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The atmospherics on display during the week of the recent inaugural US-India Strategic Dialogue (1-4 June) suggest that the bilateral relationship is on a solid footing. U.S. Under Secretary for Public Affairs William Burns called the relationship “one of the defining partnerships of the 21st century”, while U.S. Secretary of State Hillary Clinton spoke of a joint responsibility to “determine the course of the world”. U.S. President Barack Obama even made a surprise visit at the dialogue’s reception, and announced that he would visit New Delhi in November. On the Indian side, Foreign Minister S.M. Krishna called US-India ties “a relationship of limitless opportunities for mutual benefit”.
Complex Realities
Yet this flowery rhetoric masks the complex realities of what has been and continues to be a testy relationship between Washington and New Delhi. Even today, Indians worry that the United States is cozying up to Pakistan and China at their expense, while some in Washington charge that India is too fraught with bureaucratic hurdles to speed up its development and too caught up with its ‘neighborhood’ concerns to assert its influence on the world stage. If the two countries hope to forge a truly strategic partnership in the 21st century, they will have to navigate past sharp disagreements over important issues and bridge wide perception gaps.
Divergent interests kept India and the United States estranged during the Cold War. India’s policy of ‘moral nonalignment’ in the 1950s between the two superpower blocs was viewed in Washington as immoral, while the U.S. neutrality on Kashmir and arming of Pakistan after 1954 as part of a global containment policy engendered much mistrust in New Delhi. Estrangement continued in the 1970s and 1980s as India drifted toward the Soviet camp while the U.S. pursued rapprochement with China and armed Pakistan in order to undermine the USSR. And while the end of the Cold War did lead to some bilateral cooperation – including joint military exercises in the 1990s – India’s nuclear test in 1998 (which it viewed as retaliation for Pakistan’s nuclear tests) drew Washington’s ire. It was only with the signing of the civilian nuclear deal under the Bush administration in 2008 that relationship began to really take off.
New Realisation
Both sides now realize that there are manifold areas in which to pursue functional cooperation. Economically, India’s blistering growth rates and role in the G20 means that it is unquestionably a global economic power, and that there is room for expanding trade, investment, as well as educational linkages. Strategically, Washington views India as a counterbalance to Chinese hegemony in Asia, even if New Delhi is itself at time reluctant to play this role. Both the United States and India are among the world’s top five greenhouse gas emitters and have been victims of extremism, and are thus vital to solutions on climate change and terrorism. India’s geographic proximity to the Indian Ocean and status as the world’s fifth-largest navy also means that opportunities exist for further cooperation in the maritime domain, from disaster relief to anti-piracy operations and joint patrols. Beyond these interests, both are also large, vibrant democracies.
Yet discord continues to persist. India and the United States often lock horns on trade and climate issues, and there is still bad blood surrounding both the collapse of the multilateral Doha Round of the World Trade Organization (WTO) in 2008 and the Copenhagen Climate Conference of 2009, where New Delhi is said to have colluded with China to obstruct any meaningful outcome. More recently, Indians have hissed at the Obama administration for interfering in the ‘internal’ Kashmir issue, carelessly signing off on a joint US-China role in South Asia (which India considers its neighborhood), and closing an eye on Pakistan-sponsored terrorism and nuclear activities in exchange for Islamabad’s cooperation in Afghanistan without adequately consulting or involving New Delhi. India would also like the United States to unequivocally endorse its claim to a permanent seat on the Security Council, as opposed to just being “very committed to considering the idea,” as well as relax stringent export controls on technology.
The United States, for its part, laments India’s softer position on Iran and is frustrated by its inability to even pass the requisite legislation for civil nuclear cooperation to begin after Washington brought it into the nonproliferation fold. As Jasmeet Ahuja, a staff member for the House Committee on Foreign Affairs told a conference at the American Enterprise Institute recently, “India needs to think strategically about how to engage...if India does not want to, there isn’t much more that the U.S. can do”.
