As India celebrates thirty years of economic reforms, contemporary goals of becoming a global manufacturing hub necessitate new reforms to increase ease of doing business. On December 7, 2021, the US-India Strategic Partnership Forum launched two new reports focused on identifying pitfalls and solutions in India’s path to becoming a reliable manufacturing hub and a true competitor with China.
The reports were launched alongside an industry panel moderated by Atul Dhawan, Chairperson of Deloitte India. Joint secretaries from multiple ministries also spoke at the event including: Manmeet Nanda, Joint Secretary, Department for Promotion of Industry and Internal Trade, Ministry of Commerce and Industry; Gaurav Masaldan, Joint Secretary (Customs), Department of Revenue, Ministry of Finance and Saurabh Gaur, Joint Secretary, Ministry of Electronics and Information Technology.
The reports found that hi-tech sectors in India have the potential to offer an additional investment of USD $21 billion and create 550,000 direct jobs and 1,400,000 indirect jobs over the next five years. In addition, COVID has led to greater automation and digitization of work practices and the Modi administration’s Aatmnirbhar Initiative has ameliorated the opportunity for India’s participation in the Global Value Chain. USISPF’s recommendations for enhancing competitiveness are necessary to seize the above opportunity and are detailed in the two reports.
The first report, “Enhancing India’s GVC Competitiveness”, analyzes India’s competitiveness in comparison with Thailand and Vietnam in Ease of Doing Business (EODB), Cost of Doing Business, and Labor Market. The report makes recommendations for increasing EODB, improving labor productivity, and reducing the cost of doing business. The second report, “Shifting GVCs to India: Addressing the Key EODB Challenges”, focuses on the reasons and solutions for the current gaps.
USISPF hosted Finance Minister Nirmala Sitharaman for a series of one-on-one interactions and roundtable meetings with investors in Boston, New York City, and Washington, DC. The strong participation was a sign of the ongoing interest in India as a potential investment destination, including for manufacturers seeking to diversify their global supply chains.
Finance Minister Sitharaman took the opportunity to inform U.S. investors about India’s post-pandemic economic rebound and new incentive programs in place to facilitate foreign investment, and to hear from participants about various policy and regulatory challenges still to be addressed in the country. In her remarks, the Minister discussed the ways tech-enabled systems had enabled people to survive during the worst of the pandemic by using digital means to collect direct financial support, conduct government transactions, and receive critical market information. She outlined the budget measures taken to boost the recovery, highlighting reforms in insurance, banking, capital market regulation, and privatization.
Many of the participants spoke of large current investments in India and plans for substantially more, particularly if the government’s privatization and asset monetization plans move forward quickly. Several also said they are looking to incorporate India more fully into their global supply chains. They commended the pace of reform to date and urged the Minister to work with partners to increase regulatory consistency and transparency throughout the economy. Several also expressed concern about productivity losses from data localization and urged the government to consider a safe harbor policy for data with the United States.
Investors agreed India would benefit from measures to deepen its domestic capital markets and reduce the costs of debt and equity financing in the country. Reducing the size of public sector holdings in the financial sector is a critical first step. Other concrete measures include making it easier for foreign investors to register as Qualified Foreign Institutional Investors (QFII) in the country and to hedge their currency risks. They noted additional incentives and support for public private partnerships would support the government’s ambitious infrastructure investment goals.
On the issue of climate, several participants expressed eagerness to help finance India’s transition to a green economy, while the Minister noted India’s deep commitment to the issue, it being one of only a handful of countries to have met its climate goals.
All participants agreed the U.S.-India financial partnership is strong and will benefit from further tangible successes. They remain committed to working together on these issues to support India’s economic recovery and boost economic growth, jobs, and investment.
The second wave of COVID-19 in India led to a pause in high-level engagements between the United States and India. However, US efforts to support and assist India in its battle against the pandemic took forefront and both sides witnessed an unprecedented cooperation on the healthcare front. It is expected that healthcare cooperation between the two countries will continue both bilaterally as well on multilateral platforms like the Quad and the UN General Assembly.
