CUTS Washington Monthly Brief
#8, November 2018
Engaging Civil Society for Maximising Economic Impacts
 
As U.S.-India economic relations continue to shape up, it remains crucial to sustain the momentum. It will depend upon how effectively governments and private sector engages with civil society towards impacting lives of millions within and across regions in a positive way. On the trade front, bilateral trade grew from mere $20bn to over $126bn in less than two decades. It should grow further and exponentially in lesser time with expected increase in American exports of more high technology items, as a result of Strategic Trade Authorisation (STA) Tier-1 status provided to India. U.S.-India Free Trade Agreement (FTA) is another big ticket reform that the two countries are contemplating with inputs from civil society and business chambers.
 
Furthermore, the role of U.S. companies in India in shaping economic growth and development has been noteworthy. Their contributions were felicitated by U.S. India Strategic Partnership Forum (USISPF) in form of a study titled Inclusive Prosperity: The Story of American Business in India, released in October. Key highlights are as follows:
 
Contribution of U.S. Companies in India
 Contribution to India’s GDP  Over $90 bn (2017)
 Jobs supported  Over 6.6 mn (2018)
 FDI Flows  $50 bn (between 2014 & Q1FY18)
 Investment in R&D in India  Over $5.5 bn (2016)
 CSR contribution  Over 5 % of total CSR Expenditure in India (2017)

U.S. investments in India will continue to grow as being catalysed by the U.S. resolve of building Energy, Infrastructure and Digital Economy across the Indo-Pacific region. This is going to provide American companies with brighter investment prospects and promising returns. However as we gather from our recently conducted Regional Connectivity Conference: South Asia in the Indo-Pacific Context (see report below), several pain-points - but not limited to - documentation processes, land and labour issues, intellectual property, financing and procurement related, still remain.
 
CUTS International, in partnership with East West Center (Washington DC), FICCI, and with the support of the U.S. Department of State, organised a very successful ‘Regional Connectivity Conference: South Asia in the Indo-Pacific Context’ in New Delhi, on November 1-2, 2018.

Inaugurating the conference, Vijay Gokhale, India’s Foreign Secretary, said that ‘free, open and inclusive’ should be the driving force behind regional integration. The US Ambassador to India Kenneth Juster highlighted the need for private sector led infrastructure development in South Asia, while the Japanese Ambassador to India Kenji Hiramatsu enunciated specific regional connectivity projects being jointly executed by India and Japan and stressed upon ‘quality’ infrastructure as a prerequisite to sustainable regional connectivity. Pradeep Mehta, Secretary General of CUTS International, said that a multi-disciplinary and multi-country platform for regional connectivity is the need of the hour. (More details here)

The possible way forward to transform these challenges into opportunities is by fostering dialogues among governments, private sector and communities. The importance of civil society groups and business chambers in fostering such dialogues is crucial for 1) Private sector to convey their concerns and expectations; 2) Governments to convey investment opportunities and the reforms undertaken; 3) Community to get adequate representation in the decision making processes; and, 4) In all, to facilitate investments for sustainable development.
Pradeep S. Mehta
Editor
                                                                                                                                   

P.S. Perhaps, Trump doesn’t know that the tragic California forest fires occurred due to global warming, and not due to other factors.
 

Message for our Readers
This is the eighth edition of the monthly brief from the Center, which carries select published news or comments on a relevant issue. There are equally important issues which may have been missed out to keep the Monthly Brief short and swiftly readable.

 Readers are encouraged to send their own views and suggestions at: cuts-washington@cuts.org.

 

Chabahar: Why US shielded India’s interests
Two days before the crucial talks took place in Moscow to find ways to end the unending civil war in Afghanistan, the US government announced a waiver to its sanctions on Indian investments in Iran’s oceanic port, Chabahar. The informed view was that the unusual waiver that US administration gave to the Iranian port was due to the aggressive lobbying by India to save its investments and persevere with its newly crafted policy to connect with Afghanistan and Central Asia.
 
US to identify collaborative opportunities with BIMSTEC in its Indo-Pacific plan
The USA close on the heels of East Asia and APEC Summits announced that it will identify collaborative opportunities with BIMSTEC where India plays a pivotal role to advance a free and open Indo-Pacific region amid China's ambitious moves to dominate the region.
 
India–Japan embrace should stretch out to Eurasia
No other partnership has witnessed the kind of unprecedented progress that the India–Japan partnership has over the last two decades. The new India–Japan Vision Statement — a product of Indian Prime Minister Narendra Modi’s visit to Tokyo to meet his Japanese counterpart Shinzo Abe from 28–29 October 2018 — reiterates the two leaders’ commitment to work together in the Indo-Pacific and the world at large.
 
