The U.S. and India announced this month additional efforts to increase trade cooperation and collaboration as both countries look to diminish their reliance on China.
In November 2022 Treasury Secretary Janet Yellen said India could play a major role in the emerging U.S. strategy of “friendshoring,” in which the U.S. is deepening economic integration with trusted trading partners to diversify away from countries that present geopolitical, security, and other risks to supply chains. At a January 2023 meeting of the U.S.-India Trade Policy Forum, the two sides highlighted progress in addressing specific trade irritants and launched a working group aimed at enhancing the resiliency and sustainability of their trade relationship.
Following on these efforts, during a recent visit to India Commerce Secretary Gina Raimondo and Indian Minister of External Affairs Subrahmanyam Jaishankar agreed to launch the U.S.-India Strategic Trade Dialogue to deepen bilateral engagement on aligning export controls, enhancing high-tech commerce, and facilitating technology transfer between the two countries. Raimondo said this dialogue will be led on the U.S. side by the Bureau of Industry and Security but gave no further details.
The U.S. and India also signed a memorandum of understanding that Raimondo said “will establish a collaborative mechanism between our two countries on semiconductor supply chain resiliency and diversification.” The U.S. wants to see India “achieve its aspiration to play a larger role in the electronic supply chain,” she said, and the MOU is designed to promote that goal.
“It’s a huge opportunity at the get-go here to share information” about the semiconductor incentive programs each country is implementing, Raimondo said, and to “be transparent, coordinate our implementation, together map the supply chain, come up with alignment around assessments of demand for semiconductors and therefore how much supply is needed” and how to prevent over-subsidizing certain areas. She added that while the U.S. is “looking for near-term commercial opportunities” it is also “looking here for a longer-term strategic opportunity … because this isn’t a one-year collaboration; we think this is a five-, ten-, twenty-year collaboration.”
A Wall Street Journal article said these measures are indicative of how India, despite its “professed neutrality … has begun pivoting westward” because both sides “increasingly see [China] as a principal adversary.” As one example the article notes that since 2021 India “has embarked on a series of negotiations to reduce tariffs, quotas and other barriers” with partners such as the United Arab Emirates, Australia, the United Kingdom, Canada, and the European Union. While these deals “still spare many sectors deemed sensitive by India,” the article said, they need to be “judged relative to India’s traditions, in which nonalignment and protectionism were virtually hard-wired.”
At the same time, India has yet to join the trade pillar of the Indo-Pacific Economic Framework the U.S. is negotiating with 15 regional countries. India is participating in IPEF work on supply chains, infrastructure, and taxation and anti-corruption (including the second round of talks being held this week in Bali), but Raimondo said the topic of New Delhi becoming involved in the trade pillar as well “did not come up” in her recent discussions with senior officials.
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