The ongoing global downturn, which emerged in 2008, has been manifesting itself in various forms -- be it the Greek debt crisis or the recent flight of capital from China to the tune of more than $800bn or the unfolding Brazil story. This is the perfect time to ask the question -- what next? And then what? We need to piece together the signals from the world economy and decide on the course ahead. For India, a country expected to show the highest growth rate at 8-9%, a push from the world's biggest economy is expected to take cooperation to stratospheric levels.
At this stage, relations between the world's two largest democracies are definitely going to remain a focal point. The past has been intriguing as well as complex, and understanding the political economy of the two giant nations is critical for super growth. While previous talks have left much to be desired, both the countries need to rethink their strategies and engage in some out-of-the-box thinking towards setting an example of how to lead the world economy through multilateral as well as bilateral ties.
As PM Modi completes his second visit to the West Coast and Silicon Valley, India and the US need to address five specific issues, which in turn can assure investors.
1. Further explore the scope for investment
Both India and the US need to put up a framework for multilateral agreement on investment. It should be presented as a model agreement to the greater international trade community for debate and acceptance.
2. Commit to energy security
With appropriate bilateral understanding between the two countries, there needs to be a commitment towards energy security, as the US is expected to be a major partner in the exploration of natural resources in India, and also to augment renewable energy opportunities.
3. Consider a bilateral Free Trade Agreement (FTA) on services
More specifically, India and USA must explore the scope for an agreement for government procurement on services. It has been well established that India will have a distinct comparative advantage in terms of services over the next 20-30 years as 70% of country's population profile will be concentrated in the working age range. Aligning the legal and regulatory structure of both the countries will only complement the strengths.
4. Re-examine the "economic needs" criteria of cooperation between trade and services
This is in a true sense a barrier to the freedom of bilateral relations. Visa restrictions, employment restrictions, quality control in skills, visa fee hikes are just a few methods of implementing the economic needs criteria that both the countries need to negotiate.
5. Go beyond TRIPS agreement
The US and India need to think of a bilateral engagement outside the TRIPS agreement for data protection. The world moves on data and if that is not guaranteed, we run a risk of losing investors confidence.
To work, these proposals are contingent on a renewed commitment to economic liberalisation on both sides. With booming e-commerce trade, maturing social entrepreneurship platforms and the rapid rise of billion dollar unicorns, it is pertinent that both countries address non-tariff barriers like environmental, food safety and health issues. Cooperation is the key word here, if we want to promote and build our next line of entrepreneurial success.
The business community, entrepreneurs and the general public are fully behind the prime minister. The effort should be to graduate from a "conflict of interests" to a "convergence of interests", and both countries are at the beginning of a tidal wave of joint cooperation.