US-India trade and business relations have seen steady growth despite geopolitical ups and downs. There has not been any serious disruption in bilateral trade and investment inflow even during one of the lowest times in the countries’ political relations—when India tested its nuclear capabilities in Pokhran. There are many areas where the two nations share common objectives. I am not talking about the oldest-biggest democracy argument which has been discussed enough and frankly doesn’t say much. I am also not talking about bilateral trade and related issues. These are well documented and discussed with both countries having multiple platforms to resolve so that trade continues no matter what.
The Biden administration took over two years to send an emissary to India. It finally got Eric Garcetti, former mayor of Los Angeles, approved to represent the United States of America as its ambassador in Delhi. His tenure in India, at least till end of 2024, will witness 12 states having elections and a general election which will decide the fate of the incumbent BJP government led by Prime Minister Modi. Elections in India, state or Centre, diverts the administration’s focus from governance to electioneering.
Should Garcetti focus on trade during the next one year when the Modi government prioritizes winning state elections and getting itself back for a third term at the Centre? I believe, the bilateral business agenda might have to wait till the election cycle is complete and a new government at the Centre is installed.
An area which needs attention is a special bond or “cultural-connect” between both the nations which must be nurtured to drive mutual trust which will lead to business expansion, and a common geopolitical goal. This cultural-connect emanates from a strong Indian diaspora who had migrated to the US decades and generations ago and have become the part of the social fabric there. Their roots in India will always wish the US well as their families live there. The Indian diaspora constitutes over 4.5 million people which is about 1.35% of the US population. They are settled well, contributing to the US economy, and creating jobs.
The US has fascinated Indians for a long time. 1.47 million Indians visited US during 2019 as tourists, coming back with vibrant memories of a free society and land of opportunities. India sent 200,000 students to US universities during 2021-22 to pursue higher studies. Given an average 5 members in a family, this means approximately a million Indians became US admirer as one of them landed there to benefit from advanced academic environment. Indian students spend around US$10bn each year on education in the US. This is much higher than investments made by Indian companies in the US every year.
Social or cultural bonds historically have driven business and trade relations between the nations. For example, relations between the US, Mexico and Canada formed the basis of a regional trading block. Similarly cultural similarities and historical relations between the US and the UK has translated into a substantial transatlantic trade and exchange of people and ideas. Closer to home, we see strong cultural similarities between countries like India and Nepal translate into trade and business relationships, albeit at a smaller level. Historical relations between India and the UK have also formed the basis of several bilateral trade and investment treaties between the two countries.
On the contrary, Canada being home to a large Indian population, cultural potential has not translated into trade because of separatist elements within the Indian population and Canadian politicians pandering to this vote-bank for domestic political gains. Most of the US-based Fortune 500 companies are present in India, generating thousands of the jobs, investing billions of dollars every year. US expats working in India no longer find India as the difficult posting once they reach here. Indian society reciprocates the warmth which Americans extend to their families in the US. When Apple recently opened its flagship stores in Mumbai and Delhi, the company’s CEO Tim Cook didn’t just make the customary business and political pilgrimages. He met artists, designers, Bollywood celebrities, and sports icons, highlighting the importance of a cultural-connect in building depth and longevity in the substantial commercial endeavour Apple has embarked on in the country.
India’s enthusiasm and receptivity towards the US has some history as well. In 1978, then US president Jimmy Carter visited a small village known as Daulatpur Nasirabad in the state of Haryana near Delhi during a state visit and as a commemoration of the place, his mother had come to during her time in the Peace Corps. Thrilled to have the esteemed visitor, the village council decided to rename the village as “Carter Puri” in honour of the president. “Carter Puri” continues to grow and is vibrant town today.
The US diaspora is also closely connected with their families back home in India and vice versa. After becoming prime minister, Narendra Modi made his first major visit to the US–an elaborate affair aimed at rallying Indian Americans to join his cause as much as his intention to represent all Indians, no matter where in the world they lived. The US is home for 1.5 million Gujaratis, the state where Modi served three terms as the chief minister—this is the vote bank Donald Trump was after when he visited Gujarat in 2020 during an election year in the US.
A case can, therefore, be made that while the cultural-connect has been somewhat mined for political gains, more can be done, especially in trade. While the US is the biggest trading partner for India, our cultural ties have not been leveraged adequately to elevate mutual trust and expand the economic relations between the two countries. US and India announced the target to achieve US$500 billion as bilateral trade way back in 2004. Almost 20 years later, we are still around US$130 billion. We continue to focus on transactional successes: the relationship, hence, has become transactional. Business follows the stability of the political relations and demographic drivers. Political relations and mutual trust must be drawn from the cultural connect and not vice-versa. While Garcetti has time in India till the next US elections, understanding India and deepening the bond will be a very valuable contribution to the business and political agenda for years to come.
Rakesh K. Chitkara is an expert on policy and regulations and has led public policy practice in Abbott Laboratories, General Electric, Dow Chemical, Rohm and Haas and Monsanto for over three decades.