Biden’s Historic Trip to India to Strenghten U.S.-Indian Trade

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Written by Rameesh Kailasam, Guest Contributor

Last week, U.S. Vice President Joe Biden visited New Delhi and Mumbai during a four day trip to strengthen the relationship between both democracies and to gather momentum for further trade in key industries including energy, defence, and security.

Biden’s trip to India is the first in more than 30 years by a U.S. vice president, and took place within a month after U.S. Secretary of State John Kerry’s visit. While speaking at George Washington University the week before the trip, Biden had remarked, “One of the reasons why President Obama called our relations with India, ‘a defining partnership of the century ahead,’ is that India is increasingly looking east as a force for security and growth in Southeast Asia and beyond.”

During his meeting with Indian President Pranab Mukherjee, Biden remarked that America and India have common goals in the emerging global scenario and stated, “the issue is no longer what the United States can do for India, but what the two countries can do together in the world. No other two countries have so much at stake or in common in the emerging global scenario.” Mukherjee reciprocated, stating that India-U.S. relations, “are based on shared fundamental values and a growing convergence of interests.”

Biden also held talks with Indian Prime Minister Manmohan Singh and other political leaders on economic and security issues in the region. He reassured New Delhi about concerns surrounding post-2014 Afghanistan and the role for India in the light of its immediate neighbour.

During his visit to Mumbai from Delhi, Biden stressed the need for fair trade rules in addition to calling on India to improve investment conditions and remove obstacles faced by American companies which restrict trade between two of the world’s largest economies. Trade between the United States and India has grown from $9 billion in 1995 to nearly $100 billion in 2013. He also raised concerns surrounding intellectual property and local content requirements vis à vis Preferential Market Access in addition to inconsistent tax practices and interpretations many of which have now been either put under hold or review with intervention from the prime minister’s office.

As U.S. officials have pointed out, over the last 13 years bilateral trade has quintupled and there is optimism on both sides that it may quintuple again. Also, while there are concerns from the U.S. side on a number of issues from investment limits to control in various sectors and protectionist policies apart from intellectual property related issues, India has concerns about visa restrictions for high-tech workers immigrating to the United States and technology transfer in defence.

While speaking at the Bombay Stock Exchange in Mumbai, Biden stated that there was a need to increase bilateral trade and proposed three-way talks stating, “We are three big nations-China, India, and the United States-with our own perspectives. We have significant common interests, all three of us, and the entire region would benefit if we coordinated more closely. America and India have already built a trilateral strong dialogue with Japan. This past time we launched one with China.” Biden also had a roundtable discussion with select Indian business leaders.

The Indian business community seemed to agree with the issues raised by Biden about India’s business environment. Investments, both foreign and domestic, have significantly decreased in recent times with crucial sectors like manufacturing performing poorly. The Indian rupee has lost roughly 9 percent of its value against the dollar in recent months. While the Indian government has undertaken ways to achieve fiscal order through reduction of fuel subsidies, there have also been announcements around loosening restrictions around certain types of foreign direct investments.

It is important to note that U.S. companies have a significantly large presence in India with a large chunk of investments in India’s services, engineering, design and technology sectors leveraging the economic growth, liberalization and demographic dividend India provides. Yet recently, U.S. companies have found themselves in somewhat of a dilemma with unexpected regulatory, tax, and other policy issues that have forced them to voice their concerns in Washington circles for the U.S. to take them up with India.

While there were no big expectations on either side from this visit, it was clear that Biden was laying the groundwork for a summit between Obama and Singh this fall in Washington to strengthen bilateral cooperation. He also gave ample direction and thrust around areas for engagements, besides voicing concerns, on behalf of the U.S. investor community that has been and is still looking to invest in India.

Looking back at history and where we stand today, there is no denying the fact of the extraordinary progress that has been achieved in terms of the bilateral ties, trade and engagements besides mutual high level visits, despite the contradictions that exist on both sides.

Rameesh Kailasam is a senior director at APCO Worldwide based in New Delhi.

Official White House Photo by Pete Souza.