India- US Relations

Mains Marks Booster     27th July 2023        
Samadhaan

Introduction

  • Prime Minister Narendra Modi received a ceremonial welcome at the White House's South Lawn by President Joe Biden and First Lady Jill Biden.
  • The visit highlighted the focus on establishing a "next generation partnership" between India and the United States.

Key highlights of the Visit

  • Co-production of GE 414 Jet Engines for Tejas Mk2 Aircraft: GE and HAL signed a MoU for co-production of jet engines for the indigenous Tejas Mk2 light combat aircraft.
  • Purchase of Armed Drones and Defense Industrial Innovation Collaboration: India announced the purchase of armed drones and collaboration in defense industrial innovation through the 'INDUS-X' platform.
  • Investment by Micron Technology in Chip Assembly and Test Facility: Micron Technology planned to invest in a new chip assembly and test facility in Gujarat, supported by the Indian government and Gujarat State government.
  • Strengthening Space Cooperation and Mission to International Space Station: India joined a framework for space exploration and agreed to a mission to the International Space Station in 2024.
  • Visa Renewal Program and Consulate Openings: A pilot program for domestic visa renewal for certain petition-based temporary workers was announced. The program aimed to streamline visa processes and could potentially expand to cover skilled visas like H1b and L Visas.
  • Initiative on Critical and Emerging Technologies (iCET): The iCET serves as a framework for India-US cooperation in critical and emerging areas of technology. It was launched in January 2023 to strengthen the strategic partnership and drive technology and defence collaboration between the two countries.

History of India-US Relations

  • Changing Perception: The US initially viewed India's possession of nuclear weapons as a barrier to deepening bilateral and regional cooperation. However, in the early 2000s, Washington recognized the importance of an active and constructive relationship with India.
  • Expanding Engagement: Over the past two decades, the India-US relationship has expanded in various dimensions, including political, diplomatic, economic, and military.

Areas of Cooperation

Political & Diplomatic

  • Leadership-Level Exchanges: Regular exchanges at the leadership level have been conducted, such as the visit of US Secretary of State Antony J. Blinken to India in July 2021.
  • 2+2 Ministerial Dialogue: The India-US 2+2 Ministerial Dialogue, involving the heads of Foreign and Defense Ministries, reviews bilateral ties in defense, strategic, security domains, as well as regional and global issues.

Defence

    • Indo-US Ties: The relationship between India and the United States in defense has strengthened significantly. Current defense trade between the two countries stands at $119.42 billion.
    • US as India's major Arms Provider: The United States is now the fourth largest supplier of arms to India. India conducts most joint military exercises with the USA.
  • Fundamental Defense Agreements: 
  • GSOMIA (General Security of Military Information Agreement): Signed in 2002 for military information exchange.
  • LEMOA (Logistics Exchange Memorandum of Agreement): Agreed in 2016, allowing the use of each other's military bases.
  • COMCASA (Communications Compatibility and Security Agreement): Signed in 2018 to enhance interoperability and technology export.
  • BECA (Basic Exchange and Cooperation Agreement): Signed in 2020 to share advanced military technology and logistics.

Trade Relations

  • Trade Surplus with the United States: In 2022-23, India had a trade surplus of $28 billion with the United States. Bilateral trade reached $119.42 billion, an increase from $80.51 billion in 2020-21.
  • Growing Defense Trade
  • The Indian service sector, especially the IT industry, heavily relies on the US markets.
  • Trade Deal: Aiming for $500 billion in bilateral trade, both countries are working on a 'mini trade deal' due to stalled FTA negotiations.
  • Digital Tax: India and the US have agreed on a transitional approach regarding equalization levy (EL) or digital tax.