Give and Take
Pursuing a truly strategic partnership will mean both sides finding compromise on these issues and addressing their respective concerns. Even if differences over Afghanistan and Pakistan persist, pushing a new “big idea” to succeed the US-India nuclear deal over the next few months could provide sufficient “ballast” to drive the relationship forward for Mr. Obama’s visit to India in November, as former Bush administration official Evan Feigenbaum has noted. This could be movement on a bilateral investment treaty, export controls, defense procurements and agreements, or even a package of other smaller deals in agriculture or education.
Beyond specific policies, forging a strategic partnership will also require managing what former Indian ambassador Lalit Mansingh referred to as “perception deficits”. While India sees the world from the prism of ‘strategic autonomy’ and views itself as a great power and civilization, the United States is used to relationships where it has the dominant voice. Despite the vast asymmetry in terms of material capabilities, both nations engage in preachy moralism, and neither is used to deference. Learning to deal with each other amidst vibrant media communities and noisy democracies is a challenge in and of itself. The United States must understand and at times accommodate India’s perception of its “inherent greatness”, as the India scholar Stephen Cohen once put it. But India similarly needs to comprehend that it is only one of many priorities on the U.S. agenda, and that some other interests may at times take precedence.
Both sides also often trade barbs on India’s global role. Washington is fond of complaining about New Delhi’s unwillingness or ambivalence to assume a global role or think strategically beyond its immediate neighborhood. There is some truth to this. At the Track II version of the US-India Strategic Dialogue at the Brookings Institution on 28 May, prominent Indian journalist Gautham Adhikari plainly admitted that “India does not have a strategic view of the world”, and urged New Delhi to formulate a comprehensive vision for its foreign policy.
India’s Challenges
At the same time, Washington must grasp the fact that India is still grappling with a complex set of domestic challenges – from poverty that affects a third of its population to its growing Maoist insurgent threat – and that it lives in a dangerous neighborhood with a terrorism threat from Pakistan and unresolved border issues with China. Such a full plate of domestic and regional issues understandably weighs New Delhi down and restricts its ability to assert a global presence.
A strong basis for cooperation exists between the United States and India, both in principle and on specific issues. But solidifying a strategic partnership in the 21st century will require compromise, vision and deftness from both sides. For, as Mr. Burns has himself noted, “progress in US-Indian partnership is not automatic” as the atmospherics may suggest.
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India-US CEO Forum in Washington
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Top Indian and US business leaders and policymakers on 22 June began its session to fine-tune ways of taking forward their business ties in key priority areas like trade and investment and an easier visa regime. The meeting was inaugurated by Secretary of State Hillary Clinton.
Finance Minister Pranab Mukherjee led the high-level Indian official team. According to Mukherjee, “The India-US CEOs Forum meeting provides an opportunity of reviewing the identified areas where deficiencies exist and how to improve those deficiencies”. The forum, with 12 top CEO’s from each side, was rejuvenated by Prime Minister Dr. Manmohan Singh and US President Barack Obama during the Indian leader’s first state visit of the Obama presidency in November 2009.
The meeting was co-chaired by Ratan Tata, Chairman, TATA Group from the Indian side and Mr. Dave Cote, CEO, Honeywell Inc., from the US side. The CEOs from the two countries discussed opportunities for new partnerships between businesses in the United States and India, and ways to promote investment and job growth in both countries. The US official delegation included Secretary of State Mrs. Hillary Clinton, Treasury Secretary Timothy Geithner, Commerce Secretary Gary Locke, US Trade Representative Ambassador Ron Kirk and Director of National Economic Council Larry Summers.
The Indian side included co-chair Ratan Tata (Tata Sons), Mukesh Ambani (Reliance Industries), S Gopalakrishnan (Infosys), Sunil Mittal (Bharti Enterprises), Ms Chanda Kochhar (ICICI Bank) and Deepak Parekh (HDFC).
