Washington: Bullish on expanding economic ties with India, the US on Sunday said bilateral trade has reached USD 109 billion and it will get a further boost from new reforms including GST even as it flagged persisting concerns American firms have on issues related to business climate in the fast-growing economy.
US Commerce Secretary Penny Pritzker, who will be on a 3-day India visit from Monday, also said that travel and tourism and sub-national engagement have been identified as two new areas of focus to drive commercial cooperation between the two countries in 2017, under which the focus would shift from India and the US to Chennai and Charleston.
She said the Obama Administration in the past seven-and- a-half years has made significant progress toward realising the potential of what could be one of the largest commercial relationships in the world.
"Our two countries enjoy a thriving trade and investment relationship. US-India bilateral trade reached USD 109 billion in 2015, up from USD 37 billion in 2005.
"US and Indian companies are also investing in each other's economies at record levels. In 2015, US investment in India reached more than USD 28 billion and Indian investment in the United States reached more than USD 11 billion. In fact, US affiliates of Indian-owned firms now employ more than 52,000 workers in the US," Pritzker told PTI in an interview.
She exuded confidence that "India's rapidly growing economy and the Modi government's ambitious reform agenda, including the landmark Goods and Services Tax, passage of the recent national bankruptcy law, and liberalised foreign direct investment limits in key sectors, point toward a deeper economic relationship in the years ahead."
Asserting that there is a tremendous potential for the US and India to achieve even more together, the Secretary said she is particularly excited over two new areas of focus that will drive their cooperation in the coming year -- travel and tourism and subnational engagement.
She described increasing the number of travelers who move between the US and India as a significant commercial opportunity. More than 1 million people travel between the two countries each year.
"While that figure is strong, there is certainly potential for growth," she added.
On sub-national engagement, Pritzker said: "Both US and Indian states play a vital role in driving economic growth and setting business climate policy. Companies choose to invest in Charleston, South Carolina or Chennai just as much as they select the US and India."
Pritzker said Prime Minister Narendra Modi's commitment to host the 2017 Global Entrepreneurship Summit will highlight India?s strong culture of innovation on the global stage and provide Indian entrepreneurs with an exceptional opportunity to meet with top investors and network with their international peers.
Pritzker, who has been the US Secretary of Commerce for over three years and is a key member of President Barack Obama's economic team, will be travelling to India for the second US-India Strategic and Commercial Dialogue and the US-India CEO Forum.
During the visit, she will meet Indian entrepreneurs and participate in an event celebrating US-India cooperation on travel and tourism. India and the US have decided to be Travel and Tourism Partner Countries in 2017.
On whether the Modi government has delivered on its target of improving ease of doing business score and the feedback from the US companies operating in India, she said: "We welcome Prime Minister Modi's ambitious efforts to improve India's business climate and enable greater trade and investment. The recent passage of the Goods and Services Tax, for example, is a truly historic accomplishment with potentially far-reaching benefits for the Indian economy and our expanding bilateral trade and investment partnership with India."
She added: "However, the GST is just one in a series of steps the Indian government has taken to improve the ease of doing business in India. Since taking office in 2014, the Modi government has passed the national bankruptcy law, raised foreign direct investment caps in sectors including defense and insurance, established commercial courts, and ratified the WTO Trade Facilitation Agreement.
"On infrastructure, the Modi government has established Special Purpose Vehicles for smart cities, promoted municipal bonds for urban development, and launched a National Infrastructure Investment Fund. We applaud these reforms and urge the Government of India to prioritise their full implementation."
She further said that while the US companies have responded positively to these efforts, they also continue to raise concerns about persistent business climate issues that impede greater trade and investment between our two countries.
Pritzker said: "These include unclear tax policies, burdensome regulations, inadequate protection and enforcement of intellectual property rights, and onerous localization requirements. Companies seek a more transparent and predictable policy environment, including consistent notice and comment procedures in the rule-making process, in order to plan investments and inform long-term business decisions.
"Industry also sees promising opportunities to facilitate trade further through streamlining complex and cumbersome customs processing procedures, implementing a single-window approach to government licensing, and increasing predictability and efficiency in government approvals and inspections related to cross-border trade."
Pritzker said an open economy is in the best interest of India, the US and the world and reforms will benefit businesses and allow for more seamless integration of both Indian and American products into global supply chains.
"The US Government is committed to working with the Government of India through the US-India Strategic and Commercial Dialogue and other bilateral fora to address these concerns," she added.
Asked about her message to the next administration in the US with regard to economic ties with India, Pritzker said, "To the next administration, and to my successor at the Department of Commerce, I would say the following: you have an opportunity to build on what has already been achieved. Continued progress will require greater ambition from both governments, but we see tremendous potential for the US and India to continue working together on a range of issues, strengthening our commercial relationship, and improving the climate for trade and investment."
On the roadmap to achieve USD 500 billion bilateral trade target, she said, "While the trade in goods between the United States and India has declined slightly over the past year, the overall US-India bilateral trade and investment relationship remains on solid footing following a decade of strong growth.
"To put this in perspective, bilateral trade in goods and services between the United States and India has grown more than fivefold since 2000, reaching roughly USD 109 billion in 2015. Given India's bright growth prospects and our strong cooperation on a number of issues facing our economic relationship, I am optimistic about the long-term possibilities for future growth in our trade and investment ties.
She added: "It is true that we have more work to do. India is only the United States? 10th largest trading partner and 18th largest export market. In addition, India represents only 1.8 percent of US exports and only 2.5 percent of US imports. For economies our size, we can to do much better."
Pritzker said the US-India Strategic and Commercial Dialogue is very important in this regard as it is a time to review the progress that has been made over the past year, and set an agenda to guide our upcoming work.
She added: "In addition, it is critical that as our governments continue working together, we are also receiving the robust input from both of our private sectors on the areas that must be addressed to improve our economic relationship. Our business leaders have incredible insights into the global economy and can be great partners in affecting policy change.
"Together, we are focusing our efforts on key market access issues that impact US trade and investment with India, including promoting a clear and predictable tax regime, protecting and enforcing intellectual property rights, and encouraging a transparent and consistent regulatory environment. We are also encouraging open trade and investment policies, such as liberalizing FDI to boost investment and allow for more seamless integration in global supply chains."
Pritzker will co-chair the Dialgoue with US Secretary of State John Kerry, Minister of External Affairs Sushma Swaraj, and Minister of Commerce and Industry Nirmala Sitharaman. In January 2015, the US-India Strategic Dialogue was elevated to the Strategic and Commercial Dialogue to reflect the growing significance of the US-India economic relationship. This is the first time the S&CD will be held in India.
She will also also co-chair the second US-India CEO Forum alongside Jeff Zients, the Director of the National Economic Council and Assistant to the President for Economic Policy. During this event, the CEOs will communicate their joint recommendations to the US and Indian governments.