globalEDGE Blog: The Growth of a Partnership- United States and India

The Growth of a Partnership- United States and India

By supporting India for a permanent seat on the United Nations Security Council, President Barack Obama positioned the United States for a long-term political and economic partnership with the emerging Asian nation. While much focus has been put on the political alignment of the United States and India against their rivals in China and Pakistan, there are also great opportunities for business partnerships to emerge. As is often the case, strengthened political ties may lead to strengthened economic ties as well.

As leaders from China, Brazil, and Germany have lashed out at the United States over the Federal Reserve’s decision to pump billions of dollars into the economy, India has publicly supported the controversial decision. Showing that he is equally committed to the partnership, Obama recently lifted export controls on technologies in a move that will prove favorable to India.

According to the United States Department of State, India is the world’s twelfth largest economy and is expected to continue growing its GDP on an annual basis. Merchandise trade between the United States and India exceeded $50 billion in 2008. With a highly educated population and widespread knowledge of the English language, India is currently a major exporter of software services and labor to the United States.

While a lack of adequate infrastructure is seen as one of the largest constraints against continued economic growth in India, advanced machinery and computer hardware imported from the United States can help to alleviate this issue. This will help the Indian economy to modernize from an agricultural state in which major exports have included textiles and farm products. Focusing on software exports, which grew to $35 billion in 2009, India will be positioned as a powerful force in the international technology industry.

While its investment in India has always been quite high, the United States is set up to benefit greatly from an improved Indian economy. As the two largest democracies in the world, this partnership could become even stronger as India moves toward greater economic freedom.

Whether or not proposed changes to the Security Council occur anytime soon, it will be very interesting to observe the growth of a strong relationship between the United States and India. The economic impacts of this partnership could even outweigh the political implications that it will inevitably have on the Asian continent.
 

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