With supply chains and clean energy emerging as a crucial focus for both India and the US, the former will likely be reinstated in the GSP program to augment the ties between the nations.
The Reagan-Thatcher revolution and the advent of the Washington Consensus, which came into being in the 1980s, have critically led to opposition in economic orthodoxy over policies to imply winners in the arena, rather than mere market decisions.
Subsequent to this development, the United States has passed two crucial legislations; the chip and Sciences Act, and the Inflation Reduction Act in redesigning the pre-existing global supply chains, with an expected budget of 280 billion USD and 370 billion USD.
Enhancing domestic Semiconductor Industry
The former act aims at building the domestic Semiconductor Industry to ensure scientific supremacy in the US, with the latter reducing healthcare costs to encourage clean and green energy transmission and the attempts aim at decoupling the US economy from political uncertainties, where India has joined the programme via distinct schemes like Production Linked Incentives (PCI). Consequently, India is all set to embrace opportunities in emerging supply chains.
An integrated synergy between the US and India on this front is likely to be seen in recent times, with a major increase in the number of state visits by senior leaders of the respective nations. However, trade relationship ties between India and the US are yet to be reinforced to the post-liberalization period, thereby, reaching a full-fledged agreement. That is, both the democratic nations have distinct views on agriculture, labor standards, climate, and human rights issues, and are echoed in the current Indo-Pacific Economic Framework for Prosperity (IPEF). The IPEF highly aims at building regional cooperation on trade, supply chain, clean energy, and tax and anti-corruption.
Clean energy and supply chain
Supply chains and clean energy are generally critical arenas in both India and the United States, where green hydrogen holds an indispensable role play in building resilient global value chains. Wherein, India is yet to extend their participation in the trade channel of the framework, underlining the need for an established alliance between the two democratic nations. That is, reinstating India in the Generalised System of Preferences (GSP), and crucial negotiation on services trade exclusive of the framework, in addition to an intellectual-level exchange of ideas on labor and environmental standards guides the nations in extending their cooperation over the framework.
The US established preferential treatment to imports from developing countries, the GSP aims at exempting tariffs for eligible products from developing nations on their import to the United States. Thus, Indian exports to the US have seemed to be more competitive, accelerating the trade scale and pace between the nations. India has benefitted exponentially by adapting to the GSP system, while ensuring critical harmony between the countries. Thus, the US space is critically aiming to reinstate India into the GSP program, enhancing the bilateral ties between the areas.
Could the CHIPS and Science Act remake Boston’s middle class?
President Joe Biden recently signed into law a $280 billion act aimed at keeping America innovative and competitive on the global market, which will use taxpayers’ money to fund computer chip companies and invest in research.
Biden described the CHIPS and Science Act of 2022 as a way to ensure the future of the industry is “made in America.”
Semiconductor chips are tiny computer chips used in products that range from electric vehicles to smartphones, and there was a shortage in supply of chips during the pandemic. The bill funds to build those CHIP manufacturing plants in the USA.
In addition to the $52 billion for domestic semiconductor production, the law also commits another billions to 20 regional technology hubs for job creation and development in areas like chips, energy technologies and biotechnology.
