetti added.

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Highlighting that CEOs of most top US companies were looking at India for investments but opaque tax structures were still a barrier, he said. “When we break down the walls in both countries, whether they are bureaucratic, whether taxation (related), whether regulatory, or whether part of our federal system, it can only release more jobs, prosperity and strength,” he said.

Stating that year 2023 was best year in US and India history, given the high numbers of visas issued, both for students and visitors, and important partnerships announced in diverse areas related to trade and investments, Garcetti said that even with elections in both countries, things should not pause.  “We should accelerate. We should collaborate. We should innovate. We should communicate….and elevate our ambition to higher levels than ever before.”