Kal Ho Naa Ho is one of the most successful Bollywood movies ever. It’s a tragic love triangle among three very attractive Indians that made good inroads outside of the Indian market due to its setting: It all takes place in New York City. A better-known international setting than, say, Mumbai or Chennai, Kal Ho Naa Ho was more accessible to foreign audiences.
One small change though: virtually everyone in Kal Ho Naa Ho’s New York City is Indian. And it’s not the only Bollywood movie where they, for lack of a better term, Indian-wash the Big Apple. (Almost everybody in the New York of Kabhi Alvida Naa Kehna is Indian too.)
Discussions about diversity in media notwithstanding (spoiler: most people in NYC are not Indian) the films illustrate a germane point about India’s relationship with the US: They want to be in America, but they don’t really want America in India.
That’s the current situation regarding free trade with our friends in the Asian subcontinent, which will doubtless come up next week when President Trump brings his “America first” message to Davos. The country has created enormous barriers for American companies trying to export to the country’s 1.2 billion inhabitants. India is very welcoming to global companies that buy or manufacture there, but the Indian government is standing in the way of firms that sell there.
In 2015, the Indian government launched the “Make in India” initiative to attract foreign companies and investors to do more business there. India leapt that year to the No. 1 spot for foreign direct investment: attracting $63 billion worth of announced projects.
But then they pulled a bait and switch.
In 2016, India started introducing tariffs. Big ones. According to the U.S. Department of Commerce’s International Trade Administration, tariffs assigned to US commodities include:
-Flowers (60 percent)
-Natural rubber (70 percent)
-Automobiles and motorcycles (60 percent to 75 percent)
-Raisins (100 percent)
-Alcoholic beverages (150 percent) and
-Textiles (300 percent and higher)
Medical equipment like pacemakers, stents, and surgical instruments are hit with a 7.5 percent basic customs duty, 12.5 percent additional duty, and a 4 percent special additional duty. That’s an enormous amount of duty for the Indian government to put between its people and the U.S.-made devices that can save their lives.
India also has a dreadful record on respecting international intellectual property standards. While international property is one of America’s great competitive advantages, India is one of IP’s worst offenders. Fake clothes, footwear, and leather goods are easy to find in one of India’s many open-air counterfeit markets, but you’ll also find bogus automobiles and auto parts, electronics, mobile phones, CDs and DVDs, luxury goods, and so forth. The Indian government does nothing to protect American IP from these thieves.
President Trump apparently understands how beneficial it can be for India and the US to be in business with each other. He described India as a “leading global power” and wants to support the country’s leadership role in keeping the Indo-Pacific region secure. But he also denounced how the one-sided relationship with India hurts American workers and businesses. “From this day forward, we will compete on a fair and equal basis. We are not going to let the United States be taken advantage of anymore,” he said at the Asia Pacific Economic Conference in Vietnam.
India has been a concern in Washington even before the current Administration.
At a 2016 hearing, Senate Foreign Relations Committee Chairman Bob Corker (R-TN) said, “The rhetoric has far outpaced the reforms. Moreover, it appears that trade and investment remain principally transactional for the Indians rather than serving as instrumental tools to establishing a genuinely free market economy.”
Other problems foreign companies face in India include “onerous and unreasonable localization requirements, high tariffs, limits on foreign investment and unparalleled bureaucratic tape, red tape,” Corker continued.
India ranks only 130th out of 190 countries on the World Bank’s Ease of Doing Business Index. If India wants to climb this list and join the rest of the modern world, they need to make some serious changes.
India and the United States are the world’s two biggest democracies. We even mostly share a common language. Indian Minister of Commerce and Industry Suresh Prabhu and U.S. Trade Representative Robert Lighthizer must work together so that relationship obeys the mutually beneficial standards of free trade. We should have one of the best trade alliances in the world. But for that relationship to flourish, India must be transparent about its regulatory aims.
If India isn’t willing to do this, the “Make in India” initiative won’t accomplish its own goals, and the US-India trade relationship will die. Just like the main character in Kal Ho Naa Ho.
Jared Whitley has worked in the Senate, the White House, and the defense industry. He recently completed an MBA from Hult International Business School in Dubai.
