A free trade agreement (FTA) between India and the US remains a difficult proposition despite the bonhomie demonstrated between the two nations during Prime Minister Narendra Modi’s recent visit to the USt as it is a politically sensitive area, especially because of labour unions opposed to such pacts, according to a top industry representative.

However, there is positive sentiment on India among the US investor community and in the board rooms , as growing aggression in China against American companies has pushed them to view India as a good option for derisking supply chains, said Mukesh Aghi, President, US India Strategic Partnership Forum, in an interaction with businessline.

“The political sensitivities of the Democrats, especially with labour unions, will not allow them to move forward that easily with FTAs. Another example (of the sensitivities) is China as all manufacturing has been going go to that country. The government is struggling to see what they can bring back to the US. So, I don’t think FTA (with India) is on the cards, at least till the next elections,” Aghi said.

While the China factor is a big reason for US companies to take a greater interest in India, the growing market opportunities here also make the country attractive, Aghi said.

Aggressive China

“China is being aggressive with US companies. It has shut down Micron and some others. The companies are now looking at their China plus strategy. So, strategically the companies are saying that India is an option for derisking the supply chain. But there are also huge market opportunities in a country with 1.4 billion population,” he said.

The classic example is that of Apple, that has moved substantial part of its iPhone 14 manufacturing to India. “Three years ago, Apple was doing nothing (in India), but now it wants to produce 20 million iPhones in India next year. This is not only for exports but also for domestic market which is going up. It is a dual strategy. Make in india for the world and make in India for India also,” he said.

Pivot for US

Commenting on Modi’s US visit and the various agreements signed, Aghi said India has become a pivot for the US, not only geo-politically but economically.

In generics production, for instance, India can play an important role in providing affordable and scalable healthcare in the US. There is opportunity for collaboration in education and skilling as US needs more skilled workers, he said.

On the decision taken by India and the US to collaborate more in defence, as demonstrated in the signing of several key agreements during Modi’s visit, Aghi said the overall strategy seemed to be to reduce India’s dependence on Russia for defence.

“These are golden times in the India-US relationship. We need to strike now and bring in success stories to keep the momentum growing,” Aghi added.

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