Modi’s Mission to ‘Open Up’ U.S.-India Trade Is Still a Work in Progress

For the past two years, India’s Prime Minister Narendra Modi has touted a pro-business and pro-growth message: announcing that India, the world’s largest democracy, was “open for business” and that his government would take concrete steps to boost the ease of doing business there. Businesses in the U.S., India and across the globe have been hopeful that such promises would move forward quickly with important actions to improve India’s business climate.

Since 2014, the Modi government has indeed announced a string of high-level initiatives such as Make in India that pledge to improve the business climate. The business community has seen some forward steps, with openings in foreign investment in a few, select sectors such as defense, transportation and retail; greater competition among states to attract investment; and some movement to streamline business licensing and regulation.

These steps — and promises for more — have spurred a jump in foreign direct investment into India and a similar uptick in discussion concerning India’s business potential from U.S. businesses and stakeholders.

Two years into Modi’s term, however, it’s time for a sober assessment of its track record on business concerns, and whether the efforts that both sides have put into expanded bilateral engagement are resulting in concrete progress. While there have been some areas of movement, many of the same trade and market access barriers that have long troubled entrepreneurs and manufacturers remain in place — and new barriers have cropped up.

These barriers are holding back the United States’ and India’s trade and broader commercial relationships. Indeed, it is no coincidence that India’s trade volume with the U.S. (or globally) has barely changed, even as foreign investment has spiked based on Modi’s promises.

This week, Prime Minister Modi makes his fourth visit to the U.S. in the last two years, with plans to address a joint meeting of Congress and to meet with key government and business leaders. This visit will be a prime opportunity for leaders to push for concrete steps toward fostering growth in the U.S.-India commercial relationship, starting by addressing these longstanding issues, as well as new barriers.

These policies include forced localization barriers in the energy and information technology sectors; high tariffs and duties in a range of sectors, including telecom and medical device products; intellectual property policies that challenge the ability of U.S. and Indian entrepreneurs to innovate and protect their intellectual property (IP) in India; and continued burdensome procedures for companies trying to start and operate businesses.

Modi’s “Make in India” campaign has placed a renewed focus on strong manufacturing policies, which serves as a potentially positive step. However, it has also been cited as the basis for some protectionist policies to boost domestic industry, such as subsidies under India’s new Capital Goods Policy. Even initiatives that could have been used to improve the business environment in India have fallen significantly short.

For example, India’s review of its innovation and intellectual property climate produced a new National Intellectual Property Rights (IPR) policy that proposed improvements on IP enforcement, but failed to make progress on badly needed reforms to ensure protection of trade secrets, patents, and other forms of IP held by foreign and domestic stakeholders.

Businesses and manufacturers in the United States are eager to collaborate with Indian businesses to jumpstart innovation and growth in both countries, and to work with India to make real progress on issues that can help the nations’ relationship and our economies grow. Now is the time to turn Prime Minister Modi’s rhetoric into reality, and solidify a strong trade and investment relationship between the U.S. and India that would benefit businesses and consumers in both countries.

Linda Dempsey is the vice president of international economic affairs for the National Association of Manufacturers (NAM), the nation’s largest manufacturing trade association.

Morning Consult