US-India trade is vital to shaping the future of the Indo-Pacific

As it celebrates 75 years of independence, India has become the world’s fastest-growing large economy and a global leader and trendsetter that will soon overtake China as the world’s most populous country. 

U.S. strategy in Asia cannot neglect India’s importance or growing economic weight. To shape the next phase of development for a free and open Indo-Pacific, it’s vital that the United States deepen commercial engagement with the world’s largest democracy. 

As vice president, Joe Biden set a target of $500 billion in U.S.-India trade, but too little progress has been made toward this goal. As strategic concerns in the region escalate, it’s time to shore up our joint strategy to incorporate a more robust trade agenda. 

India is moving forward fast without meaningful U.S. government engagement. In the digital economy, the architecture for the next five decades is being built over the next five years: The Indian parliament recently introduced a Competition Bill with provisions on mergers and acquisitions that would give it greater control over American technology companies. India is also launching an “Open Network for Digital Commerce” that will transform how e-commerce companies compete for customers in the country.

India is well positioned to export these frameworks: Just as we’ve become familiar with the “Brussels effect,” Washington has to prepare for the “Delhi effect” throughout the region. Without constructive commercial engagement between the two countries, we may find ourselves competing rather than collaborating on the next phase of Indo-Pacific development.

Our allies recognize the strategic imperative of closer business ties with India. Australia recently signed an interim trade agreement with India, the first India has signed with a developed country in a decade. Since 2016, the United Kingdom has invested significant political capital to advance trade talks with India, negotiating a trade deal in the context of strengthening strategic ties and remaining open to increasing visas to Indians as part of the bargain. The European Union relaunched talks for a free trade agreement with India last month, recognizing the “unprecedented urgency” for greater cooperation to counter rising authoritarianism around the world. Our allies see that their trade doctrines must service their strategic interests and that limited deals are better than none.

The U.S. needs to catch up before it can lead. The relaunched U.S.-India Trade Policy Forum (TPF) is not making sustained progress on market access. Biden’s new Indo-Pacific Economic Framework (IPEF) will not address tariffs or market access for American workers and the goods and services they produce. India’s decision to participate as only an observer in the last IPEF ministerial signals that the framework is failing to secure critical buy-in from one of its most important stakeholders.

A robust trade strategy with India must fully leverage the TPF, IPEF, and the Quad platforms to address market access in bilateral and multilateral contexts. The digital space is ripe for a “mini-deal.” Elements like technical standards and cross-border data flows can be unbundled and negotiated on separate platforms, serving as building blocks for a comprehensive Digital Trade Agreement between the two digital giants. Additionally, with U.S. businesses clamoring to attract high-skill talent, liberalized visas for Indian workers and students could be a potent incentive in trade negotiations that could help address the skills gap in our own workforce.

India has been a historically difficult trading partner, retaining some of the world’s highest tariff barriers and presenting significant concerns for U.S. firms in intellectual property, digital governance and public procurement. Constructive trade engagement from Washington can encourage India to take further steps to be a positive stakeholder in the multilateral trading system and address concerns articulated by American investors and firms.

Mini deals in critical sectors can serve as stepping stones to an eventual trade agreement. In the long run, a free trade agreement with India would be a monumental achievement enabling us to work as economic partners in securing a free and prosperous Indo-Pacific.

The “pivot to Asia” has been an elusive goal for Washington across administrations. If the Biden administration is going to stick the landing, it must advance a bold trade agenda with a democracy that can be as messy as our own. But, unlike us, that democracy is moving ahead with vigor to expand trade partnerships in its own national interest.

Myron Brilliant is executive vice president and head of international affairs of the U.S. Chamber of Commerce.