US-India economic ties to take-off, says American expert on South Asia

The ties between India and the United States (US) have come a long way in the last one decade and is now slated to go much farther in the coming years, said Mr. Richard M Rossow, Senior Fellow at the Centre for Strategic and International Studies (CSIS), Washington DC, where he occupies the Wadhwani Chair in India-US Policy Studies. He was delivering a talk on ‘US-India Economic Ties: The Next Ten Years’ at the ICFAI University, Hyderabad.

According to him, with further simplification of investment policies that is expected from the new government, American investors would find India even more attractive as an investment destination. Three areas which are likely to see significant growth in US-India partnership are civil aviation, defence and insurance sectors, which were, incidentally, opened up for foreign direct investment recently.

Mr. Rossow pointed out that it is very rarely that the voices from Washington, whether they are policy hawks, investors or strategy experts, speak in one voice and it is happening now.

When it comes to India-US relations, there seems to be great bi-partisan clarity and optimism all around. On the one hand, American investors want to be part of the Indian growth story and on the other, American strategic interests are aligned with the interests of a democratic India in Asia. The roll out of Goods and Service Tax, simplifying of labour laws and reforms in land acquisition policies are three significant developments that global investors are awaiting in India. Anything else that improves the ease of doing business in India would significantly advance the economic ties between the two nations.

According to Mr. Rossow, there are potential downsides to this overwhelmingly optimistic story. As US-India trade grows, the size of US-India trade imbalance and the negative trade gap the US has with India will come into focus. This could potentially dampen the enthusiasm of some in Washington. Similarly, while a lot is expected from the new government, any inability to move forward with much-awaited reforms could also become a dampener. Specifically, while India-watchers are aware of the challenges in moving key legislation through the Rajya Sabha at this point of time, the investor community at large still has placed great hopes on significant progress in the economic environment here. Any disappointment on that front could again slow down the deepening of economic ties between the two nations.

Prof. J. Mahender Reddy, the Vice-Chancellor of the ICFAI University, presided over the session and attended by students, faculty and research scholars of the University. The event was also webcasted live to all the 11 Universities and six IBS campuses of the ICFAI Group.