After a successful trip by U.S. Secretary of Defense Lloyd Austin to India in March, and India External Affairs Minister S. Jaishankar’s recent trip to Washington, D.C., working level engagements have begun for the next round of the 2+2 Dialogue expected to be hosted in October in Washington D.C.
Both sides are working on a potential agenda, although it is unlikely that any high-level deliverables will be announced. Additionally, U.S. Trade Representative Katherine Tai remains engaged with her counterpart, Ministry for Commerce and Industry Piyush Goyal. While there is less likelihood that the stalled mini trade deal under the Trump administration will be addressed, a prospective broader trade deal with additional components is under discussion. The U.S.-India Trade Policy Forum has not convened since 2017. However, both USTR Tai and Minister Goyal are committed to holding the TPF and the CEO Forum this year.
On the defense relationship, the next round of the U.S.-India Defense Technology and Trade Initiative (DTTI) and a visit by officials of the Indian Defense Acquisition Council is also likely to take place in the coming months. On the energy and climate change front, U.S. Special Envoy on Climate Change John Kerry undertook a visit to India and met with the leadership to deepen ties and efforts on tackling climate change. Both sides are committed to remaining engaged on the issue and more high-level interactions are expected to take place. June 9, 2021
The US-India Strategic Partnership Forum in partnership with NITI Aayog announced the launch of its adult immunization initiative “Immunization: Pulse of a Resilient Public Health System”. This timely initiative aims to create a platform to initiate a dialogue among key stakeholders on the role and importance of creating a resilient public health system through immunization among adults.
Despite being one of the top ten public health interventions, vaccines are typically synoynyms with pregrnant women, infants and children. In reality reality far too many adults fall ill or die each year from diseases that can either be prevented by vaccines or the risk can be mitigated. Additionally, there are no national adult immunization guidelines in India, therefore making it unclear as to who should receive certain vaccines among adults. USISPF’s initiative will help India strengthen its vaccine delivery programme towards adults through the following objectives:
Adapting global best practices on adult immunization on implementation of vaccination programs for adults & vulnerable groups
Building new partnership models around disease surveillance, awareness, capacity building, research, supply chain resilience to support immunization against diseases preventable by vaccines.
Developing a national policy on adult immunization.
Through this initiative USISPF plans to host a series of discussions on issues pertaining to healthy ageing, vulnerable groups, vaccinating workforce, protecting healthcare workers as well as at-risk groups, among others.
To kick off the initiative, USISPF hosted a virtual roundtable on April 16, 2021 with senior government and industry leaders including –
Dr Manohar Agnani, Additional Secretary, Ministry of Health and Family Welfare, Govt. of India
Prof N K Ganguly, Former Director General, Indian Council of Medical Research
Dr Arindam Ray, India Country Office, Bill & Melinda Gates Foundation
Prof Srinath Reddy, President, PHFI
Sriram Shrinivasan, National Life Sciences Lead, Ernst & Young
Dr Rana Mehta, Partner & Leader Healthcare, PricewaterhouseCoopers Services
Dr Sanjay Singh, CEO Gennova Biopharmaceuticals Ltd.
Dr Srirupa Das, Director Medical Affairs, Abbott India Limited
The Launch saw the participation of over 400 people from various sectors such as Government, Media, NGOs, Public health experts, Industry representatives, Economists, Academia, among others. Discussions focused on vaccine delivery mechanism, in light of the current global health crisis; highlight the need for public and private sector intervention towards immunizing adults to reduce the burden on public health infrastructure; overcoming regulatory challenges to incentivize immunization of adult population.
