An occasional white paper by the U.S.-India Business Council and ELP
COVID-19 has revealed the vulnerabilities of well-established international supply chains and acted as a catalyst for companies to reconfigure value chain networks with a focus on resiliency and reliability. With India – and the rest of the world – still combating an unprecedented global pandemic, it is more important than ever to implement policies and practices that ensure the safety of our citizens, support economic reopening, and create a business environment that will support strong future growth.
To that end, the U.S. – India Business Council (USIBC) and Economic Laws Practice (ELP) conducted a survey of USIBC member companies to solicit recommendations on the policy reforms, regulations, and incentives that will make India a more attractive investment destination. The USIBC membership includes some of the world’s largest multinational companies, and this report represents a cross-section of those companies, with inputs drawn from every major sector.
USIBC and our members have worked extensively with the Government of India (GoI) to achieve shared economic and development goals. This report seeks to continue that partnership and support the inbound investment that can serve as a foundation for future economic growth and prosperity.
A report on U.S.-India bilateral trade growth by the U.S.-India Business Council and the Confederation of Indian Industry (CII)
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$500 billion in two-way trade has come to be a shorthand for the aspirations of policymakers and industry leaders focused on growing the U.S.-India commercial partnership. USIBC Chairman Terry McGraw first unveiled the $500 billion target in 2012, and the idea took on momentum following then-Vice President Joe Biden’s visit to the Mumbai Stock Exchange in 2013. The timing was no accident—U.S.-India trade figures quintupled in the first decade of the 2000s, demonstrating the relationship’s vast potential.
Since 2014, when the U.S.-India Joint Statement formally cemented $500 billion as a shared bilateral goal, U.S.-India bilateral goods and services trade has grown from $105 billion to $142 billion. In 2018, the U.S. and India ranked as each other’s ninth and third largest trade partners, respectively. Recent reforms have catapulted India’s standing in the World Bank Ease of Doing Business ranking to 77th globally—the top ranked country in South Asia—and a sweeping slate of economic reforms unveiled by the Modi 2.0 government promises to make trade and investment by foreign companies easier than ever. The outlook is bright for business in India.
Still, more progress is needed to unleash the full potential of the economic relationship. The Confederation of Indian Industry (CII), the U.S. Chamber of Commerce’s U.S.-India Business Council (USIBC) and our members stand ready to work with stakeholders to address existing challenges. Together, we focus on connecting businesses and governments to address barriers to trade, accelerate investment, enhance cooperation and make ‘$500 Billion’ a reality.
As the United States and India continue to bolster strategic, defense and people-to-people ties, we believe it is critical for the two countries to address trade irritants proactively to avoid casting a shadow on the positive trajectory of the U.S.-India partnership. We have held extensive consultations with industry executives, thought leaders, and policy experts, and created a roadmap of recommendations to share with our respective governments and the larger global business community.
Innovation in both new and existing industries—and support in both countries to help businesses thrive and grow—will be key to delivering on this longstanding goal. We see boundless opportunity for collaboration in the digital economy, aerospace and defense, energy, infrastructure, and manufacturing sectors, all driven by next-level technology and innovation and cemented by our shared values and people-to-people ties. In this report, we provide an assessment of current trends in U.S.-India trade and the policy moves that will push the relationship towards faster growth, as well as several case studies of growth in areas outside of the traditional industry verticals. We hope that government officials, industry leaders and independent policy analysts alike will find this assessment useful as we work to achieve our shared goal of $500 billion.
This work was supported by the U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy, International Program under Contract No. DE-AC02-05CH11231.
India launched the Energy Conservation Building Code (ECBC) in 2007, and a revised version in 2017 as ambitious first steps towards promoting energy efficiency in the building sector. Pioneering early adopters-—building owners, architecture and engineering firms, and energy consultants—have taken the lead to design customized solutions for their energy-efficient buildings. Building Innovation- A Guide for High-Performance Energy Efficient Buildings in India offers a synthesizing framework, critical lessons, and guidance to meet and exceed ECBC. Its whole-building lifecycle assurance framework provides a user-friendly methodology to achieve high performance in terms of energy, environmental, and societal benefits. Offices are selected as a target typology, being a high-growth sector, with significant opportunities for energy savings. The best practices may be extrapolated to other commercial building sectors, as well as extended to other regions beyond India with similar cultural, climatic, construction, and developmental contexts.
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The Modi Administration has made ease of doing business – most clearly quantified by the World Bank’s annual Ease of Doing Business Report – a cornerstone of efforts to attract new business and investment. Given this focus, the U.S.-India Business Council partnered with Khaitan & Co., one of India’s oldest full-service law firms, to develop a list of targeted recommendations designed to make India’s economy more business-friendly and support the country’s expansive economic growth.
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Regulatory and policy reforms have been at the top of the agenda for Prime Minister Narendra Modi and the NDA government since 2014. Over the past five years, the government has carried out numerous reforms aimed at improving the ease of doing business in India.
