Diplomatic contacts between India and the US were initiated in November 1941, six years before our independence. There was a wealth of goodwill for India’s independence in the US.
The decision to establish diplomatic relations with India reflected the American unhappiness with the British approach to the question of independence. The United States believed that Britain should promise self-government to India after the War, in exchange for India’s participation in the struggle against Hitler.
The Atlantic Charter, spelt out by the US and Britain, had offered hope of a new dawn to the suppressed people of the world once the War had been successfully concluded. America got a lot of credit in Indian eyes for this. However, Britain subsequently declared that the Charter applied solely to fellow Europeans under Hitler’s Nazi occupation.
Relations in the Cold War Years
The relations between India and the US failed to achieve their full potential. Many factors were responsible in determining the actual course. This was due to the preoccupation of the United States with the ‘containment of communism’ which started the Cold War between the US and the Soviet Union. The newly independent India, led by our first Prime Minister Jawaharlal Nehru, refused to be drawn into the Cold War politics of competitive military alliances promoted by both the superpowers.
Nehru chose the policy of ‘nonalignment’ which aimed to give India the much-needed independence of action in the sphere of foreign policy and relations. America regarded India’s refusal to collaborate as a sign of unfriendliness. The cause of better Indo-US relations received a blow in 1954. The US through Cold war brought rivalry to India’s doorsteps by forming two military organisation SEATO and CENTO with Pakistan who joined these alliances as a key member. The US military aided Pakistan, given to check the spread of communism, was used against India contrary to initial assurances.
The October 1962 war between India and China introduced a new element in the Indo-US relations. Within India, there were for the first time many voices strongly advocating an alliance with the US against China. Many also wanted a drastic modification of the nonalignment policy. There was perhaps an expectation in the US too that India could now be prepared to head an anti-Chinese and anti-Communist alliance.
When the Chinese invasion scaled up, the Government of India made an urgent appeal to Washington (US) for military supplies. In a speedy response, the US President John F. Kennedy provided India with small arms and equipment. The first batch of arms arrived even before the signing of a deal between the two countries. Further, the US agreed to payment for these arms in rupees.
However, the pro-American goodwill in India evaporated with the US reluctance to openly blame Pakistan for starting the 1965 war against India. In addition to US support to Pakistan, US war on Vietnam contributed to certain coldness in Indo-US relations in 1960s. In the beginning of 1970s, the US rapprochement with China (with Pakistan help) was another turning point.
The Bangladesh episode created a new crisis in Indo-US relationship too. The US administration (government) took the position that the East Pakistan’s (present-day Bangladesh) revolt was a movement to break up Pakistan and that Pakistan’s brutal attempts to suppress it were justified. During the Bangladesh war (1971) the US moved a anti India resolution in the Security Council and USA froze its economic assistance to India.
The only assistance that continued was food distributed free by voluntary agencies. Not only that, Washington also made military moves. A part of the US Seventh Fleet was ordered into the Bay of Bengal.
The nuclear-powered aircraft carrier USS Enterprise sailed towards the Bay of Bengal in a show of solidarity with Pakistan army which could be saved from defeat in Bangladesh.
It took some time (a couple of years) for the US to recognize India as the major country in the South Asian region. It was in this spirit of reconciliation, India hosted President Carter’s visit in 1977.
However, once again another blow struck. The Soviet invasion of Afganistan in 1979 had thrown India and United States on opposite sides. Pakistan became the closest ally to facilitate military help to Afghan Mujahiddeen. No doubt India’s initial sympathies with the Soviet action against Afghanistan harmed relations with America.
American Aid to India
There was a slow start to the economic assistance that India received from the US. India’s food production at the time of independence was insufficient to feed its millions; its industrial and service sector were also quite backward.
That is why, India was dependent on other countries for bilateral assistance. The first of the many food aid shipments to India from the US started in 1951.
In 1954, the US Congress passed a Public Law 480 (PL 480) allowing the sale of surplus American wheat to India. India continued to receive foodgrains from the US under PL 480 till the early 1970s.
The story of suspicions in political relationship uses only one side of the coin. During the cold war, despite political differences, India received significant economic and food aid from the US, right from 1950s. In addition to food assistance, the US had provided large bilateral developmental assistance to India.
However, you must not forget that this assistance was not available for the development of heavy industry but in the field of agriculture, development of raw materials and minerals.
For creating a heavy industrial base, India had to turn to the Soviet Union. The development assistance given by the US reached a peak of around $500 million in 1962.
During the Bangladesh war, the US froze its economic aid to India. However, the bilateral assistance started in 1978 after a long gap.
But the importance of bilateral aid decreased from the late 1970s onwards because of the substantial increase in multilateral assistance given by the International Development Authority (IDA), the softmoney affiliate of the World Bank.
Much of the IDA money was, of course, funded indirectly by the US. In the 1980s, the World Bank lending typically ran into $2 billion (one billion is one hundred crores or one thousand million).
So, for India, the US stance towards multilateral financial institution mattered more than the bilateral aid. US had no objection to clear India’s request for a $5.8 billion loan from the International Monetary Fund (IMF) in 1981 - the largest ever sought by a member country.