Yellen visits India to bring growing economic power closer to American orbit
WASHINGTON, Nov 8 (Reuters) – Janet Yellen begins her first trip to India as U.S. Treasury Secretary on Tuesday, focusing more on the similarities between the world’s two largest democracies and the opportunities for deeper ties than on the conflicts past trade and geopolitics.
Yellen shouldn’t dwell on India’s failure to condemn Russia’s war in Ukraine, or India’s massive increase in purchases of cut-price Russian oil this year.
A Treasury official says the United States is not trying to dissuade India from buying Russian crude as G7 allies and Australia finalize details of a Western-imposed price cap on Russian oil exports scheduled for Dec. 5.
On the contrary, the official told reporters that India would benefit from the lower cap prices.
In addition to participating in the 12-year U.S.-India Economic and Financial Partnership Dialogue in New Delhi, Yellen will meet with Indian tech leaders and discuss India’s leadership agenda for the Top 20 Group. savings next year with Finance Minister Nirmala Sitharaman.
Yellen then travels to Bali, Indonesia for the G20 leaders’ summit as the group continues to battle deep divisions over the conflict in Ukraine.
THE DECADE OF INDIA
Yellen’s visit to India comes as the country is experiencing the early stages of an economic boom that has outpaced China’s growth rate in recent years and is rapidly expanding its manufacturing base.
Morgan Stanley said last week in a research report titled “Why is this India’s decade? .
With India’s growing economic weight, Washington and New Delhi have a “responsibility” to deepen their ties, dramatically expanding trade and investment flows, said Atul Keshap, a former career US diplomat who is now President of the US-India Business Council.
“We’re both part of a high-trust ecosystem. Our companies collaborate with each other at the higher end of the value spectrum,” Keshap said. “Strategically we have a lot of convergence and therefore economically we should have convergence.”
But the economic relationship presents challenges, including trade disputes over U.S. steel duties and Indian retaliatory tariffs on Harley-Davidson motorcycles (HOG.N).
Differences over digital trade and India’s data localization rules have hampered trade talks for years.
While India is part of the Biden administration’s flagship Asian engagement project, the Indo-Pacific Economic Framework, it has opted out of joining negotiations on the trade pillar of the IPEF.
But among the topics Yellen plans to highlight are strengthening pandemic-ridden supply chains through “friend shoring” or diversifying away from a COVID-restricted China and more. more authoritarian towards American allies.
“It’s a hugely compelling message for India,” said Richard Rossow, an India expert at the Center for Strategic and International Studies in Washington.
India and the United States are increasingly concerned about their heavy reliance on China for manufactured goods and inputs ranging from pharmaceutical ingredients to electronics, and India is eager to catch up. investments moving away from China, he said.
The Treasury official said the two democracies were “committed to maintaining the rules-based international order at a critical time for the cause of freedom.”
Yellen will also likely find a receptive audience to his call to dramatically increase the lending capacity of multilateral development banks to meet the needs of climate transition.
India sees it as a key way to meet both its climate goals and its growing electricity needs, while developing its technology and industrial base for green energy, said Ambitabh Kant, India’s G20 Sherpa.
He told a CSIS event last week that the IMF and World Bank “must become institutions to drive climate action.”
Reporting by David Lawder; Editing by Himani Sarkar
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