Obama cheer-leads for US investments into India

The US is upbeat about prospects of doing more business with India. India figures among the top priority destinations for US investments abroad, a US official said. “In terms of the US-India partnership, ..the president is very enthusiastic about the prospect of increased collaboration, increased economic growth for American companies, and investments in India,” said press secretary Eric Schultz.

The US’ enthusiasm about pouring more money into India, Asia’s third largest economy, should bring a lot of cheer to India’s Prime Minister Narendra Modi who has actively rooted for more US investments to shore up the Indian economy and bolster the country’s infrastructure. During Mr Modi’s visit to the US in September 2014, US corporates had pledged around $39 billion investment in India. Nearly 10 months later, it remains a work in progress. But one hopes that the latest signal coming from the Obama administration will prod US companies to fast-track their India investment plans.

Indian companies have invested around USD 15 billion and are estimated to have created over 100,000 jobs in the US. If India is able to sustain this momentum, one could expect the overall trade between both countries to shoot up significantly. Bilateral trade between both countries as of July 2015 is USD 50.5 billion, with India’s exports at USD 34 billion and imports at USD 16.5 billion. Currently, the US is India’s second largest trading partner in terms of overall trade after China.

The share of US FDI equity inflows into India is around 6 percent of the total FDI inflow into India, with Mauritius bringing the largest FDI inflow at around 36 percent followed by Singapore and the United Kingdom at 12 percent and 10 percent respectively. Given the promise the relationship between India and US is showing at this point of time, one can expect the share of US FDI in India to increase even though the increase may be mostly incremental.

There is a broad bipartisan support in the US Congress to improve trade relations between India and US. There wouldn’t be much obstruction in the US Congress to make India one of the most favoured investment destinations. One could expect the overall relationship between both countries to grow further with such policy initiatives taken by both countries.

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