Valentine’s Day is an interesting choice for a date to conduct the commercial dialogue between Indian commerce and civil aviation minister Suresh Prabhu and US commerce secretary Wilbur Ross. India and the US seem to be caught in a long courtship and now bickering like partners. Overall, though, the promise for the future is strong.
In my role as US assistant secretary of commerce for global markets and director general of the US and Foreign Commercial Service (USFCS) in the Obama administration, I could get a good sense of commercial opportunities around the world. It was clear to me then — and is even clearer to me now — that US-India commercial engagement holds the most promise for both countries.
Under the previous government in Washington, there was an increasing preoccupation with the Asia Pacific, exemplified by the focus on the Trans-Pacific Partnership (TPP). That treaty has been since pulled down by the Donald Trump government, pulling the US out of it. The other 11TPP countries are moving forward without the US. Without TPP, the importance of India and the Indo-Pacific to the US is even greater.
Keeping geopolitics aside, the opportunities in India for US businesses are enormous. They compare only to those of the dotcom days in California. My message for US companies: if you’re not already in India, you need to be now.
India has surpassed Britain to become, in dollar terms, the fifth largest economy. It will not be long before India becomes the third largest economy. US venture capital investors have told me that after Silicon Valley, they see India as the best source of quality deal flow. US-India bilateral trade grew by over 10% in 2017 to reach $126 billion, making India the US’ ninth-largest trading partner.
But that’s not good enough. India accounts for far too little of the US’ trade. China’s trade with the US is six times larger than India’s. Another example is South Korea, whose bilateral trade relationship with the US is twice the size by volume than that between India and the US, while its GDP is 40% smaller than India’s.
Integrating value chains, starting with areas such as defence manufacturing, US participation in India’s infrastructure build out, increasing energy linkages and stepping up collaboration in innovation and entrepreneurship are some areas to focus on. India’s talent already enhances the competitive advantage of many US companies.
AUS India Business Council-KPMG report released last month (‘US-India Partnership: Road to Partnership’) identified 70 specific opportunities for US-India commercial engagement in eight areas, ranging from agriculture to manufacturing, and identified policy approaches for the way forward to unlock synergies.
Further, the engagement of India’s states is critical, as economic activity will increasingly be driven, as has been the case in the US, at the state level.
As we look to the future, India and the US represent increasingly attractive markets for each other. It is in the interest of both countries to see each other grow and prosper.
(The writer is CEO, KPMG India)