Growing Convergence, Collaboration & Cooperation between United States and India
Above: Prime Minister Modi speaks at USIBC's event in Washington, D.C. (September, 2014)
The constitutions of both India and the United States of America begin with the words “we the people”. These three words define the values of our democracies. The ideals of democracy, liberty, and equality bind the two nations together. Leaving behind the distrust and suspicion garnered in the Cold War era, the two countries have since forged a deep partnership of economic and geopolitical significance. The U.S.-India commercial and strategic relationship supports global security, promotes economic growth and creates jobs for both countries and the global economy. Today, as we witness a paradigm shift in the erstwhile global order, an opportunity has emerged for both countries to set new standards in bilateral ties that will be bound by their shared values.
The U.S.-India relationship is grounded in two fundamental principles:
India’s economic prosperity is in the strategic interest of the United States;
India’s military strength is a bulwark of stability in Asia, which is vital to the global economy and international security.
As the new U.S. administration resets domestic and international policy, both countries must establish goals for deepening the bilateral relationship and develop mechanisms to implement their common vision for the coming years. Formed in 1975 at the request of the U.S. and Indian governments, the U.S.-India Business Council is the premier business advocacy organization, comprised of 400 top-tier U.S. and Indian companies, advancing U.S.-India commercial ties. Over the past 40 years, the Council has served as the direct link between business and government leaders, forged consensus, and played a proactive role by being the voice of industry on both sides, thereby enabling growth in trade and investment between India and the United States. In addition to advocating for pro-growth trade policies, USIBC provides Indian and American decision-makers a platform for engagement and negotiation. This document highlights certain commercial and strategic priorities that are the pillars of the U.S.-India partnership. We encourage both governments to consider these areas of cooperation as the initial rounds of engagements take place.
Pillars of U.S.-India Partnership
The growth in U.S.-India defense trade mirrors the growing convergence of American and Indian defense interests. Having risen from just $300 million just over a decade ago to $15 billion today, U.S.-India defense trade is booming. India’s planned defense procurement for the next decade is over a quarter trillion dollars, which is a tremendous market opportunity for U.S. companies. India’s build-out of a defense industrial base is a chance for both countries to advance co-production and capacity building and can serve as a win-win opportunity. This can also be viewed as an opportunity for the U.S. Department of Defense to procure certain quality products from India thereby reducing its own procurement costs.
Towards this end, India’s status as a “major defense partner” has already eased technology transfer processes but further streamlining is required. India needs to go a step further in its ease of doing business environment and create a vibrant ecosystem that will allow private sector companies an opportunity for high technology partnerships.
India imports 70% of its energy requirements which is growing exponentially along with its economy. The U.S. has become a net exporter of energy since the domestic shale gas boom. Strengthening mutual energy security and promoting stable energy markets to ensure adequate supplies of energy will support desired levels of economic growth in both countries. Greater collaboration between the two nations in electric power, oil and gas, renewable energy, civil nuclear energy, coal and innovative new technologies is a win-win for both nations. India’s consumption of energy will substantially grow as its villages use more electricity and the cities develop further. It is necessary to reduce India’s dependence on energy imports from the Middle East. The action items outlined below build upon existing collaborations and enhance mechanisms for information and technology exchange, but additional dialogue with industry participation will be required to further define, enhance, and accelerate collaboration activities.
As part of the U.S.-India Energy Dialogue framework, develop new avenues of collaboration that include increased industry participation with the previously established Coal Working Group, Oil & Gas Working Group, and the Power and Energy Efficiency Working Groups that were formed to support the Energy Dialogue.