The US-India CEO Forum presented its recommendations to the representatives of both the Governments. These recommendations covered areas such as Infrastructure; Clean energy; Education and skill development; Bio-technology and long-term ideas like a Diabetes breakthrough project and Strategic space cooperation.
During the interactions, Industry Minister Anand Sharma explained that “we are in the process of conceptualizing National Manufacturing Investment Zones as integrated industrial townships with state-of-art infrastructure and complete eco-system for manufacturing industry. This mechanism is being developed in response to the concerns on availability of developed land, infrastructure and other services for industry. A discussion paper has been placed on the website of the Department for wide-ranging consultations on this initiative”. He urged the CEOs to give their comments and suggestions so that Government could take an informed decision in the matter.
In response to a suggestion for reduction in Indian import duties on security technologies and products, he explained that 100 percent FDI is permitted under automatic route for manufacture of such equipment in India for non-defence application. There is a large and growing market and it would be a win-win situation for both sides if concerned businesses could establish in India. On India’s Foreign Direct Investment regime, he said that India has a liberal and transparent FDI regime in place except for a few sectors like Banking and insurance, Defence and Retail trade in which calibrated liberalization is allowed on account of domestic sensitivities. He said that initiatives like e-biz; incorporation of the Invest India Company, simplification and consolidation of the FDI policy pronouncements would go a long way in improving business environment.
Welcoming the CEO Forum initiative on the launching of a US$1 billion venture capital /private equity fund for Clean Energy technology development projects, Sharma said that the West, including US, will continue to lead technology development. But when it comes to adaptation, a number of emerging economies have the capability to adapt the technology to their situation. The issue is one of access to the latest technology. Hence he urged the CEO Forum to suggest specific mechanisms to make clean technologies accessible to the resource poor countries, given that these are protected by IPRs and often out of their reach. Sharma also welcomed the CEO Forum initiative to participate and support the joint research centre proposed as part of Indo-US Clean Energy Research and Deployment Initiative.
Anand Sharma welcomed the initiative of the CEO Forum to establish a joint Indo-US Drug Discovery Fund and said that collaboration between research institutions and private sector cooperative research between India and the US would greatly enhance the R&D efforts in the area of biotech and healthcare in the two countries. Emphasizing that India is committed to a strong and equitable IPR regime and has put in place legislation and enforcement mechanisms to this effect, Sharma said “Be it technology or life saving drugs, there has to be balance and sharing so that the resource poor countries are not denied access to these”.
During the bilateral meeting, Sharma and United States Trade Representative Ambassador Ron Kirk reviewed the implementation of the India-US Trade Policy Forum Framework for Cooperation on Trade and Investment singed in March 2010 and agreed to further the engagement to build on the success of the Trade Policy Forum by facilitating trade and investment flows between the two countries. They agreed to hold the next meeting of the Trade Policy Forum at an early date and also work towards identifying deliverables for the forthcoming visit of US President. The minister discussed a wide-range of issues including the Totalization Agreement, H-1B visas for Indian skilled labour, Generalized System of Preferences, labour related non-tariff barriers, other market access issues and removal of India from the Special 301 watch list.
Meanwhile, the United States asked India to address what it called ‘longstanding impediments’ like investment caps, agricultural market access barriers and high tariffs as they work on accelerating their bilateral economic relationship. US Trade Representative Ron Kirk also listed intellectual property rights, and the need for continuing regulatory streamlining and transparency among the impediments at a meeting with Indian Industry Minister Anand Sharma.
“Kirk urged India to address longstanding impediments, such as investment caps, agricultural market access barriers, high tariffs, intellectual property rights, and the need for continuing regulatory streamlining and transparency,” USTR’s office said.
The ministers agreed to continue to work together to meet the objectives set out in the Framework for Cooperation on Trade and Investment signed in March ‘to enhance opportunities for bilateral trade and investment and ultimately create jobs in the United States and India,” the USTR said.
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