Redefining Enduring Ties in the New Year

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Even though President Barack Obama will create history by becoming the first US president to visit India twice in his two terms and the first president to be the chief guest at India’s Republic Day parade, Ambassador (Retd) Surendra Kumar believes that both he and Prime Minister Modi will have to produce concrete results to make Indo-US relations the defining relationship of the 21st century

Narendra Modi, former Gujarat chief minister, and credited with the economic transformation of his state, was persona-non-grata in the eyes of the US government. As campaigning for the March-April 2014 parliamentary elections drew closer, most opinion polls predicted a victory for the BJP led by its prime ministerial candidate Narendra Modi. The European and American decision makers saw the writing on the wall and hurried to open channels of communications with him. The visits of the British and European ambassadors to Ahmedabad, followed by an American Congressional delegation and Nancy Powell, former US Ambassador to India, clearly highlighted the unmistakable political power shift in India. It also reflected diplomatic change of gear on the part of the EU and the US to prepare the ground for transacting business with India’s new prime minister. Therefore, it wasn’t surprising that even before Modi was sworn in as the prime minister; President Barack Obama not only congratulated him, but also invited him to visit the US. This presidential call ended Modi’s ten-year-long ostracism by the US for his alleged role in the 2002 Gujarat riots. Keen to push the bitter past behind and open a promising and productive chapter with the new government, President Obama sent Nisha Biswal, Assistant Secretary of State for South Asia, John Kerry, Secretary of State and former Defence Secretary Chuck Hagel to India in quick succession.

Clearly, the majority which Modi secured for his party in parliament and his emergence as the most powerful and arguably the most popular and decisive leader of the largest democracy changed everything. On his part, being a seasoned politician and a consummate diplomat driven by India’s national interests, Modi displayed no rancour or bitterness about the treatment meted out to him earlier. Instead, he clasped Obama’s hand of friendship with the hope to transform the Indo-US strategic partnership and realise his vision for a resurgent India.

Bilateral Relations at a Nadir

After the euphoria and buzz created by the signing of the unprecedented Civil Nuclear Cooperation Agreement in 2008 under Republican President George Bush and the UPA government headed by Dr Manmohan Singh, bilateral relations between India and the US seemed adrift, despite Obama’s characterisation of relations with India as the defining relationship of the 21st century. India’s nuclear liability law disappointed American firms, and so, barring the contract secured by Westinghouse for the supply of reactors for Gujarat, no concrete business flowed from the watershed nuclear deal. Retrospective tax regime, compulsory licensing, mandatory domestic content for solar panels, alleged ‘unfair and discriminatory trade practices’ and ‘infringements of IPR’ did not endear India to the Obama regime. The loss of the contract for the supply of MMRCA (India opted for the French Rafale) was another bitter pill. Several MNCs, which were staunch India supporters, now clamoured for action against Indian firms; several Congressmen asked the government to put India on the Special 301 list and investigate its trade and taxation policies. Differences on food security and climate change were serious and substantial. President Obama’s frequent refrain that jobs were going away to Bengaluru didn’t help matters either. The UPA government’s failure to clear legislations like FDI in retail and open up the insurance and pension sectors for foreign investment added to disappointment on the American side.

India also had multiple complaints: its IT and pharma companies were feeling the heat; enhanced fees for H1B visa and restrictions on movement of employees on L1 visa from one city to another added to their woes. Higher technology and market access were restricted even though India claimed that its trade practices and IPR regime were WTO compliant. In climate change and WTO negotiations, India and the US were not on the same page.

India was apprehensive about the US exit plans from Afghanistan and disapproved its decision to open dialogue with the so called ‘good’ Taliban. The lack of US pressure on Pakistan to bring the perpetrators of 26/11 to justice or the differences on key international issues like Libya and Syria rankled India. In brief, for the transactional President Obama, India had gone off the radar. Bilateral relations touched an all-time low during the avoidable episode involving diplomat Devyani Khobragade, which triggered off an unprecedented nationwide public outrage in India, compelling the Indian government to condemn the US action in the strongest terms and the withdrawal of certain special facilities extended to the US mission for decades.