Innovation & Entrepreneurship
In Silicon Valley, one out of almost four start-ups are owned by entrepreneurs of Indian origin. India sends more than 150,000 students to the U.S. annually. The number of Indian students studying in the United States has grown by nearly 31% from 2015-2016, a demonstration of the value that Indians place on high quality degrees received from American universities. These students not only play a pivotal role in STEM education, but also pay full tuition fees making it easier for colleges to subsidize the education of local American students. Today the demand for STEM graduates is approximately 120,000 students whereas the U.S. universities graduate only 40,000 students. It is important for the U.S. economy to absorb these students into the job market and find ways to fulfill the demand of U.S. corporations. The United States and India should form a partnership between universities and corporations to collaborate on innovation, building on the U.S.-India Higher Education Dialogue. It is critical for India to leverage U.S. venture capital and experience to help grow the burgeoning start-up eco-system. Specific tracks on R&D can be prioritized such as those on health care, information technology, energy, and space and satellites.
Infrastructure Investment & Collaboration
India needs to invest a trillion dollars to build its infrastructure. This is a strong opportunity for U.S. capital and technology investment. Infrastructure investment could be in waterways/ highways/ airports/ buildings/ urban development. India in partnership with the U.S. can leapfrog the traditional model of urban planning. U.S. companies in many service areas with Project Management, Architecture & Design, and Engineering capabilities are extremely competitive in sectors ranging from Energy to Transportation to ICT. These companies are known for quality, innovation and standards that transcend a project's life cycle. A reverse opportunity also exists for world-class Indian engineering firms to seek investments and provide cost effective solutions in the U.S., as they begin the process of upgrading their core infrastructure like roads, bridges, and airports. Robust financial markets are critical to supporting the growth infrastructure. U.S. investors remain keenly attuned to investment opportunities in the Indian financial markets as they seek a wider range of investment products and balanced regulations that ensure transparency and protection for their investments. These institutional investors also bring benefits to the Indian companies in which they invest. As seasoned investors, they are well-suited to evaluate the companies’ performance and demand a higher level of corporate governance and transparency with shareholders, all of which positively impact companies’ operations.
The infrastructure build-out underway in India has created tremendous opportunities for American companies. In turn, the upgrade of American core infrastructure underway will provide an opportunity for Indian engineering companies to provide world class solutions at competitive prices.
U.S. investors can allow access to innovative forms of much-needed capital in a timely manner, spurring growth in Indian companies. Indian financial markets, in turn, also provide U.S. investors with a critical opportunity to diversify their investments and lower risks in their portfolio. Therefore, collaboration and harmonization of standards for cross-border investment in the financial markets remains a key opportunity for growth for investors and companies in both markets.
India’s ambitious agenda for developing 100 Smart Cities provides an unprecedented opportunity for U.S. companies to invest and provide their best technology and services.
Affordable and efficient healthcare systems
Both countries face challenges in providing superior healthcare to citizens at the most affordable costs. India can leapfrog to a more efficient system by learning from the evolution of healthcare in the U.S. The U.S. can leverage the huge cost saving provided by the Indian pharmaceutical companies that are producing world-class generics. India is also driving innovation in healthcare delivery models which the U.S. may want to adopt to create greater efficiencies in the system. Therefore, we suggest:
A framework for healthcare cooperation would allow both countries to share experiences, technologies and best practices. This would be a framework for innovation and collaboration.
Global Leadership in Cyber Security
Cyber-attacks plague both nations. This is an uncharted territory that has no defined global rules and enforcement. India with its vast resource of IT professionals, and the U.S. with its position as a technology and enforcement leader, can develop a trans-national agenda for rules and regulations to avoid cyber terrorism and potential physical war. We suggest the following:
The U.S. and India should take the lead in creating a common code of conduct and regulations in the cyber world to avoid future conflict between nations stemming from cyber-attacks. To that end, work should begin by streamlining and ensuring there is a system in place for timely and adequate exchange of information in the event of a cyber-attack or cyber-crime.
Continue the annual U.S.-India Cyber Policy Dialogue in coordination with the White House, Prime Minister’s Office and U.S.-Indian IT companies.
Establishing an ethical hacking center.