Strategic Energy Partnership (SEP) in Energy sector

  • The energy dialogue between India and the US has been elevated to the level of a strategic energy partnership (SEP).
  • The US-India Climate and Clean Energy Agenda 2030 Partnership was launched during the Leaders' Summit on Climate in 2021.
  • Partnership for the 2030 Agenda: A partnership has been established between the United States and India to work towards the 2030 Agenda.
  • Strategic Clean Energy Partnership (SCEP): The SCEP has undergone a redesign.
  • India-US Civil Nuclear Energy Cooperation: The cooperation on civil nuclear energy between India and the US has been reviewed. The Gas Task Force has been renamed as the India-US Low Emissions Gas Task Force.
  • Civil Nuclear Cooperation (2008): Preparatory work has commenced in India for the construction of six AP 1000 reactors by Westinghouse, which will make it one of the largest projects of its kind.
    • The Memorandum of Understanding for collaboration on the Global Centre for Nuclear Energy Partnership (GCNEP) between India and the US has been extended by ten years in 2020.

Strategic Partnership

  • The strategic partnership between India and the US has been strengthened, particularly in response to the rise of China and its aggressive behavior in the Indo-Pacific region.
  • The 2+2 Ministerial Dialogue has been institutionalized and efforts are being made to strengthen the QUAD, aiming for a peaceful, stable, and rules-based order in the Indo-Pacific.
  • Indo-Pacific Economic Framework for Prosperity (IPEF): India and the US are partnering on the IPEF to enhance economic connectivity, resilience, and fairness in the region.
  • I2U2 Dialogue: The I2U2, comprising India, the United States, Israel, and the United Arab Emirates, serves as a strategic dialogue mechanism.

QUAD

  • India is categorized as a 'vital partner' in the Indo-Pacific region according to the USA's Indo-Pacific Strategy report.
  • The Blue Dot Network has been established to certify projects that adhere to international standards and align with principles of openness, inclusivity, transparency, sustainability, and regulations.
  • The Blue Dot Network holds strategic importance as it is part of the US's Indo-Pacific strategy, aimed at countering China's ambitious Belt and Road Initiative (BRI).
  • Counterterrorism, maritime security, and cyber security are essential pillars of the strategic partnership between India and the US.
  • Key agreements in the 2+2 Ministerial Dialogue focus on various areas of cooperation, including global partnerships, Indo-Pacific cooperation, mutual prosperity, innovation, resilient supply chains, climate, environment, clean energy, science, technology, cybersecurity, space, global health, defense and security, counterterrorism, counter narcotics, education, and people-to-people ties.

India as a Net Security Provider

  • The concept of 'Indo-Pacific' has positioned India as an emerging Net Security Provider.
  • India's role includes collective action in humanitarian assistance and disaster relief, monitoring shipping, and countering China's imperialist policies in the region.

Other

  • Diaspora/People-to-People Ties: Indian-American Community: With around 4.2 million Indian Americans residing in the US, the Indian diaspora contributes to strengthening people-to-people ties between the two countries.
  • International Cooperation: Multilateral Engagement: India and the US closely cooperate at various multilateral organizations, including the United Nations, G-20, ASEAN Regional Forum, IMF, World Bank, and WTO.
  • Scientific Collaboration: The Indo-US Science and Technology Forum (IUSSTF) plays a crucial role in strengthening cooperation in science and technology.
  • Space Cooperation: India collaborates with NASA and other US institutions on space exploration and satellite projects.

Areas of Concern

  • Role in the Indian Ocean Region: India's collaboration with the US may impact its position as a net security provider in the region.
  • Intellectual Property Rights: India's IP regime is under scrutiny for adequate protection and enforcement.
  • Generalized System of Preferences: Termination of India's GSP benefits affects sectors like pharmaceuticals, textiles, and automotive parts.
  • Religious Freedom allegations and Data Localization: US criticism of India's religious freedom and data localization policies.
  • Trade-related concerns
    • Pending Bilateral Investment Treaty:
    • India's Tariff Regime: The United States has longstanding concerns regarding India's tariff regime, particularly in agriculture, where the average tariff rates are relatively high.
    • Steel and Aluminum Tariffs and Retaliatory Tariffs: India opposes the persistent steel and aluminum tariffs imposed by the United States under "Section 232" since 2018. In response, India applied retaliatory tariffs after losing its GSP eligibility.
    • Digital Services Tax (DST): United States and India reached a "political agreement" on DST treatment.
    • U.S. Generalized System of Preferences (GSP): India was excluded from the U.S. GSP program in 2019 due to market access issues.

