US fails to understand India's development needs: CII
24 January 2015
A lack of understanding on the part of the United States about the development needs of India is hampering progress in bilateral economic relations, the Confederation of Indian Industry (CII) has said.
Beyond the issues of market access and return on intellectual property, CII said, India should worry more about creating jobs for millions even as industrialisation in the country benefits overseas investors more.
CII said India has now opened up almost all sectors of the economy for foreign investment and offers a huge market for investors. US companies can also use India as an export base.
In a report published ahead of US President Barack Osama's India tour, CII has identified areas like defence co-production, Digital India, higher education and skills training as areas for `Make in India,' collaboration between the two countries.
"US companies can play a role in using India as a gateway for exporting to countries in Asia and beyond, leveraging India's FTAs (free trade agreements) in Asia. Industry could partner with Government of India to organise `Make in India' roadshows across the US, where the value of manufacturing in India could be clearly demonstrated," CII said in its US-India report.
The two countries could also cooperate in development of industrial corridors, engaging small and medium enterprises, joint R&D, attracting infrastructure investments, infrastructure financing, technology, renewable energy and smart cities, CII said, adding that the Modi government's `Clean India' programme offered an ideal area of bilateral cooperation.
"The perception in the US seems to be that India is curtailing market access for US companies. Issues such as the civil nuclear agreement, FDI in multi-brand retail, taxation demands and others are gaining mind space in the US administration, and US companies have pushed their own agenda substantially to the detriment of the overall relationship".
"This has resulted in Congressional and trade enquiries into Indian trade practices, placing the country on a wrong footing. There appears to be insufficient understanding of India's development concerns particularly on areas such as food security, job creation, and need to drive industry as an instrument of economic progress," CII said.
CII noted that almost all large US companies have a footprint in India. However, it said, FDI from that country totaled only $13.3 billion between April 2000 and November 2014. the US is the fifth largest source of FDI in the country.
Over the last three years (2010-11 to 2013-14), FDI from US to India trickled to just $1.6 billion. The trend, however, saw a reversal with $1.36 billion coming in between April-November 2014, CII noted.
CII now sees green light for India-US economic cooperation with some improvement in bilateral understanding of issues that are important for expanding cooperation.
''We are indeed happy that India and the US had successfully resolved the issues relating to public stock-holding for food security purposes. Indian industry looks forward to closure on this issue at the WTO General Council meeting next month, thereby allowing the Bali package to move forward,'' Ajay S Shriram, president of CII, stated.
Industry lobby PHD Chamber of Commerce and Industry, which is more optimistic, said on Friday that President Obama's visit would further enhance India-US bilateral trade, which is set to reach $100 billion by 2018.
"I believe the forthcoming visit of US President Barack Obama would further enhance economic and business linkages between India and US and lead to a win-win proposition for both in terms of improving investors' confidence," said Alok B. Shriram, president, PHD Chamber of Commerce and Industry.
"The new government is pro-active and progressive for undertaking strategic initiatives for ease of doing business so as to provide conducive business environment to the prospective investors."
India's exports to the US have risen from $9 billion in 2001-02 to around $39 billion in 2014-15, with the US remaining India's top export destination throughout the years, as per commerce ministry data.
India's import from the US also recorded a steep rise from $3 billion in 2001-02 to $22 billion in 2014-15.
Overall, bilateral trade between India and the US rose five-fold from $12 billion in 2001-02 to $62 billion in 2014-15.