The State Bank of India’s research report, Ecowrap, while listing the economic aspects of Prime Minister Narendra Modi’s recent visits to the US and Egypt, said that this is the beginning of a new world order of collaborative knowledge economies. The report stated that the visits mark an important development both in the economic and strategic plane. The deepening of the ties between India and these two countries are of “vital importance for India’s economic development and position in the Indo-Pacific”, the report added.

Listing the aspects, the SBI Ecowrap report, stated that the US visit marks a shift in the onshoring of chip manufacturing in India. US chip manufacturers announced an FDI of $825 million with a combined investment of $2.75 billion to set up a semiconductor assembly and test facility in India.

It said that the dominance of China is being curtailed through collaborative arrangements amid bigwigs such as the US, Japan, Taiwan, South Korea, Netherlands – and now India. The strategic alliance between US and India assumes paramount importance to guide the uncertain future amid escalating geopolitical tensions.

Another aspect is the India-US defence relationship. The conventional arrangements will include further collaborations and leverage India as the hub of repair and maintenance of naval assets, as well as of aircraft. “The future collaborations in new defence domains will include the collaboration in defence application of space and AI technology. This will cover prototyping of projects, testing, collaborative research, and co-production of defence systems,” the report added.

The report added that the third aspect is the lowering of the cost of capital for green transition by provision of catalytic capital and derisking of climate projects. Many collaborations to achieve goals of net zero were announced covering green hydrogen, biofuel, sustainable aviation fuel and critical minerals.

The fourth aspect is the resolution of the six major pending disputes at WTO relating to steel, aluminium, renewable energy, and solar cells. Three of these cases were raised by the US against India and three were raised by India against the US.

“The US will grant market access to steel and aluminium products under the exclusion process of Section 232 of the Trade Expansion Act 1962. India has agreed to remove the additional duty, i.e., retaliatory tariffs on certain products. However, the prevailing basic import duty on these products applicable to all imports will continue. This market access will restore opportunities for Indian steel and aluminium exporters, which were restricted since June 2018. Going forward, the US Department of Commerce will clear 70 per cent of steel and 80 per cent of aluminium applications for products originating in India. It would provide significant impetus to raise India's steel and aluminium exports by about 35 per cent,” the report mentioned.

The fifth aspect pertains to the PM's Egypt visit where an agreement to elevate the bilateral relationship to a ‘strategic partnership’ was signed. Three MoUs in the fields of agriculture, archaeology and antiquities, and competition law were signed. Further ways to deepen ties in areas like trade and investment, information technology, defence and security, renewable energy, agriculture, health, culture and people to people ties were also discussed.

“In all, the two recent visits mark significant long term economic gains for India. Development will have a cascading impact on economic growth in India and extended neighbourhood,” stated the report.