Unleash the Market: U.S.–India Economic Relations

Olivia Enos /

The U.S.–India economic relationship is undeniably expanding. The question is how to maximize it. A recent report published by The Heritage Foundation, “Unleashing the Market in the U.S.–India Economic Relationship, Part I,” begins to answer that very question. The publication sheds light on what could happen if the largest economy (the U.S.) and the fourth-largest economy (India) in the world capitalized on their economic strengths.

The report is the first of an ongoing series intended to enhance economic relations between the two nations by focusing on the proper role of government, the positive strides that can be made in the private sector despite poor government policies, and recommended additional actions that the U.S. and India should take to facilitate greater exchange between the two markets.

U.S.–India bilateral trade, at just $58 billion, is fairly small, especially when compared to U.S. trade with South Korea that comes to around $100 billion. While trade in services is flourishing, trade in goods fails when measured against the natural benefits of comparative advantage. Other barriers to increased trade levels include India’s underdeveloped intellectual property rights system, as well as immigration restrictions on high-skilled workers wanting to come to the U.S or go to India.

There is hope for the future if foreign direct investment (FDI) in India is realized by working at the state level, relaxing immigration barriers to high-skilled workers wanting to work in both India and the U.S., and passing a Bilateral Investment Treaty (BIT). The private sector also offers great opportunities for growth that require less political change and expedites the process of investment. The combination of these action steps will make for a more open and economically prosperous environment.

Are U.S.–India relations growing? The answer is: They could be growing much more, if both sides would unleash the power of the free market.