As a testament to the success of these reforms, India climbed 75 spots during PM Modi’s first term, reaching 77th in the World Bank’s 2018-19 Ease of Doing Business report. The Government of India has set the goal of improving its ranking to 30th spot by 2020.(1)
The U.S.-India Business Council and Khaitan & Co, one of India’s oldest and largest law firms, offer the following suggestions for reforms that we believe will significantly increase India’s status as a global leader in business. We see these reforms as easy and quick-to-implement solutions to procedural and regulatory challenges facing domestic and foreign-based businesses. This report is presented from the perspective of lawyers, who are often key figures influencing a company’s decision to invest in India.
These recommendations are based on our research and experience, supplemented by discussions with Indian and U.S. lawyers, including in-house counsel for some of the leading Indian and multi-national companies doing business in India.
It is our view that these recommendations are in line with the Government of India’s already significant success at enacting economic reforms. If implemented, we believe that will improve ease of doing business in India and propel the growth of foreign direct investment (FDI) from the international business community.
For ease of reference, we have classified the reforms into three broad categories:
In July 2019, the U.S.-India Business Council produced a set of recommendations for Prime Minister Narendra Modi and the newly elected NDA government. These recommendations are designed to highlight the economic policies that will propel the Indian economy towards the shared goal of $500 billion in two-way trade between the United States and India.
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The U.S.-India Business Council and the U.S. Chamber of Commerce congratulate Shri Narendra Modi on his election to a second term as Prime Minister of India. Under the Prime Minister’s leadership, U.S.-India business relations have strengthened considerably, with U.S. foreign direct investment (FDI) into India increasing to USD 44.5 billion in 2017, a 15.1% increase from 2016.(1) At the end of 2018, the United States was India’s fourth largest source of FDI, contributing 6% of total FDI inflows.(2)
The United States and India have much in common, including a common set of values, robust democratic systems, and cultures of entrepreneurship. Our countries also enjoy longstanding peopleto-people ties that make them natural strategic partners. As leaders around the globe reconsider their approach to global trade and investment, both nations can and should do more to achieve the shared goal of USD 500 billion in two-way trade.
Despite messages to the contrary, the trade trajectory is positive, with bilateral goods and services trade growing 12.6 percent in 2018 to reach USD 142 billion. Still, significant untapped potential remains in the U.S-India commercial relationship. Business-friendly policies can unleash upwards of USD 150 billion in trade over the next 5 years, as resolution of regulatory issues impacting trade and investment by both U.S. and Indian companies opens the door for more expansive growth.
USIBC stands ready to support Prime Minister Modi and the Government of India in efforts to develop the economic policies that will transform India’s economy and create millions of high quality jobs. In preparing the following recommendations, USIBC held consultations with both U.S. and Indian members to identify impediments to business and critical areas for regulatory reform. We are confident that action by the new Government of India to address these issues will propel the Indian economy forward in the next five years.
Within our recommendations, we have identified priority reforms that are likely to significantly improve ease of doing business for U.S. and multi-national companies operating in India. These recommendations touch on both broader government policies and more specific sectoral regulations that can help maximize and leverage India’s global trade advantages. We are optimistic that the NDA government will recognize these as priority areas of work for the administration’s first 100 days, and take action to push the U.S.-India commercial relationship to new heights over Prime Minister Modi’s 2019-2024 term.
Energizing India: Fuelling a Billion Lives brings together top global energy experts, academics and policy makers, contributing an insightful and engaging compilation of essays on the various facets of energy-related issues in India and the world.
Edited by Shreerupa Mitra, this book comes at a time when global energy consumption is seeing unprecedented growth while new sources of energy are gaining currency and old ones are threatened by geopolitical upheavals. The illustrious list of contributors include Nisha Biswal, Kirk Smith, Bob Dudley, Daniel Yergin, Fatih Birol, Dharmendra Pradhan, Mohammad Sanusi Barkindo, Anil Kakodkar, Arvind Panagariya and Anil Jain among others. The essays also elucidate and assess India’s position in the global energy landscape by taking into account current world politics. The book examines the idea of energy justice with a focus on sustainability, affordability, infrastructure expansion and issues associated with climate change.
In her chapter, “Powering the U.S.-India Relationship,” U.S.-India Business Council President Nisha Biswal discusses the pursuit by both countries of “all-of-the-above” energy strategies to maximize energy access and energy security both domestically and abroad. Since 2005, the US and India have engaged in a productive bilateral energy dialogue, and over the past decade that dialogue has expanded as leaders is successive administrations prioritize energy-focused collaboration. The strategic and commercial role of energy between India and the United States was reaﬃrmed and elevated during President Trump and Prime Minister Modi’s 2017 meeting in Washington, when the two leaders announced the US–India strategic energy partnership. Amid a number of large-scale energy initiatives, private sector players of both countries will be essential to closing the investment gap and providing input to policymakers.
You can purchase a copy of Energizing India: Fuelling a Billion Lives on Amazon