india-us-bilateral-relations

India-US strengthened their partnership with agreements on healthcare and energy, and issued a joint statement that designated the two countries as “Comprehensive Global Strategic partners”.

  • The historic welcome to Trump was about ending the residual domestic reservations in India about partnering with the United States.

Key takeaways of Trump’s visit: 

A thrust on “early conclusion of the Basic Exchange and Cooperation Agreement”: this is one of the last of the foundational agreements in defense cooperation. 

Foundational Defence agreements between USA & India

  • India has already signed the Logistics Exchange Memorandum of Agreement (LEMOA) with the US and Communications Compatibility and Security Agreement (COMCASA). 
  • However, it is yet to sign the BECA for geospatial cooperation. 
  • A country needs to sign these three pacts to obtain cutting-edge weapons and communications systems from the United States.

Blue dot network: Since China is expanding its strategic footprint through the Belt and Road Initiative (BRI), India and the US are planning to discuss the Blue Dot network.

About Blue Dot network:

  • It is “a multi-stakeholder initiative to bring together governments, the private sector, and civil society to promote high-quality, trusted standards for global infrastructure development.
  • The US-led proposal is already joined by Japan and Australia as partners.
  • This proposal is part of the US Indo Pacific strategy.
  • Different from China’s Debt trap diplomacy: Projects that meet the norms will get a “blue dot”, which will enable them to attract private funding with transparency and adherence to environmental norms. It also avoids debt traps as they will not have to depend on state funding alone.

Terrorism

  • The joint statement did not mention the Comprehensive Convention on International Terrorism, which was mentioned in the 2017 statement. 
  • It mentioned Pakistan, cross-border terrorism and expeditiously bringing justice to the perpetrators of Mumbai and Pathankot terror attacks along with the names of the Haqqani network and TTP.

About ‘Comprehensive Convention on International Terrorism’ (CCIT)

  • It provides a legal framework that makes it binding on all signatories to deny funds and safe havens to terrorist groups. 
  • Proposed first by India in 1996, the ratification of the Comprehensive Convention on International Terrorism is impeded due to opposition from the US and OIS countries over the “definition of terrorism" (the most divisive of the issues).
  • However, three separate protocols that aim to tackle terrorism have been adopted by UNO

Afghanistan issue: In a major development, the two sides have agreed on a common language. While it talks about Afghan-led and Afghan-owned, it does not mention Afghan-controlled –– since in reality the peace process is controlled by other players, including the US.

Kashmir and religious freedom issues: U.S. President renewed his offer to mediate between India and Pakistan on Kashmir and discussed the issue of “religious freedom”. India has consistently rejected mediation in the issue of Kashmir since it considers Kashmir as a mutual issue between India and Pakistan.

Nuclear Suppliers Group: With India in other multilateral export control regimes, it said Trump reaffirmed US support for India’s entry to the Nuclear Suppliers Group “without any delay”.

Group on narcotics: The two sides agreed to a “joint working group” (JWG) on fighting narcotics as part of their homeland security dialogue and two MoUs on mental health and safety of medical products were signed. 

Trade: While Indian and U.S. negotiators failed to forge a trade deal in time but they would work on a legal framework for a future deal.

About Indo-US relations: India-U.S. bilateral relations have developed into a "global strategic partnership", based on shared democratic values and increasing convergence of interests on bilateral, regional and global issues.

Brief Background 

1947- 1971: A Period of Harmony & Discord 

  • Prime Minister Pandit Nehru met with U.S. President Harry S. Truman in 1949 in the U.S. The trip preceded India’s formal proclamation of neutrality in the developing Cold War, in which it took a leadership role within the Non-Alignment movement.
  • In 1962, Nine American universities and the U.S. Agency for International Development (USAID) helped establish one of the first Indian Institutes of Technology at Kanpur.
  • In the 1962 Indo-China War over a disputed frontier, the U.S supported India in the conflict, recognizing the McMahon Line as the border, and provided air assistance and arms. 
  • U.S. Agronomist Norman Borlaug tested high-yield wheat varieties and his collaboration with Indian scientist Dr. M.S. Swaminathan resulted in the “Green Revolution,” which transformed India from food scarcity to self-sufficiency within a decade.
  • In the 1965 India-Pak war, the United States supported Islamabad, given its mediating role in Nixon’s rapprochement with China.
  • India also signed a twenty-year Treaty of Friendship and Cooperation with the Soviet Union, sharply deviating from its previous position of non-alignment in the Cold War.
  • Support on Kashmir brought Soviet Russia closer to India in the 1950s, the rift between Moscow and Beijing in the 1960s consolidated the Indo-Soviet partnership.