Dr Mukesh Aghi, President and CEO US India Strategic Partnership Forum welcomed the speakers and participants. Dr. Aghi laid special emphasis on replicating India’s success in polio eradication to reduce burden of VPDs in adult population. Dr Manohar Agnani explained the robustness of India’s vaccine ecosystem and its readiness to support immunization of large population for any future interventions if they are cost effective and for the public good. He also endorsed the recommendation of Prof. Srinath Reddy on the need for robust, responsive and timely surveillance system through epidemiological surveys on deaths, diseases and burden to be able to measure current and anticipate future disease burden to support timely measures. Prof N K Ganguly recommended immunization of elderly with co-morbidities like COPD, diabetes, hypertension, acute kidney ailments etc by saying that vaccination will be a savior to such population. He also emphasized on the need for strong collaboration between public and private sector to create sustainable financial architecture to ensure equitable distribution of vaccines to adult population from various economic sections of our society.
Speakers representing industries deliberated on leveraging infrastructure created during ongoing pandemic for immunizing adults against many other high burden VPDs, role of private sector partnership on mass awareness among healthcare workers and larger population on various VPDs common among adults especially high-risk population with co-morbid conditions. Dr Srirupa Das proposed a way forward for private sector partnership on disease surveillance and monitoring by offering strong pharmacovigilance system available with pharma companies. Dr Sanjay Singh, CEO, Gennova Biopharmaceuticals emphasized on the need for creation of National Advisory Group by the Government of India to develop standard guidelines on Adult Immunization.
Dr Arindam Ray from BMGF endorsed the need for a strong disease monitoring system to prioritize immunizing adults. Dr Ray also informed about BMGF future initiatives on enhancing HPV vaccine coverage among adolescent girls through school programme under RBSY scheme which is part of Ayushman Bharat-PMJAY.
On April 9, 2021, USISPF and the Raj Center at Columbia University hosted N.K. Singh, the Chairman of the Fifteenth Finance Commission, for a discussion on the federal polity of India, India-US relations, and the farmers’ protests. The session was moderated by Dr. Arvind Panagariya.
Singh explained that India is a union of states, rather than a confederation. The evolution of the same is marked by the Government of India Act of 1919, followed by the Government of India Act of 1935. The federation of states has been clearly defined in the constitution. The 7th schedule of the Constitution defines subjects that are the domain of states, subjects under the central government, and concurrent subjects with the Indian parliament’s decision being binding. The classic distribution of subjects between the union list, states list, and concurrent list has faced many challenges. For instance, education was a subject that was transferred to the concurrent list leading to the enactment of the Right to Education act. Employment was a subject in the states list, however, that too was transferred to the concurrent list when the parliament implemented the MNREGA. The distribution of subjects has made it difficult to address issues such as natural disasters as it has become unclear who is responsible for spearheading the crisis response. In the past half century, most centrally sponsored schemes had previously happened to be under state domain but were undertaken through the mutual consent mechanism exercised under Article 282 of the Constitution. In the report put forth by the Fifteenth Finance Commission, Singh stressed that the 7th schedule and use of Article 282 must be reviewed.
Explaining the history behind the finance commission, Singh stated that between 1949 and 1951, an interim finance commission was created which attempted to resolve issues surrounding what percentage of union tax revenue should go to the central and state governments – an issue that cropped up once again when India created the Goods and Services Tax (GST) Council, a permanent body to look into indirect taxes and manage the newly adopted GST. Furthermore, Singh said that the Finance Commission has submitted its report to the President who has accepted their recommendations. Accordingly, the Finance Commission has suggested fiscal reforms to increase the tax-to-GDP ratio, through an overhaul of the GST. The share of taxes to be devolved to states, including Ladakh and Jammu & Kashmir, has remained at 42%. The shares of taxes to individual states were then determined through a careful consideration of geographic area, forest cover, demographic management and tax effort to judge performance, equity, efficiency, and needs.
Dr. Panagariya asked Singh regarding agriculture market, which was historically a state subject. For the same, reforms have been ongoing since 2003 to assuage the plight of small farmers. He further added that every country that has gotten richer and more developed has done so because of moving workers away from farming. Singh lauded the farm laws for creating more options available for farmers to select the best person and price to sell their produce. He mentioned Bihar as a state that is reaping the benefits of eradicating the APMC. He cited the goal of the agriculture reforms as raising productivity in the agriculture track, adding that these reforms were the beginning of much more comprehensive agriculture reforms. The finance commission report has articulated areas of reform including diversification of cropping, water conservation patterns, and improvement of agricultural exports. The report also deals with urbanization, whereby resources assigned to states have been tied to some performance criteria via urban local bodies. Since urbanization is an important indicator of growth, cities have been classified by population between 1m+, 100k to 1m, and cities below 100k. This will incentivize the creation of new cities and spur urbanization.
