India-US Economic Relations: A Thriving Partnership with Endless Opportunities – Opinion News

By Anish Shah

The economic relationship between India and the United States has entered a new era of strategic importance, characterised by burgeoning trade, substantial foreign direct investment (FDI), and deepening cooperation in critical sectors such as technology and defence.

Data shows that total merchandise trade between India and the US stood at nearly US$ 120 billion in FY24 with India’s exports to the US amounting to US$ 77.5 billion and our imports from US totalling US$ 42.2 billion. Our total trade in services stands at nearly US$ 59 billion. The burgeoning trade flows have solidified the US position as India’s largest trading partner and bolstered India’s significance as a market for US exports.

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The investment landscape paints an equally compelling picture of this flourishing alliance. The US has emerged as one of India’s most significant sources of FDI, with equity investments totalling nearly US$ 66.7 billion during the period April 2000 to June 2024. These figures reflect growing confidence in India’s market potential, underpinned by its vast consumer base, ongoing economic reforms, and increasingly investment-friendly policies. US investments span diverse sectors, with particular emphasis on technology, manufacturing, defence and biotechnology. Indian companies too have been diversifying their operations across the US in sectors such as life sciences, pharmaceuticals, automotive, metals and mining, ICT, financial and business services.

At the heart of this economic synergy lies a series of high-level government-to-government agreements that have propelled the relationship forward and provide a strong momentum to private sector engagement.

The establishment of the Initiative on Critical & Emerging Technologies (iCET) in 2023 marked a watershed moment, focusing on cutting-edge areas such as semiconductors, cybersecurity, quantum computing, artificial intelligence and critical minerals. Another notable achievement has been the signing of a Memorandum of Understanding (MoU) on Semiconductor Supply Chain and Innovation Partnership. This agreement aims to coordinate our countries’ semiconductor incentive programs, promote commercial opportunities, and advance research and skill development. The establishment of the Indo-US Quantum Coordination Mechanism and the launch of a US$ 2 million grant programme for AI and quantum technologies further exemplify the depth of our technological cooperation.

In the critical realm of healthcare, efforts are underway to develop a Strategic Framework to optimise biopharmaceutical supply chains. This initiative and the “Bio-X” programme to enhance biotechnology cooperation demonstrate a shared commitment to fostering innovation and resilience in healthcare infrastructure and reduce reliance on single source suppliers.

Defence cooperation has emerged as a cornerstone of the India-US economic relationship. Over the years, the US has scaled its position as one of India’s primary defence suppliers. This collaboration extends beyond mere transactions, encompassing advanced military equipment transfers and technology sharing, reflecting a deep-seated strategic alignment between the two nations. The conclusion of the India-US Defence Industrial Cooperation Roadmap in May 2023 laid the groundwork for accelerated technology cooperation and co-production. The subsequent launch of the India-US Defence Acceleration Ecosystem (INDUS X) further emphasises a shared focus on innovation, bringing together a network of universities, incubators, corporations, think tanks, and investors to drive collaborative advancements in defence technology.

Reputed Indian companies have established a strong presence in the US. For example, the Mahindra Group recently celebrated its 30^th anniversary in the US. It is now the 3rd largest tractor brand in the <100hp segment.

Mahindra also contributed to Detroit’s resurgence by establishing a manufacturing plant in 2017, the city’s first in 25 years. Tech Mahindra has 6,000+ employees in the US, generating revenue of over US$ 3bn.

As we look to the future, the trajectory of India-US economic relations appears poised for continued growth and deepening integration. The robust trade figures, rising investment flows, and strategic collaborations across critical sectors underscore the relationship’s resilience and potential. I see tremendous opportunities in sectors such as AI, cybersecurity and cloud computing where Indian and US companies can export cutting edge technological solutions worldwide. Wireless communications, particularly with the advent of 5G and 6G, is another important area for cooperation. Both the US and India have the potential to collaborate and lead in building the digital infrastructure that will power the next generation of global connectivity. In clean energy, the world is increasingly looking at advanced technologies in areas like solar, wind, and battery storage, where both the US and India are taking a lead.

Beyond economics, the U.S.-India partnership is strengthened by deep people-to-people connections. The Indian diaspora in the U.S. plays a crucial role in fostering cultural and business exchanges. From Silicon Valley tech leaders to academics, the influence of Indian Americans is a testament to the collaborative spirit that binds our two nations. To give a figure, around 72 unicorn startups out of 648 in the US are led by Indian-origin founders employing over 55,000 people in the US.

While the two sides have a thriving bilateral relationship, the United States and India are also key partners in ‘The Quad’, an emerging strategic partnership between the governments of India, Japan, Australia, and the United States.

To further cement our relationship, we require sustained engagement from both governments and private sector stakeholders to capitalise on the opportunities. As global economic paradigms shift, the India-US relationship stands as a testament to the power of strategic economic alliances in driving innovation, growth, and shared prosperity. The coming years will likely see an expansion of cooperation into new frontiers, further cementing the indispensable nature of this bilateral economic relationship in the global context.

The author is Group CEO and Managing Director of Mahindra & Mahindra, and is the current President of FICCI.

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