1974 - 2001:  A Period of Estrangement

  • In 1974, India Completed the First Nuclear Test to become the first nation outside the five permanent members of the United Nations Security Council to have declared nuclear capabilities. In 1978, Washington ended all nuclear assistance to Delhi.
  • In 1982, Prime Minister Indira Gandhi met with President Ronald Reagan during a state visit to improve the countries’ strained relationship. 
  • In 1998, India Tested Nuclear Devices - US President Bill Clinton imposed economic sanctions, required under U.S. law.
  • In 2000, President Bill Clinton made the first U.S. presidential trip to India since 1978. ending the estrangement of the post-1998 Indian nuclear weapons tests. The Indo-U.S. Science and Technology Forum was also established during the visit.
    • As India’s economy began to take off, the trip indicated a further shift in Washington’s regional orientation away from its Cold War alliance with Pakistan.
  • In 2001, U.S. Lifted sanctions that were imposed on India after its 1998 nuclear test.

Since 2004:  A Period of Elevation & New Achievements 

  • In 2005, the United States and India signed the New Framework for the U.S.-India Defense Relationship, which sets priorities for defense cooperation in maritime security, humanitarian assistance/disaster relief, and counterterrorism.
  • India and the United States inked the Civil Nuclear Cooperation Initiative: Under the agreement, India agreed to separate its civil and military nuclear facilities and place all its civil resources under International Atomic Energy Agency (IAEA) safeguards.       
  • In 2008, The Nuclear Suppliers Group (NSG), an intergovernmental body that sets guidelines for nuclear exports, allowed an exemption to its rules that permits India to engage in nuclear trade for the first time in three decades.
  • Chandrayaan-1 became the first Indian spacecraft to land on the moon. It carried two scientific instruments designed by NASA scientists, which later discovered water molecules on the moon’s surface.
  • In 2014, a memorandum of understanding between the Export-Import Bank and an Indian energy agency was signed, which provided up to $1 billion to help India develop low-carbon energy alternatives and aid U.S. renewable energy exports to India.
  • In 2016, the United States elevated India to a major defense partner, a status no other country holds. 
  • In 2018, during a “two-plus-two” dialogue India & U.S. signed ‘The Communications Compatibility and Security Agreement (COMCASA)’.
  • In 2019, the two sides also inked an industrial security agreement that allows the transfer of defense technology.
  • Modi’s strategic embrace of Trump looks quite similar to India’s enthusiasm for Soviet Russia during the Cold War.

Political Relations: India & US in 2015 issued a Delhi Declaration of Friendship and adopted a Joint Strategic Vision for Asia-Pacific and the Indian Ocean Region. 

Strategic Consultations: US-India 2+2 Dialogue between Defence and Foreign Ministers of both countries,  to discuss ways to advance cooperation on critical diplomatic and security priorities.

  • The strategic cooperation with the US encompasses the Indo-Pacific and the two nations have good exchanges on that front.

“Indo-Pacific” refers to the inter-linked destinies of the Indian Ocean and Western Pacific regions. 

The rise in prominence of this term indicates the eastward shift in the world’s economic center of gravity towards the Asian continent and highlights the relevance of maritime strategy in shaping geopolitical outcomes in the twenty-first century. 

Arguably, the transition from the term “Asia-Pacific” to “Indo-Pacific” also reflects the rising importance of India as a “natural” balancer in the region.

Civil Nuclear Cooperation: The bilateral civil nuclear cooperation agreement was finalized in July 2007 and signed in October 2008. Both have started the preparatory work on-site in India for six AP 1000 reactors to be built by Westinghouse.

