The relationship between India and the United States was considered one of the most important of the 21st century.
India is expected to be the second-largest economy in the world by 2030, with the US becoming the third-largest economy, giving it strong purchasing power. However, cultural and political barriers remain obstacles to a coherent trade partnership, as highlighted in "Trading Against the Tide," a discussion at the India Economic Summit of the World Economic Forum.
Piyush Goyal, Minister of Trade and Industry, said India has committed to protecting the needs of its many small retailers.50-60 million small retail businesses provide employment and job opportunities for some 120 million people. However, the US is by no means convinced that this is in the interests of both countries.
India has changed its foreign direct investment policy to allow foreign-owned e-commerce companies to continue to provide a marketplace for buyers and sellers, but stop selling their own goods.
Bricks and Mortar or Global Online Trade?
We can not let the small retail trade die, so we limited foreign direct investment in multi-brand retail to 49%, "Goyal said at the summit, adding that electronic commerce should not provide a platform for predatory pricing. However, his US counterpart, US Secretary of Commerce Wilbur Ross, argued that protecting small stationary retailers would ultimately put India at a disadvantage.
If India still has as many small retailers as it does today in a hundred years, it would have stunted the nation's growth, "he said. Ross pointed out this week that Amazon has announced it will spend a third less on investment in India this year - the first time that its annual investment in India has fallen since it entered the market in 2012. It would probably have spent a lot more in India if it did not feel that growth has slowed due to some [India's] policies, "Ross told the summit. So there are those costs for India through politics.
The road to New Delhi
While recent talks between India and the US have not resulted in a new trade agreement, trade relations between India and the US are rapidly increasing. Trade-in goods and services grew at an average annual rate of 7.59% from 2008 to 2018, doubling its value from $ 68.4 billion to $ 142.1 billion.
The US was the second-largest trading partner for India and the largest export destination in 2018. Bilateral trade and bilateral investment between India and the US continues to increase.
At the summit, Ross noted that the US intended to increase overall trade and reduce the trade deficit, and expressed its concern about what he called "artificial and protectionist" trade barriers. But he expressed his optimism about future trade relations between India and the US and said that after the elections, Prime Minister Narendra Modi has "a clear, strong position in parliament, it should be much easier to take determined action".