U.S. Vice President Joe Biden’s trip to India today (Monday, July 22) marks the highest-ranking U.S. official to visit India in four years. It couldn’t have come at a better time. In recent years, U.S.-India economic relations have been significantly strained by a range of policies that India’s government has implemented that favor domestic producers at the expense of foreign competitors.
Such policies include India’s Preferential Market Access (PMA) mandate for electronic and information and communication technology (ICT) products, a “forced localization” policy which requires that a specific share of each product’s market in public (and possibly also private) procurement of electronic goods must be filled by India-based manufacturers. India’s introduction of local content requirements on wind turbines and solar cells if firms are to receive significant government subsidies is another. So are India’s imposition of compulsory licenses on biopharmaceutical products, as in the case of Bayer’s anti-cancer drug Nexavar, and India’s denial of or revocation of existing patent rights, as in the case of Novartis’s Glivec or Pfizer’s Sutent drugs, respectively. In short, India has been steadily shutting out foreign competition and making it increasingly difficult for U.S. businesses to compete in India.
These types of policies harm both American companies and workers and Indian industry and citizens alike. For example, India’s failure to recognize foreign intellectual property rights in the biopharmaceutical industry costs American jobs and also deprives companies of the resources and incentive to invest in the risky and expensive research needed for the development of new products. This will preclude or inhibit the invention of new therapies that could benefit citizens not just in India or America, but throughout the world. By discriminating against foreign competition, India is choosing to cut off its citizens’ access to newer and cheaper products and technologies. More broadly, when India competes by forcing foreign corporations to invest in India rather than attracting their investment, it’s taking a shortcut to growth instead of engaging in the hard work that India needs to bolster investments in infrastructure, scientific research, and education and implement a strong business and regulatory environment that will underpin India’s genuine competitiveness and long-term economic growth.
Moreover, these policies threaten to jeopardize what has historically been a strong and robust trading relationship. In fact, the United States is India’s second largest export trading partner and accounts for the largest trade surplus India runs with any nation. The bilateral trade relationship exceeded $60 billion in 2012. The partnership is vitally important for both countries, but if it is to remain positive and robust, the United States must take this opportunity to have an open and direct conversation with Indian Prime Minister Manmohan Singh.
The United States must make it clear to India’s top leadership that barriers to free and open trade between India and the United States must be addressed if our close economic and diplomatic relationship is to continue to grow. Vice President Biden’s trip is an excellent opportunity to address these persistent trade issues and ensure that future relations between out two nations are fair and productive for all parties.