Defense relationship: It has emerged as a major pillar of India-U.S. strategic partnership with the signing of the ‘New Framework for India-U.S. Defense Relations’ in 2005. 

  • According to the Bureau of Political-Military Affairs of the U.S. State Department, the defense trade has increased to $15 billion in 2019.
  • India and the U.S. concluded defense deals worth over $3 billion for 24 MH-60R Seahawk Multi-Role Helicopters for the Navy and six AH-64E attack helicopters for the Army.
    • Negotiations are going on regarding India’s potential purchase of drones, additional P-8I long-range, multimission maritime patrol aircraft and also Raytheon intelligence, surveillance, target acquisition, and reconnaissance (ISTAR) aircraft.
    • Since 2008, India has purchased sophisticated C-17 and C-130J transport planes, Harpoon missiles, Apache and Chinook helicopters, and M777 howitzers.
  • In 2016, the U.S. recognized India as a "Major Defence Partner", which commits the U.S. to facilitate technology sharing with India to a level commensurate with that of its closest allies and partners.
  • The agreements signed in the recent past include Logistics Exchange Memorandum of Association (LEMOA - access to designated military facilities on either side for the purpose of refueling and replenishment), Fuel Exchange Agreement, Technical Agreement (TA) on information sharing on White (merchant) Shipping, and the Information Exchange Annexe (IEA) on Aircraft Carrier Technologies.
  • In 2018, another defense foundational agreement, the Communications Compatibility and Security Agreement (COMCASA) were inked to “facilitate access to advanced defense systems and enable India to optimally utilize its existing U.S.-origin platforms.”
  • India in 2018 also became just the third Asian country (after formal US treaty allies, Japan and South Korea) to receive clearance on purchasing license-free space and defense technology under the Strategic Trade Authorisation-I.
    • STA-1 allows India to import high-end sensitive technologies like armed drones.
  • Joint exercises such as Cope-India (Air Force), Yudh Abhyas (Army) and Vajra Prahar (Special Forces). Tiger Triumph Exercise- the India-U.S. joint tri-services and amphibious exercise ‘Tiger Triumph’ on an annual basis. It was first held in November 2019 as a Humanitarian Assistance and Disaster Relief (HADR).
  • The two sides are also increasingly engaged in multi-lateral exercises such as the MALABAR, RED FLAG, and RIMPAC, covering the broad expanse of the Indo-Pacific.

Counter-terrorism and internal security: Expansion of bilateral counter-terrorism cooperation, through increased information-sharing efforts on known or suspected terrorists and implementation of UN Security Council Resolution 2396 on returning foreign terrorist fighters.

Trade and Economic: At a broad level, U.S.-India trade in goods and services has grown at a steady clip from $16-billion to $142-billion during 1999-2018.

  • Both side’s Foreign Direct Investment (FDI) witnessed double-digit growth in 2017—with US FDI in India rising by 15.1-percent and India’s FDI in the US surging by 11.5 percent.

Energy and Climate Change: With India’s energy demand expected to grow at 4.2% per year over the next 25 years, India is the sixth-largest buyer of US LNG. It also purchases crude oil from the USA.

  • Tellurian Inc. has signed a $7.5 billion agreement for India’s Petronet LNG Ltd to buy a stake in its proposed LNG terminal near Lake Charles, Louisiana. India is the world’s fourth-largest LNG importer.
  • Collaboration between Nuclear Power Corporation of India Limited (NPCIL) and Westinghouse Electric Company for the establishment of six nuclear power plants in India.

Education

  • The Fulbright program was renewed in 2008, with the enhanced mandate and joint funding to provide more student and scholar exchange grants.
  • Under the Global Initiative of Academic Networks (GIAN) launched by India, up to 1000 American academics will be invited and hosted each year to teach in Indian universities at their convenience.
  • The two sides are also collaborating to establish a new Indian Institute of Technology in Ahmedabad.

Diaspora: The Indian Diaspora has evolved over three phases in the U.S, firstly the pursuit of education and employment, secondly, a major source of remittances ($10.657 Billion annual remittances from the US to India in 2017) and thirdly as effective players in impacting the dynamics of U.S.

