Manufacturers Hopeful New Administration, Congress will Reinvigorate Efforts to Strengthen U.S.-India Economic Relationship

By Linda Dempsey, Vice President of International Economic Affairs

As a new Congress kicks off, and as the new administration takes the reins with stated priorities of boosting manufacturing in the United States, now is the right time to assess the state of the U.S.-India economic relationship. The National Association of Manufacturers (NAM) joined 21 other trade associations in a letter today to Congressional leadership urging them to work to support a robust, reciprocal U.S.-India economic relationship that creates commercial opportunities in both countries and meaningfully addresses outstanding issues impacting manufacturers in the United States.

As the world’s largest economy and one of the world’s fastest growing major economies, the United States and India are natural trade partners with enormous economic potential. The two sides have significantly expanded their engagement on a range of issues – but the economic and commercial relationship continues to underperform. To realize the potential, the two sides must address ongoing challenges that have negatively impacted u.S. jobs and competitiveness.

Two and a half years ago, Indian Prime Minister Narendra Modi took office with promises to improve the business environment in India, and set out to improve the general environment for doing business in India that would make progress toward achieving those ends. The U.S. business community and government has worked hard to assist the Indian government in reaching these goals through numerous dialogues and trade forums. These dialogues and reform efforts have spurred some steps in the right direction, including foreign investment openings, key energy and defense initiatives, permitting and licensing, and passage of bankruptcy and tax legislation.

As explained in the letter, however, policy changes to address other longstanding barriers, remain elusive. For example, manufacturers in the United States face a range of roadblocks that prevent them from competing on a level playing field. Such issues include high tariffs, forced localization measures, poor protection of intellectual property rights, challenging processes to obtain government approvals and licenses. These barriers make India a challenging business climate to do business in – as evidenced by India’s ranking of 130th in the World Bank’s most recent Doing Business Report.

In contrast to persistent issues in India that prevent manufacturers in the United States from competing on a level playing field, the U.S. market remains open to Indian companies. As a result America is the largest destination for Indian exports, yet India is not even among the top 15 destinations for U.S. exports ranking behind much smaller economies like Singapore and Belgium.

The new administration and Congress must use all available channels – including cooperative programs, commercial dialogues, and trade enforcement mechanisms – to promote concrete policy changes that work towards the full economic potential of the U.S.-India commercial relationship and address these issues. Businesses and manufacturers here in the United States strongly support a fair and constructive U.S.-India relationship – but deserve the opportunity to compete on a fair and level playing field in India and across the globe.