Trade and Job Creation
Above: Amazon CEO Jeff Bezos with Prime Minister Modi at USIBC's 41st Annual Leadership Summit, where Amazon announced $5 billion investment in India. (June 2016)
U.S.-India trade has tripled over the last decade, reaching a historic high of nearly $110 billion in 2015. But the potential is much greater. USIBC encourages the United States Government and the Government of India to negotiate a bilateral investment treaty (BIT) that promotes the free flow of economic resources – capital, people, and technology. This is a critical step to unleash the full potential of industry in both countries. The process of treaty negotiation would provide a platform to resolve deadlocks and challenges on issues such as totalization, the high-skilled work visa program, intellectual property protection, and product conformity by aggregating the benefits and mitigating costs.
There is an opportunity for both countries to also sync their regulatory and standards system to increase trade and investment. The more convergence there is on standards, the more jobs and prosperity will likely be created in both nations. This is a critical foundation for more collaboration in technology.
Partnership to Counter Global Terrorism
Both the United States and India have been victims of persistent global terrorism. It is in the interest of both nations to pursue a convergent and collaborative strategy to counter terrorism. As democratic and pluralistic countries, the United States and India should partner across the spectrum of efforts that include diplomatic engagement, military coordination, intelligence sharing, and law enforcement cooperation. To this end, we suggest:
Expanding the U.S.-India Homeland Security Dialogue homeland security cooperation program including training exercises and capacity building.
Setting up a framework for interaction between Special Forces.
Conducting joint rescue operations from war zones.
Developing mechanisms for enhanced intelligence sharing.
Stabilizing Afghanistan and Promoting Maritime Security across the Indo-Pacific Region
Cooperation between the U.S. and India to stabilize Afghanistan is a win-win scenario for both countries. India has long supported Afghanistan’s political stability and economic development. India is the fifth largest international donor of development assistance and has pledged $2 billion in humanitarian support towards Afghanistan. As the U.S. reviews its posture in Afghanistan, it should work closely with India and other countries in the region to promote economic development, support the government in Kabul, and maintain security.
Looking East, the aggressive and assertive posture of China in the Asia-Pacific region creates additional vulnerability. At the geo-strategic level, U.S. and India’s interests converge primarily because of the shifting balance of power in Asia caused by the growth of Chinese military power. This reality has created a strong Indian military – one that can resist external coercion and is in the interest of the United States. For example, forty percent of the trade in the region passes through the Strait of Malacca near India’s Andaman Islands. India can play a much larger role in protecting these sea routes and it is important to maintain open navigation lines between both nations. In addition, regional connectivity via land routes is also critical as India is the gateway to Myanmar and South East Asia in the east and Afghanistan in the west. Therefore, we suggest:
Creating a Track 1.5 Trilateral U.S.-India-Japan forum that provides an opportunity for stakeholders from the three countries to discuss pressing issues including national security, economic prosperity, and societal well-being. A next step in this could be creating a forum for trilateral cybersecurity conversation.
India today is the largest contributor to the U.N. Peacekeeping forces around the world. The large manpower of these highly trained armed forces can play an important role as a regional stabilizer in partnership with the United States. Joint military and naval exercises are already being conducted between the two countries and should be expanded.
The U.S. should continue its support for India’s permanent membership on the United Nations Security Council. The U.S. should also continue its efforts in support of India’s membership in the Nuclear Suppliers Group (NSG).
History, geography, culture and shared values have made the United States and India natural partners. This hasn’t always been reflected in national politics and foreign policy, but the evolution of global geopolitics has led to an unprecedented convergence of the vital interests of both nations. The commercial imperative for closer U.S.-India ties is unequivocal for American companies seeking to do business in a dynamic India, the fastest growing large economy in the world. The strategic imperative for a deeper cooperation between the two countries is indisputable: China’s military buildup and its assertive posture in the Asia Pacific, the need to address regional security threats in South Asia, increasing cyber security challenges and the vital partnerships that link India, Indian-Americans, and America’s industry. The list of common challenges and shared opportunities is long. We urge both governments to seize the moment to deepen and solidify this vital relationship.
Full paper can be downloaded below.