Science & Technology (S&T) & Space

  • NASA and ISRO are collaborating for India's Mars Orbiter Mission and for a dual-band Synthetic Aperture Radar (NISAR).
  • India's contribution of $250 million towards the Thirty-Meter Telescope Project in Hawaii and Indian Initiative in Gravitational Observations (IndiGO) with U.S. LIGO Laboratory are examples of joint collaboration to create world-class research facilities.

Health sector: In order to build up the disease surveillance and epidemiological capacity in India, Global Disease Detection-India Centre was established in 2010 and an Epidemic Intelligence Service program launched in 2012.

Significance of the Relations

  • Emerging strategic alignment with the US: Despite its relative economic decline, the US is poised to dominate the military realm due to high defense spending and unparalleled power projection capability of nearly 800 military outposts across 70 countries.
  • China factor: Today the deepening schism between Washington and Beijing and the growing imbalance between India and China have set the stage for Delhi and Washington to work together to stabilize the Asian balance of power.
    • Focus on Indo-Pacific region - In the backdrop of China’s expanding footprint in the region, India and the US will work in concert with other partners toward advancing a free, open, and inclusive Indo-Pacific region, based on recognition of the centrality of the 10-member ASEAN.
    • Quad and containing China- ‘Quad’ grouping of like-minded democracies India, USA, Australia, and Japan have the potential to dramatically change the Asia Pacific region’s security landscape.
  • Message to Pakistan - Delhi has received the extraordinary support from Trump on the Kashmir question, on pressing Pakistan to stop cross-border terrorism, sustaining the pressure on Pakistan at the Financial Action Task Force (FATF) and preventing the UNSC to discuss Kashmir after India changed the constitutional status of the state.
  • Afghanistan Policy - US engagement with the Taliban is a central pillar of Afghan politics which has strategic importance for an Indian security interest in Kashmir.
  • Infrastructure development avoiding debt traps - US & India have emphasized the need to work collectively with other partner countries to support transparent, responsible and sustainable debt financing practices in infrastructure development.
  • Energy - India, the biggest emitter of greenhouse gases after the US and China, has been pushing for a gas-based economy and plans to connect 10 million households to piped natural gas by 2020. 
    • Also, in the wake of the West Asian Crisis (including US Sanctions on Iran), India is looking forward to diversifying its energy import sources.
  • Coalition for Disaster Resilient Infrastructure (CDRI): United States has announced its commitment to being the founding member of the CDRI whose headquarters will be located in India. U.S. participation in CDRI is a significant development for the organization since the U.S. has considerable expertise in the area, which will be beneficial to the organization and its members.

India has effectively moved from its historical fixation with ‘strategic autonomy’—a ghost of its nonaligned past, to ‘strategic alignment’. 

For example, India found common-ground with China to defend globalization against the America First-brand of protectionism, whilst otherwise embracing the United States on a host of other issues.

Concerns:

