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Wednesday, 28 January 2015

INDO-US Relation and Early Jubilation

A win-win situation has emerged after a long deadlock in relationship in certain areas between India and United States. The open passion shown by US President Mr. Barack Obama and Indian Premier Mr. Narendra Modi is unprecedented given the coverage and eyeballs, it generated during pre and post Republic Day celebration in this year.
The response of Chinese Government to the overflowing emotions that run immediate in Indo-US relationship in media, has sounded another logic to the pro-US synergy coming out of such understanding. In fact of late India has won few diplomatic Politico-Eco tactical positions in her Global role and in safeguarding and promoting trade and capital flows for consolidating or stabilising her position in Global market.

The major worrying thing is promise of sharing the same space in partnering development with many such powers including China, Japan , of late Us and then perhaps in future EU especially Germany on technological front. New diplomatic zero-sum prisoner's dilemma syndromes may be emerging if China offers concessions in terms of issue based support to Pakistan, backing India's quest for permanent position in UNSC , peaceful existence with Japan and granting more soft loan assisted infrastructure development programmes to India.

Considering the incremental growth in demand for oil contributed mostly from China-India-US in the last 10 years , considering the size and changing nature of importance of interdependence among these three economies for safeguarding their growth as Europe is failing to pick up, and sidelining and sliding of Russia , cheaper Japanese loan option and possible techno-project management assistance, etc. India is better suited to bargain for a growth at cheaper cost.

For this, the beauty of the diplomatic balancing act lies in not over-emphasizing particular event /s. Media, planners, experts, analysts intelligentsia, politicians need to explore and highlight alternatives to pressurize interested partners of growth, so that the distribution and gains from such partnering will safeguard our interests with equal weightage. Same is applicable to Business interest group and share holders to look beyond profits especially to areas of new employment potentials, income generation to the economy and future gains from that. Potentials of Make in India need to fit into such matrix.

We have both untapped market and growing incomes and with savings pitched high at 28-30%. A few percentage swings in consumer confidence will add to consumption along with this higher investment may help us achieving 6 to 8 % growth in few quarters. With inflation under comfortable level, low oil prices , low metal and commodity prices in the International Market, gradual change in norms for labour dis-engagement in Industrial sectors, attempts towards energy sufficiency via solar and nuclear energy, market deregulation and easing of subsidies, we are gearing for comfortable ride in 2 years time. 

US economy is poised for revival as Household credit position revives along with savings by some sections of households. Income growth in both economies is definite to help bilateral trade to grow manifold. And India's opening up of Defense sector, growth in aviation, more space in banking, insurances, FMCG , technology driven support services, smart city concepts provide lot of avenues to US investments, expertise. It is a good news for Indian diaspora in US.

Funding of India investment becomes easier. Restrictions on movement of skilled manpower eases too. Right time for Dr. Raghuram Rajan to initiate and introduce further reforms in phased manner over next few years in capital control to make Rupee more stabilized at its normal and to withstand short run pressures. We may find aligning of monetary policies by major Central Banks in years to come. India can be peacetime ally to control the spread of funded terrorism, for which more concessions may be in the pipeline.

By :Prashant


  1. Advance pricing agreement empowers US companies to determine prior tax arrangements before investing in India.