Dr. Panagariya expressed doubt over centrally sponsored schemes whose progress is hard to track and questioned whether such schemes should be continued. Singh stated that all schemes will have a sunset clause, to be reviewed regularly so as to make sure that resources are not being wasted. He said that the report exercises for deep rationalization of state sponsored schemes, including the closure of many poor functioning schemes.
Speaking of India and the US, Singh said that the bilateral relationship has strengthened through the years. He mentioned the meeting between John Kerry, Special Envoy of Climate, and Prime Minister Narendra Modi as indicative of the countries’ strong ties on matters of renewable energy, green technology, health related infrastructure, and the deepening and diversification of the new partnership of the Quad. Dr. Panagariya brought about India-China relations, further adding that while he had advocated for India to be a part of RCEP, that confidence and level of trust had declined after the tragic skirmish between soldiers in Galwan Valley. Singh responded saying that India must not distance itself from China through embargo or such but through deeper connections with the US and the Quad, as well as active policies to enhance India’s productivity and defense capacity.
Responding to the probability of the US imposing sanctions on the delivery of the 1st battery S-400 missile Russia system, Singh stated that there was an ongoing dialogue to clarify the necessity of the system for India. On the topic of defense, he added that India must create a non-lapsing fund to generate resources to impart predictability and certainty for capital expenditure of defence, so states do not pay through a cess or sub-charge. Answering questions about the lessons learned from GST rollout, Singh admitted that he would prioritize simplicity, simplify risk and find one revenue neutral rate, one de-merit rate, and one merit rate. He also said that he would try for more predictability and greater robustness in the tech platform. Speaking of the reformulations in urban interconnectivity infrastructures in light of the pandemic, he said that there would be special initiatives from the incubation fund and the Pradhan Mantri Gram Sadak Yojana to promote the creation of new cites Lastly, touching upon the nation’s dependence on fossil fuel revenues, he stressed that we need to move away from fossil fuels dramatically, re-calibrate of the entire structure to allow market forces more leeway, and have systems of connectivity and storage with the grid. Singh added that both the India and the US are ready to meet these daunting challenges.
The Quadrilateral Security Dialogue or Quad held its summit in a virtual format featuring for the first time, four heads of state – US President Biden, India’s Prime Minister Modi, Japanese Prime Minister Yoshihide Suga, and Australian Prime Minister Scott Morrison.
The four quad nations are the major players in the dynamic and high-growth Indo-Pacific region. While not a formal military alliance like NATO, the Quad framework is often regarded as a potential counterweight to growing Chinese influence. With the current health crisis, there is convergence on financing agreements to support an increase in manufacturing capacity for coronavirus vaccines in India. White House Press Secretary Jen Psaki noted that, “President Biden has made this one of his earliest multilateral engagements speaks to the importance we place on close cooperation with our allies and partners in the Indo-Pacific.”
A recently held discussion by the US-India Strategic Partnership Forum on the Quad’s immediate priorities featuring government and private sector leaders discussed a comprehensive cybersecurity response as a cornerstone of the quadrilateral framework. It is necessary to highlight the digital linkages of the region that contains little more than half of the world’s internet users, burgeoning ecommerce sectors, and hyperlocal service economies. The pandemic has also exposed vulnerabilities in global supply chains, with many countries exploring possibilities of reshoring and incentivizing local firms to manufacture closer to home.
Here are a few takeaways from the discussion focusing on the path to building coordination and cooperation in the highly digitized Indo-Pacific realm that is booming with diverse suppliers:
While discussants pointed out the need for a speedy adoption of 5G technology, it was also noted that 5G has emerged as a critical flashpoint in global geopolitics today. Despite 5G’s superior ability to support advanced technologies and critical infrastructures of countries, suppliers/vendors of 5G can potentially dominate a given country’s data economy.
