India–US Trade Deal Will Be A Game Changer For Growth & Investment: Arvind Panagariya

New Delhi, July 26 (KNN) Arvind Panagariya, Chairman, 16th Finance Commission, has expressed strong optimism about the prospects of an India–US trade agreement, calling it a potential ‘game changer’ for India’s economy and its appeal to global investors.

Speaking during an interaction at the Consulate General of India in New York this week, the eminent economist and former NITI Aayog Vice Chairman said the proposed trade deal would result in substantial liberalisation in India and position the country more competitively on the global stage. 

“A lot of the current things that are underway are very exciting,” Panagariya remarked, highlighting the India–US and India–EU trade negotiations as critical developments.

“The India–US trade agreement will be a big shot in the arm. Once that happens, the India–EU deal will follow. These are the two largest markets globally, and open access to both will make India a highly attractive destination for future investors,” he said. 

Reduced friction at the border, he added, would significantly enhance India’s global competitiveness.

Responding to a question on tariffs by PTI, Panagariya noted that such agreements would also lead to India lowering its own trade barriers, which could have wide-ranging positive impacts. 

The US–India bilateral trade relationship continues to expand. 

In 2024, total goods trade between the two countries reached USD 129.2 billion. US exports to India stood at USD 41.8 billion, while imports from India rose to USD 87.4 billion, resulting in a trade deficit of USD 45.7 billion.

Prime Minister Modi and President Trump have set an ambitious goal—dubbed Mission 500—to increase bilateral trade to USD 500 billion by 2030. 

Commerce Minister Piyush Goyal recently stated in London that India is making ‘fantastic progress’ in its trade talks with Washington. 

Speaking about the Viksit Bharat 2047 goal of becoming a developed nation by India’s centenary of independence, he noted that sustained growth in per capita income would be essential. 

India's current Gross National Income (GNI) per capita is USD 2,740, well below the World Bank’s high-income threshold of USD 13,995. 

Reaching this milestone would require an annual GNI growth of 7.9 percent, factoring in population growth of 0.6 percent.

He emphasised that India’s large population and relatively low per capita income create ample room for growth. 

He pointed to India’s expanding physical and digital infrastructure, rapid urbanisation, and young, high-saving population as key enablers of this trajectory.

On the reform front, Panagariya highlighted the implementation of new labour codes, growing awareness among states about the importance of urbanisation, and continued expansion of public goods infrastructure. 

However, he cautioned that India's most pressing challenge remains the transition from a rural, agriculture-based economy to one anchored in manufacturing and services. “The creation of well-paid jobs in industry and services is the biggest challenge,” he said.

(KNN Bureau)