Amid the ongoing trade tensions with India, businesses from the US are keeping a close watch on upcoming general elections with a hope of ‘reappearance of aggressive reform’ process.

One of the largest business and trade facilitation bodies in the US — US-India Business Council (USIBC) — pointed towards concerns on both sides on tariffs and trade barriers causing tensions in the trade relationship between the two largest democracies of the world.

‘Directional change’

“There have been some regulatory and policy changes. Those have caused anxiety about whether India is pulling back on some of the opening that had been happening over the last few years. This was a substantial directional change,” Nisha Biswal, President, US-India Business Council, US Chamber of Commerce told BusinessLine.

Biswal was in Ahmedabad leading a delegation of business leaders from the US for the 9th edition of Vibrant Gujarat Global Summit (VGGS). For the US businesses, a bullish stance on the reform agenda by the newly elected Narendra Modi government in 2014 was looked up to with much optimism. But several protectionist measures adopted by the NDA government as well as its US counterpart has soured the trade relations for past one year. So much so that US Consul General Edgard D Kagan had last December cited trade issues between the two countries as a reason for not partnering in the Vibrant Summit. “People are trying to understand turn of events in India elections with keen interest. Knowing that the country is going to elections, there ought to be pressure as domestic constituents will require attention,” she said adding that India’s growth depended on foreign investment, for which, there is a need for resumption of reform with attractive climate for foreign investments in manufacturing and infrastructure.

“Foreign investors are looking for some reassurance that the bullishness and aggressiveness on reform front, which was seen in the first few years of PM Modi’s tenure, is going to reappear. We hope that the directional change that is seen now is not long-term,” added Biswal.

‘Positive developments’

She said that many positive things have happened over the last 4-5 years. There have been improvements in ease of doing business and lifting of caps on FDI. Rolling out of GST as a unified tax and creating a unified market are  strong positive indicators for attracting investments.

Unlike Vietnam and South Korea, which are acting as manufacturing base sans wide market access, India, according to Biswal, has an advantage of a strong local market. “ We hope that with PM’s bold vision, there will be a governing consensus that moves India into that direction,” she added.

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