Over the last few years, an often repeated opening line for Indian and US policymakers has been to state that the cornerstone of India–US relationship has been the shared value of democracy between the world’s largest democracy and the world’s oldest democracy.

US presidents, right from Bill Clinton, George Bush, Barack Obama and Donald Trump have used different and new variants of this refrain. What might be interesting to note here is, though India has been less active in the use of this buzzword, the overall sense that can be gathered is that the shared values of democracies indeed bind both our great countries together.

But is this still the case, or are we starting to see this relationship move in a different direction?

The India Story

Despite global uncertainty, India’s transformation story remains intact and the reforms momentum continues to gain and build traction. This has found support not only from the US but also from the European Union (EU) including the UK, Japan and others.

Balanced monetary and fiscal policies, along with the implementation of key structural reforms, have helped strengthen the macroeconomic fundamentals and has raised the bar for effective governance. India, today, is probably the only large economy with the potential to attain double-digit growth (ambitious, but an ambition the current government has been pretty vocal about) on the back of rising consumption-led demand, increased infrastructure spending and development.

Today, we are witnessing a growing share of the east in the overall global economic activity. This has largely been because of countries like India and China playing a bigger role in the Indo-Pacific region in what is now emerging as a strong new geopolitical construct.

For example, being the world’s third largest economy in terms of purchasing power parity (PPP) and second largest military base, India could look at exerting significant influence in shaping the international system, specifically in the Indo-Pacific region which will come to gain great importance in the coming years.

The India–US India Relationship: Current Scenario

Bilateral trade between both nations has grown exponentially (currently $120 billion+) and continued efforts are now being made to achieve a more balanced trade relationship. Both nations should now look at continuing and deepening the collaboration, working on strategic areas such as technology, defence, aerospace, infrastructure, healthcare, and energy.

This, in turn, will help in job creation, increased technology transfer, creating strong bilateral security scenario in the Indo-Pacific, and enhancing people-to-people ties. These steps will go a long way in creating stability and has the potential to become the defining economic partnership of the century.

Every relationship can be improved and the India-US dynamic still has a few areas that can be worked upon. For example, small businesses are expected to be a lynchpin when it comes to bilateral trade between India and US and efforts need to be made from both ends to create an investor-friendly eco-system to attract US investment in India and vice versa.

Further, both countries should look at cooperation at a subnational level, through the state to state and city to city cooperation, as this will come to be a critical factor for economic growth and will pave the way forward to steer the economic relationship in times to come.

US’ Role In India Achieving Its $5 Trillion Ambition

If India has to realise its India@75 vision by 2022 and its dream of becoming a $5 trillion economy by 2025, bold and transformative measures will have to be implemented by the government. They must be inclusive and to that effect, this will require a mindset shift that spans policy, projects and partnerships.

A critical success factor in this journey would be to create a strong and long-term partnership with the US, which could be the crucial pivot in helping India achieve this vision. The key would be to build consensus on views and sectors where there exists tremendous potential for collaboration for the US government and the private sector in India.

US’ alignment with India’s economic ambition offers varied collaborative opportunities, including in all forms of energy, technology and infrastructure, necessary to ensure this goal is met. For example, in order to leverage its demographic dividend and a large untapped rural market, it is imperative for the Indian government and the private sector to work towards building an affordable accessible healthcare ecosystem.

Through the Ayushman Bharat programme, US firms have an opportunity to invigorate the private sector in healthcare through capacity building of healthcare providers, conducting screening camps, and therefore helping develop innovative PPP models to address infrastructure and services demand.

There also lies great opportunities in strategic areas such as energy, where the dialogue on energy cooperation needs to be sustained and scaled up as it has the potential to help define the future. Large opportunities also exist in the digital space as India now is advocating greater participation by private players in commercial satellite operations, especially in providing broadband in remote areas. These are just some of the key areas where the US could help India realise the $5 trillion economy vision.

To sum up, the India-US relationship is distinctive as there exist great potential strategic and commercial interests that could be beneficial for both. Coming back to the question: are we now starting to see this bilateral relationship move in a different direction and becoming more strategic? I believe the answer to that is an unequivocal Yes — a balance between reaffirming democracy as a key consideration in the conduct of their foreign relations and commercial trade.

That said, both countries should work closely and increase cooperation in key interest areas such as defence, infrastructure, cyber and energy to boost this relationship in the coming years.

Nilaya Varma is partner and leader, Markets Enablement, KPMG in India.

First Published:Mar 26, 2019 5:47 AM IST