India’s many technological advances from the last few decades which can be used for the betterment of the people. India and the US share an interest in the Indo-Pacific which is the most challenging regional area in geopolitics at the moment, presenting challenges to democracy.
India’s new cybersecurity strategy has an automatic intelligence sharing arrangement from Mumbai to California. Greater technology and intelligence sharing among Quad nations will allow for developing trusted supply chains, solar and wind energy development, and trusted sources for products and services. India’s concept of ORAN or Open RAN network is a great business opportunity for 5G solutions.
With the high intensity of cybersecurity attacks against nation states and individuals, the US-India technology partnership must be centered around the need to share data and further expand the collaboration among quad nations. The reason cybersecurity prevention is defensive rather than proactive is because it is far cheaper to attack than to defend. Moreover, the liability of a product in cybersecurity lies with the buyer not seller. Therefore, the need of the hour lies in creation of best practices around cybersecurity. The partnership between the two countries should be focused on sharing information in a transparent manner.
Capacity building in the cyber domain both on the products and services side by engaging the private sector and academia should be a key priority.
India is a mobile-first market, and to truly draw upon the benefits of the telecom network, will need to standardize 5G solutions to meet international industry standards, accelerate innovation, technology adoption, and build more robust security frameworks. Ultimately, deeper penetration of 5G and robust supply chain ecosystem can help India deliver quality and timely healthcare solutions to the remotest parts of the country.
On March 10, USISPF and Nishith Desai Associates co-hosted a virtual webinar on decoding India’s recently formulated National Education Policy, entry of foreign universities, online learning regulations, degree accreditation process, and deepening US-India collaboration in higher education. Susan Ritchie, VP of trade and technology policy at the USISPF forum, introduced India’s new education policy and the opportunity it creates for U.S. educational interests. “We see India’s new education policy as strategically significant to our members as they plan to expand their workforce in India in the coming years. Collaboration between U.S. higher educational institutions and Indian academia is an important element to that goal,” Ritchie stated.
Experts from Nishith Desai Associates stressed upon increasing importance and reliance on technology in India and its relation to significant reforms in higher education. They presented an overview of the regulatory framework of higher education in India, distinguishing between both regulated and structured frameworks. They distinguished between the regulated framework as bachelors/undergrad, master’s, and diploma courses and structured framework that includes certification courses not leading to the award of a degree or diploma, vocational training, tutoring services, online education programs, and pathways/credit transfers. They explained how the structured framework is growing at an exponential pace by stating, “When there is lack of regulation, there is much faster growth in innovation and the way services are being delivered.”
Nishith Desai Associates further listed the different types of higher education institutes and how there is now a new set of recent regulations for technical regulations on online learning, which is important to monitor, especially during the COVID-19 pandemic. They discussed regulations for Foreign Educational Institutions, which include:
FEI’s can enter into collaborations/twinning program with Indian institutes.
The two regulators, UGC and AICTE have their own set of regulations to govern the collaborations/twinning arrangements.
In addition to these regulators, there are professional councils as well regulating higher education.
With that being said, NDA mentioned the opportunities found within the online educational sector, particularly with:
Structure 1: the online degree program. India does have regulations pertaining to online programs, but all of these regulations are on Indian higher education institutions. NDA explained considerations, which include the validity of degree, direct fee collection, and taxes. They also introduced softer issues, which include advertising, promises/claims made, and consumer issues.
Structure 2: the platform model is described as a foreign university to U.S. platform to Indian student structure. Considerations include arrangements between US universities, platforms, and Indian students, fee collection, and taxes.
Structure 3: the online + on-campus program is described as a U.S. university to both Indian university and student model or U.S. university to Indian university to student model. Considerations include arrangements between U.S. universities and Indian institutes, fee collection, and taxes. Softer issues include advertising, constituting a campus in India, and consumer issues.
