Prospects for future collaboration with India? Insights into the Modi Government

Posted by on August 1st, 2014 | 0 Comments »

By Edona Dervisholli and Margaret Zeigler

The world’s largest democracy, India, received a lot of attention over the past few months because of the recent election to power of the BJP (Bharatiya Janata Party). On May 26, 2014, the BJP party leader, Narendra Modi, was sworn in as the 15th Prime Minister of India.  This new leadership comes to office with a strong focus on growing the economy and investing in infrastructure.  Now in office, the first realization of economic promises is the new budget, which seeks to attract more foreign investment and capital.  Within India’s global economic aspirations, what is the future of U.S. and India relations?

GHI’s 5th annual Global Agricultural Productivity Report® (GAP Report®) will have a special focus on India.  The rising incomes of the world’s second largest nation, along with shifting monsoon patterns and decreasing water availability, will create unique challenges for India in the coming decades as the country seeks to provide sufficient nutritious food for its 1.2 billion citizens.

2014 GAP Report Save the Date

On Wednesday, July 24th, 2014, the Asia and Pacific Subcommittee of the House Foreign Affairs Committee held a hearing titled “U.S.- India Relations under the new Modi Government.” Members of this committee questioned two witnesses, the Honorable Nisha Biswal, Assistant Secretary from the Bureau of South and Central Asian Affairs at the U.S. Department of State, and the Honorable Arun Kumar, Director General of the U.S. and Foreign Commercial Service and Assistant Secretary for Global Markets within the International Trade Administration at the U.S. Department of Commerce. These two experts provided insight into a range of economic and strategic potential for the US and India relationship under Modi’s government.

Both witnesses remarked on the reasons why a partnership is desirable and also on the particular ways in which the U.S. and India can collaborate. In their opinions, it is vital that the relationship between India and the U.S. stays on good terms because India and the rest of Asia make up an enormous percentage of global market share and GDP. Both nations need to collaborate for a better future in economic and trade partnerships, energy and innovation, security, and regional cooperation. Greater collaboration will encourage other regional leaders to cooperate in the same way for a more prosperous future.

Members of the committee expressed their concerns in terms of growth trends and India’s aging or inadequate transportation and trade infrastructure, power availability, internet connectivity, and even basic resources such as access to water. As these internal challenges remain, the committee also remarked on India’s relationship with other nations, particularly those such as Russia, that differ with the U.S. on key global strategic issues.

The witnesses clarified that the Obama Administration will work hard to build on the foundation established by the Bush Administration over a decade earlier for greater trade and economic partnership between the U.S. and India.  Since 2002, trade between India and the U.S. has grown five-fold from nearly $20 billion annually to nearly $100 billion today. As of 2013, the total agricultural product value imported from India to the U.S. was roughly $4.7 billion dollars, while the value of U.S. agricultural exports to India was nearly $1 billion (USDA Foreign Agriculture Service, 2014, Global Agricultural Trade Online (GATS)). These figures highlight the overall trade potential and while agriculture is a smaller component, there is room for more growth. The September State visit of Prime Minister Modi to the U.S. may include an address to a joint session of Congress and will provide an opportunity for greater dialogue to forge increasing trade partnerships.

 

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