European Union unveils strategy paper for ramping up ties with India
The European Union unveiled a 'strategy paper' outlining the broad roadmap for stepping up cooperation with India in a range of key sectors, including trade, investment, defence and security, innovation, and on dealing with various global challenges.

 

India becomes largest renewable energy auctions market in the world
India has become the largest market globally for auction of new renewable energy generation projects and the second-largest destination attracting clean energy investments. These are the findings of the latest Climatescope 2018 report by Bloomberg NEF (BNEF).
 
Trump rejects findings of U.S. government climate change report
President Donald Trump rejected projections that climate change will cause severe economic harmto the U.S. economy, findings outlined by a report his own U.S. government. The congressionally mandated report said that climate change will cost the country's economy billions of dollars by the end of the century, but Trump said he does not believe the economic impacts will be devastating.
 
Indian oil refiners look at ‘consortium’ approach to buy crude from United States
Indian refiners, both state-owned and private, are weighing a “consortium” arrangement for buying crude from the United States to secure concessions and save on freight costs, at least two people familiar with the plan said.
 
Iran’s oil and India’s fragile energy security
India’s economic managers might have heaved a collective sigh of relief over Washington’s decision to exempt India and seven other nations (including Japan and China) from a complete ban on importing Iranian oil, but New Delhi’s hand-wringing over the entire issue illustrates the essentially fragile state of India’s energy security.

 

India eyes bigger share in global trade amid US-China tensions

India will focus on boosting its exports to the US and other global markets as Chinese shipments become unattractive amid a trade war between the world’s biggest economies, the country’s trade minister said. New Delhi is focusing on a handful of items including automotive parts, chemicals, electrical equipment, among others, after the US and China slapped reciprocal duties on each other’s goods, minister Suresh Prabhu said.

U.S. Firms Evading Trump Tariffs by Switching Output Abroad: UBS

U.S. companies are evading President Donald Trump’s goods tariffs by partly moving production abroad, shielding China for now from the effects of an escalating trade dispute, according to research by UBS Group AG. “If U.S. companies move a stage of their manufacturing overseas (to a country other than China), the trade tax is avoided,” Paul Donovan, chief economist at UBS Wealth Management, said.

The threat to growth from raging global trade war

Calling the end of the global trading system, or at least of sustained expansion in cross-border commerce, is now a tradition that stretches back two decades. The bursting of the 1990s tech bubble; the September 11 attacks; an international epidemic of avian flu in 2005. All were predicted to throw sand in the wheels of globalisation, and all failed to do so.

China Is Winning the Trade War with America for Now

Sometimes statistics don’t behave as predicted. Take the thorny issue of US-China trade and Donald Trump. Earlier this year, the US president expressed fury about the size of America’s bilateral trade deficit with China and imposed escalating tariffs on $250bn worth of Chinese imports. The assumption inside the White House was that this would cause the deficit to shrink, since American companies would produce more goods at home and/or find ways to avoid costlier imports. But that theory has not played out — or not yet. Far from it.

 

New H-1B visa lottery process may hit immigrants
From April, the filing season for the H-1B applications, companies hiring foreigners to work in the US through this popular work visa route will have to pre-register electronically for the annual H-1B lottery, and then file ‘full-fledged applications’ (referred to as petitions) for the winners.
 
India begins developing applications for its upcoming supercomputers
India has begun developing applications for cancer research, genome sequencing and drug discovery to be run on high performance computers that it has contracted to French IT services firm Atos to build as part of the National Supercomputing Mission.
 
Despite Trump, US MNCs flock to India for engineering talent
The number of MNCs with engineering and R&D centers in India grew to 976 in 2017, from 943 in 2016. This number is expected to rise in 2018 to 1,005, according to a study by Zinnov Consulting. And more than 60% of these MNCs are from the US.
 
Flow of Indian students to US slows to a five-year low
The number of Indian students in US higher educational institutions grew by 5.4% in 2017-18, a five-year low, amid restrictive immigration noises from Washington DC, according to official data released. In 2016-17, the number had grown by 12.3%, while in 2015-16 it had risen by 24.9%, and in 2014-15 it had grown by 29.4%, according to the 2018 Open Doors data released by the Institute of International Education (IIE) in collaboration with the US department of state’s bureau of educational and cultural affairs.