  • Services industry challenges: Competitiveness and market access: Both countries face hurdles in services industries. US corporations encounter obstacles such as limits on foreign ownership and local presence requirements in India.
  • Agricultural obstacles: Sanitary and phytosanitary (SPS) barriers: In the United States, SPS obstacles hinder India's agricultural exports. Both sides perceive each other's agricultural support schemes as market distortions, leading to collaboration at the TPF.
  • Intellectual Property concerns: India on the "Special 301" list: The United States included India in its 2021 "Special 301" report, prioritizing IP issues.
  • "Forced" Localization dispute: India's domestic support measures for sugar and sugarcane: In 2022, India appealed against a WTO ruling that deemed its domestic support measures for sugar and sugarcane inconsistent with global trade norms.
  • Investment dynamics: FDI reforms: India has implemented FDI reforms, including increased foreign equity caps for insurance and e-commerce platforms. Additionally, a streamlined FDI approval system has been launched.
  • Defense trade considerations: Technology-sharing and co-production projects: India seeks increased technology-sharing and co-production opportunities, while the United States desires further reforms in India's defense offsets policy and higher FDI limits in the defense sector.
  • Geostrategic implications:
      • Afghanistan's potential impact on Kashmir: The US withdrawal from Afghanistan poses a risk of destabilization, which could have spillover effects in Kashmir.
      • Indo Pacific perspectives: India focuses primarily on the Indian Ocean, while the United States places greater emphasis on the Pacific Ocean.
      • Middle East dynamics: The Trump Administration's Maximum Pressure strategy on Iran has affected India-Iran relations, leading Iran to strengthen ties with China.
      • Russia-Ukraine conflict: While the US imposed sanctions on Russia, India maintained a non-aligned position on the issue.
      • China-related suspicions: Both countries harbor occasional suspicions toward each other regarding potential future cooperation with China, which hampers the establishment of deep and long-term deals.
  • Climate change considerations:
      • Failure in meeting financial commitments: The USA and other developed countries have failed to fulfill their financial and other commitments to support developing nations.
      • Differences over Net Zero emission targets: Disagreements have arisen over the concept of "Net Zero emissions," with the USA advocating for it globally, while India believes it falls short of meeting earlier targets, despite its commitment to Net Zero.
  • Data sovereignty concerns:
    • India's stance on the Osaka Track: In 2019, India boycotted the Osaka Track on the Digital Economy, which advocated for legislation enabling free data movement across countries. India opposed this approach as it infringed upon its sovereignty.

Is US wooing India to act against China?

  • Decoupling with China: The US has been actively engaging with India, but its approach is not solely aimed at provoking India to act against China.
  • Indo-pacific narrative: The US recognizes India as a significant player in shaping the regional dynamics of the Indo-Pacific and seeks to build a comprehensive partnership based on shared interests.
  • Unleashing the economic potential: The US recognizes India's economic potential and seeks to deepen economic ties.
  • Convergence over diverse issues: This involves maintaining freedom of navigation, resolving disputes peacefully, and upholding the principles of international law.

Way forward

  • Multipolar Rule-Based World: Collaborate to create a multipolar rule-based world order, promoting shared interests and values.
  • Counter Terrorism Cooperation: Strengthen cooperation on counterterrorism, leveraging the changing dynamics in the region.
  • Digital Ecosystem: Foster cooperation in emerging technologies, artificial intelligence, and cybersecurity to address policy differences and drive progress.
  • Investment Promotion: Enhance two-way foreign direct investments and provide incentives for private sector investments.
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