India has concluded a raft of trade agreements – with Japan, South Korea, the Association of Southeast Asian Nations (Asean), and many others – and it looks set to initiate more negotiations. But the US is the forgotten player, in part because Washington has yet to sort out its own trade priorities with India.
First, the good news: The US-India trade has grown rapidly — more than doubled from 2004 to around $66 billion in goods and services trade in 2008. Growth areas include aircraft, machinery, commercial services and defence-related equipment. And Washington and New Delhi are reaching out in other ways as well. During President Barack Obama's visit to India in November, the two sides announced plans to create a $10-billion infrastructure debt fund as a public-private partnership. India seeks large-scale foreign funding for its infrastructure build-out. And its decision to raise the limit for foreign institutional investment in corporate bonds in the infrastructure sector will almost certainly open up new opportunities for US investors.
But what happened to the idea of a bilateral investment treaty (BIT)? Not long ago, the US and India were locked in rancorous disagreements in the Doha Round of multilateral trade talks. And bilateral initiatives, like the BIT, were viewed, in part, as a way to provide ballast to US-India relations in the face of disagreements on multilateral arrangements.
But the BIT is stalled, principally because the US remains locked in an interminable internal review of its model treaty. And neither President Obama's November visit to India nor his administration's December decision to move forward with other pacts, such as the Korea-US free trade agreement (FTA), has done much to shake it loose.