  • A distrust: Despite much progress over the last two decades, distrust of the US is entrenched in the bureaucracy, the political class, and the intelligentsia of India.
  • Bilateral trade deficits. India has slightly narrowed the trade deficit in goods with the United States, which went from $24.3 billion in 2016, the tenth-largest that year, to $23.3 billion in 2019, the eleventh-largest. 
    • An MoU for India’s gas importer Petronet to invest $2.5 billion in U.S. company Tellurian Inc’s LNG project, that was signed during Mr. Modi’s visit to Houston, was not finalized.
    • Agreements on Space and Intellectual Property Rights also were not finalized because of procedural delays.
  • Tariffs: The Trump administration began applying new tariffs in 2018 on steel and aluminum imports from dozens of countries, including India, using a national security exemption in U.S. trade law. 
    • In response, New Delhi drew up a list of retaliatory tariffs and filed it with the World Trade Organization (WTO), but held off on applying them.  
    • India’s high tariffs on motorcycles—they stand at 50 percent for some Harley-Davidson models.
  • Generalized System of Preferences (GSP): the Trump administration removed India from the GSP program, a special trade treatment for developing countries. 
    • One qualification of the program is “equitable and reasonable” access to that country’s markets for U.S. goods and services, the USA noted still-significant trade barriers in India. 
  • Agricultural trade: India’s 2019 retaliatory tariffs included U.S. almonds, walnuts, cashews, apples, chickpeas, wheat, and peas. Also, India imposed a retaliatory tariff of 20 percent on in-shell walnuts.
  • U.S. dairy products: It is difficult for U.S. dairy farmers to sell their products in India because India requires that dairy products are “derived from a dairy cow that has been fed a vegetarian diet for its entire life.
  • Intellectual property rights: Concerns involve piracy of software, film, and music and weak patent protection, among others. India is placed on the USA's priority watch list despite some progress.
  • Investment barriers: The insurance industry has an FDI limit of 49 percent and a requirement that companies be Indian-controlled.  In banking, foreign ownership is capped at 74 percent.  Media also face foreign investment limits: 49 percent for cable television. In single-brand retail, which comprises companies such as Nike that sell only their own goods, Indian rules permit 100 percent FDI but have some local sourcing requirements. Multi-brand retail is permitted up to 51 percent FDI, however Indian states can opt-in or opt-out of allowing this type of foreign investment; currently, only around nine of India’s twenty-nine states permit it (plus a small union territory). 
  • Medical devices: The USA has fresh concerns about customs duties on medical equipment and devices when the Indian government applied new price controls on coronary stents and knee implants.
  • Digital Economy: In 2018, RBI ordered companies “that operate a payment system in India” like credit card companies and digital payment platforms such as PayPal, to store all data on local servers. This at first led to confusion about jurisdiction for cross-border transactions
  • In the e-commerce sector, rules prohibit foreign investment in platforms that sell directly to consumers, so foreign e-commerce operators in India use a marketplace model. That means they provide the technology platform to connect buyers with sellers.
  • Energy Insecurity - USA’s tensions with Iran and Venezuela have put India’s energy security at stake with India dependent on imports for more than 80% of its energy.
  • Visas in services trade: There are restrictions on visas for highly skilled Indian professionals seeking to take up employment in the U.S.
  • Hate Crime - The racist attacks spark concern among Indians that the United States is not safe for them. Increasing anti-immigrant rhetoric causes some prospective applicants to rethink their plans.
  • Internal disturbances in India: An India at war with itself can hardly take advantage of the huge possibilities presented by the warm phase in the US relationship.

Strategic concerns:

  • American withdrawal from Afghanistan war & the possible revival of the Taliban: Pakistan-based terror elements or the Inter-Services Intelligence may gain a stronger foothold in the power vacuum that could compromise Indian interests considerably. 
  • CAATSA -  the Countering American Adversaries Through Sanctions Act (CAATSA) affects India-Russia defense relations, especially in the context of India’s purchase of the S-400 missile system.
  • Erosion of Strategic Autonomy - In addition to CAATSA & Iran Sanctions, U.S has urged India to avoid using Huawei equipment as it prepares to roll out a 5G network, and warned that deciding to go ahead with Huawei could impede future intelligence sharing.

Way Forward

  • Move towards a Free trade agreement: A  $10 billion “limited trade deal” should be signed which expectedly includes restoration of generalized system of preferences (GSP) scheme for India in return for dismantling of “retaliatory tariffs” on American almonds, walnuts and pulses, apart from lowering import duties on high-end motorbikes like Harley Davidson and several farm and food products like cherries.
  • Conclusion of BECA-  the true potential for high technology transfer involving the Indian private sector would be realized only after the conclusion of the Basic Exchange and Cooperation Agreement (BECA).
  • India needs to speed up its defense modernization, especially capacity-building, indigenous manufacturing and access to the most sophisticated defense technologies if it is to play a role commensurate with its ambition and potential.
  • US concerns regarding IPR run deep and remain to be assuaged, just as India’s expectations regarding the transfer of technology and license production remain unfulfilled.
  • Mr. Modi may privately seek reassurances from his President Trump to mitigate the fallout of the USA’s withdrawal from Afghanistan.
  • As US-India ties enter seemingly turbulent waters, both nations recognize the relationship’s value for the strategic underpinnings of their respective foreign policies. After all, it is the willingness to discuss differences that makes two democracies like India and the US natural partners.

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