India must spend 20 years building its own capabilities in economic and defence, says President of the Washington-based US India Strategic Partnership Forum Mukesh Aghi, who attended the Global Entrepreneurship summit in Hyderabad this week.
What has been the impact of Ivanka Trump’s trip to India?
The immediate impact is there is much more awareness on a global basis that India is a fantastic opportunity for start-ups. And as the economy grows in the next ten years, start-ups will make a big difference, and hopefully India will build a strong ecosystem to develop the start-ups.
There has also been some criticism at the GES about the red carpet welcome, normally reserved for royalty accorded to Ivanka Trump, given that she is a presidential advisor. What kind of weight will her presence here carry back home in the US?
Well, I think you have to look at the weight she carried for China. During the election campaign, the President was very critical of China and Ivanka was the conduit for the Chinese to the President….and as you saw, a State visit took place in November. So while her title may be “advisor”, President Trump is all ears for her. And hopefully Ms. Trump will carry back a more hopeful response on the opportunities that exist in India.
How do you see the transition from the Obama administration to the Trump administration on trade ties? Is there continuity?
There is definitely some continuity. What we are seeing is much more openness on the transfer of technology. The best example of that is on the UAV or drones, something India has been asking for, for years. This President took a decision as India’s strategic partner to supply the drones and the best technology to India. I think that is a very positive sign. The trade deficit, which I think is quite small is not such a big issue. The two leaders (Pres Trump and PM Modi) are more interested in seeing how they can grow the geo-strategic relationship between India and the US.
Even so, concerns over the H1B visas, the cutting of financing renewable technology and the climate change agreement, as well as WTO disputes persist. More importantly, does the US President’s America First policy clash with PM Modi’s Make in India?
As the relationship deepens and broadens, there will be such disagreements. The US and Canada have more disputes at the WTO than anyone else. What makes a difference is the maturity in handling these disputes, which we are seeing. Strategically India and the US are aligned. India and US believe in the rule of law, want a stable world. So these disputes will have a limited impact.
I don’t think that America First and Make in India clash. In fact they complement each other, as we have seen with the fighter jets, that could be made in India, but the component parts will still come from the US, so jobs will be created in both countries. Today the civil aviation minister said that there are civilian orders for about 1000 plane orders are in the pipeline.
One area there hasn’t been a breakthrough is the civilian nuclear industry. Nearly three years after President Obama and PM Modi declared the Indo-US nuclear deal was done, we haven’t yet seen one agreement, or the first US dollar go into the sector….
I think that’s about priorities. For this government, renewable energy is important, but it is making a big push for solar energy technologies. The other thing is because Toshiba-Westinghouse went into bankruptcy, the process has been delayed. I believe it will come through eventually, once Westinghouse gets its house in order. But from an Indian perspective the growth is in the solar sector.
Do you think the liability question has been resolved yet?
I think the liability issue and the assurance given of private insurance (insurers pool) by the Indian government seems to be, and I purposely use the word “seems” to have satisfied the US companies. Yes, they would prefer a global standard of liability but at the same time , they seem satisfied that they can work around this. But until there is an agreement signed, [we cannot confirm this].
Finally what needs to be done really increase India- US bilateral trade, that is just over $100 billion for goods and services ($67.7 billion in goods, 2016), to the oft-repeated goal of $500 billion?
I think you have to look at what has happened in the US and China. A large investment has to come from the US into India, especially on the technology side. Indian investors have also upped their game, putting about $ 12.6 billion into the US last year. But I think what is going to bring the big leap is when India provides more market access to US companies. It is now happening with companies like Amazon, Uber and Google. They have a much greater market share here than they have in China. So atleast in the services sector, India has realized it is important to open up. And I think this is what is needed in the manufacturing industry, and [US investment] will come.
In India, many have trust issues with the fact that when it comes to trade, the US has a much larger relationship with China. How can you work around that?
First, India has to drive its economy at a very fast pace, and build its own defence manufacturing to be self-sufficient. India’s ecosystem will have to be built in partnership with the US, and maybe others like France, Sweden etc. One must remember that the US sees India as its partner vis-à-vis China. In my thinking India needs 20 years of unimpeded growth in the manner that China did, keeping the focus on building itself internally, both economically and in defence capabilities.
