Prime Minister Narendra Modi’s second visit to the U.S. from 26-30 September 2015 and his third meeting with President Barack Obama promised a lot in terms of aspirations and commitments— it is now time to consolidate and deliver.
The primary focus on business, innovation, and technology was evident in Modi’s interaction with India’s tech diaspora and Silicon Valley IT majors like Google and Facebook. The contrast with Chinese premier Xi Jinping’s high-octane visit to the same IT majors in the U.S. was stark. While the IT companies want to tap into India’s vast market for internet and IT services, in China, Google and Facebook remain banned, and industry majors unsuccessfully sought Chinese commitment to stop the hacking of U.S. defense, business, and technical data.
Another important part of Modi’s U.S. agenda was climate action in cooperation with the U.S. administration and business sector. His visit to the Tesla plant in San Jose was aimed at exploring its solar powerwall technology, considering that India has an ambitious target of setting up 175 gigawatts of solar and wind power capacity by 2022. India has to also ensure that about 40% of its electricity comes from non-fossil fuels if it is to meet the target of reducing the country’s greenhouse gas emission intensity by 33-35% by 2030 (when compared to 2005 levels).
These issues will come up at the 2015 United Nations Climate Change Conference, COP21, in December 2015, and the India-U.S. strategic partnership on energy security, clean energy, and climate change can enable India to import climate-friendly technologies for its industry and power sector. However, a lot now depends on the flow of financial resources from the U.S. as well as from the UN Green Climate Fund.
But the American view remains that India is still highly defensive and protectionist in its trade policy—this was clear at the bilateral Strategic and Commercial Dialogue on 22 September 2015 in Washington, which preceded Modi’s visit. Although Modi’s statement after meeting Obama speaks of a shared a vision for Asia, Pacific, and the Indian Ocean, which allows for freer transit and investment, the American view of a protectionist India may explain why India is not a part of the two major new generation trade agreements—the Trans-Pacific Partnership (TTP) and the Trans-Atlantic Trade and Investment Agreement (TTIP). Together, the TPP and TTIP will eventually cover 68% of world trade, making it difficult for countries like India to participate in this trade.
India must therefore take early steps to simplify its trade policy and tariff structure, and, like the TPP and TTIP, base it on the concept of global value chains, if it wants to benefit from these new generation accords. India’s bid to join the Asia Pacific Economic Community (APEC), and the WTO Agreement on Trade in Services or the Agreement on Environmental Goods will also depend on the degree to which Modi’s trade policy can deal with these new developments in international trade. To this end, India first goal must be reducing trade and investment controls, and improving its ranking in the World Bank’s ‘ease of doing business’ index. This will also help India to jump-start a high-growth strategy.
On the defence front, India seems to have finally decided to increase its use of U.S. equipment and weaponry. But the decision to buy $3.1 billion worth of military hardware from the U.S. just before Modi’s visit is opportune only if it boosts the domestic defence trade and technology sector—and Boeing or other companies will not transfer manufacturing technology to India unless India increases the foreign direct investment cap in defence beyond the existing 49%.
During Modi’s visit, India’s initiative to call a meeting of the G4 group (India, Japan, Germany, and Brazil) seeking UN Security Council permanent seats, was timely. The lack of any viable agreement for almost 20 years and strong opposition from detractors like Italy, Pakistan, Argentina, and China has so far kept the issue on hold.
A possible U.S. initiative may start text-based negotiations in November 2015—and the U.S. too will want this done, before the divisions within the P5 consolidate with China and Russia ranged against the western members. Notably though, while thanking Obama for America’s support for India’s permanent seat, Modi did not allude to an important sub-text: both Germany and Japan seem to have accepted the possibility of a permanent seat without the crucial power of “veto”. If offered, India too will have to accept this option. It is in this context that Modi’s statement speaks of U.S. support in a “reformed” Security Council.
India will need similar U.S. support to see its candidature through in the nuclear weapon supervisory bodies like the Missile Technology Control Regime (MTCR), Nuclear Suppliers Group (NSG), the Australia Group, and the Wassenar Group. That the fractious U.S. electoral scenario hinders US activism in India’s favour was clear when the 29th Plenary MTCR meeting in Rotterdam from 6-9 October 2015 again failed to agree on India’s application. With Pakistan being offered similar admittances, during Nawaz Sharif’s current visit to Washington DC, to restrict and control its growing nuclear arsenal, India’s difficulty becomes further compounded.
Still, despite their disagreements, India and the U.S. are inexorably moving towards a growing partnership. This coming together is symptomatic of significant international re-alignments, such as new pairings between Pakistan and China, Saudi Arabia and Israel, and Europe and China. But will these new India-U.S. relations signal the beginning of real changes that go beyond personal chemistry?
