India, US services trade can cross $150 b: CII study

The study by CII highlights the recent trends in investment and trade between the two economic giants and proposes an economic agenda for growth and deeper integration. The study also underscores various concerns that impede greater economic engagement between the two largest democracies in the world.

In the current economic crisis India’s exports to the US have dropped by 20 per cent, which has severe implications for the more than 150 million people employed in the export sector. Since the US is India’s second largest export market, the study urges the US to remove trade restrictions and production subsidies that they have introduced temporarily to counteract the effects of the crisis. In services trade, although exports have grown exponentially to touch  $12 billion in 2008, Indian industry is still concerned regarding movement of professionals and non-recognition of Indian professional qualifications in the US.

The study calls for a focused strategy to diversify India’s exports into sectors such as financial, entertainment and health and health related services; easing of commercial services requirements by the US and recognition of Indian professional qualifications as laid down by international organisations.  The investment front would however be critical for building synergies between India and the US.  The study finds that India’s FDI outflow to the US outgrew inflow from the US in 2008. US investments in critical infrastructure sectors from roads to electricity, irrigation to telecom is still low and India’s investment gap in these sectors is to the tune of $150 billion.

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