Growing Defence Cooperation

In this gloomy and acrimonious atmosphere, the defence sector witnessed remarkable expansion and progress resulting in the export of goods worth $9 billion in the last five years. This helped India meet part of its defence requirements and created thousands of jobs in the US. Over 300 joint exercises were carried out by the Army, Navy and the Air Force of the two countries, making India the first non-NATO country to be accorded this distinction.

A Man of Action and Vision

Prime Minister Modi’s commitment to peaceful and mutually beneficial relations with India’s immediate and extended neighbours was amply evident before he undertook his maiden trip to the US in September 2014. Modi struck a personal rapport with Obama, as he did with Shinzo Abe and Xi Jinping, and was hailed by Obama as a man of action.

Despite the presence of serious differences on a number of issues, Modi and Obama have brought back much needed positivity, optimism and trust into bilateral relations. Modi has understood the centrality of closer relations with the US to fulfil his vision for India: a strong and vibrant democracy that grows economically at a fast pace; threatens none but is capable of defending herself, plays a significant role in the comity of nations commensurate with her strengths and respected for her constructive contributions.

Modi strives to fulfil the vision of former PM, Atal Bihari Vajpayee, who regarded India and the US as natural allies. Today, both the countries are engaged in over 23 missions covering every possible area of cooperation. The US can take advantage of India’s burgeoning demand for energy, infrastructure, smart digital cities, water and waste management, green technology, skill development, agriculture, education, health and hygiene. It must share higher technology including space, offer greater market access to Indian products and resolve genuine grievances of Indian IT and pharma firms. Fortunately, there is bipartisan support in the US Congress and Senate for closer relations with India, which is based on the realisation that a strong and developed India is in America’s interests.

On its part, India must make it easier to do business, as we figure at an embarrassing 142nd place on the ease of doing business list. Modi’s promise of offering a red carpet rather than red tape to foreign investors will remain mere rhetoric unless India further streamlines rules, regulations and procedure and adopts transparent, stable and business-friendly trade and taxation policies. Bilateral trade of around $100 billion in 2013, up 400 percent from $23.9 billion in 2003, though impressive, looks quite modest compared to Sino-American trade of $513 billion in 2013. To facilitate investment, both the countries must sign a Bilateral Investment Treaty and must resolve various issues that have bedevilled relations, especially nuclear liability, IPR, totalisation and market access before Obama’s Republic Day visit.

India has emerged as America’s largest defence importer. The long wish list of military hardware of the three services will ensure steady growth of defence cooperation, which is expected to drive the Indo-US strategic partnership. Opting for co-development and co-production of India’s defence requirements would obliterate lingering concerns about US supplies owing to past experiences.

Convergence on International Issues

China, the world’s largest manufacturer and exporter and the second largest economy with increasing global political clout, is an invisible factor in India-US relations. No single country or group of countries can contain China but with close cooperation, the US, India, Japan and ASEAN can exert enough diplomatic pressure on China so that it adheres to international laws and does not threaten neighbours.

The recent massacre of innocent school children in Peshawar by Taliban has vindicated India’s assertions about the militant group. Closer interface with India on Afghanistan and Pakistan can serve both countries’ interests better. Similarly, closer cooperation on the South China Sea, fighting international terrorism, WTO and climate change negotiations, and UN reforms can transform the India-US Strategic partnership.

Obama will create history by becoming the first US president to visit India twice in his two terms and the first president to be the Chief Guest at India’s Republic Day parade. However, Obama and Modi will have to produce concrete results to make Indo-US relations the defining relationship of the 21st century.

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Author

Ambassador Surendra Kumar

Ambassador Surendra Kumar (Retd) was India’s Ambassador to Libya, Mozambique, Democratic Republic of Congo and Eritrea & High Commissioner of India to Kenya, Swaziland and Malta. He is the founding president of the Indo-American Friendship Association.

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Diplomatist Magazine was launched in October of 1996 as the signature magazine of L.B. Associates (Pvt) Ltd, a contract publishing house based in Noida, a satellite town of New Delhi, India, the National Capital.

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