India-United States (US) Relations: Everything You Need to Know

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India and the US in the recent trade negotiations in New York have failed to even arrive at a limited trade deal. The deal staggered over the duties imposed by India on Information and Communication Technology Products. The US wanted the 20% duty on mobile and ethernet switches to be reduced or eliminated. Also, America had called for greater access to the Indian market for medical devices, diary and agricultural products. These are sensitive products in the political perspective for India as the current government has promised to make them affordable. If the Indian government loosens trade restriction on these products, the price of these products will be increased. India, on the other hand, had called for the restoration of the Generalised System of Preferences. As for the full-scale trade talks, it would involve sensitive issues like H1B visas, intellectual property and e-commerce. Currently, even limited trade deal between India and the United States seems to be a challenge. Both sides must put aside these minor differences for achieving the common strategic interests of both the nations.

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How did India-US relations evolve over time?

  • India-US relations have not always been smooth.
  • It has seen many ups and downs.
  • Following independence, the newly formed government of India was faced with the huge challenge of war with Pakistan.
  • The international community along with the US was not willing to support India.
  • In 1955, Pakistan became a member of the South East Asian Treaty Organisation (SEATO) and Central Treaty Organisation (CENTO) leading to it being officially an ally of the US.
  • During this time, India along with few other developing nations was advocating for Non-Aligned Movement (NAM).
  • Pakistan enjoyed a close relationship with the US due to its strategic importance to the US’ policies with regards to the Soviet Union and Afghanistan.
  • During the 1962 Sino-Indian war, the US provided assistance by directing an American carrier, the Enterprise, to the Bay of Bengal. China on the next day had declared a unilateral ceasefire.
  • In 1966, India had criticized the US’ intervention in Vietnam. This led to the US curbing the grain shipments to India under Public Law 480 programme.
  • The year 1971 saw the blatant suppressive policies of Pakistan on the people of East Pakistan (now Bangladesh). The US was not supportive of India’s assistance for the formation of Bangladesh and there were diplomatic tensions between the two countries.
  • This led to India’s shift from the traditional policy of non-alignment to close ties with the then Soviet Union by signing of Treaty of Friendship, Peace and Cooperation.
  • The US responded to this move by enhancing its ties with Pakistan while also suspending $87 million worth of economic assistance to India.
  • India emerged victorious during the Bangladesh Liberation War despite the US’ antagonistic stance during that time.
  • In 1974, India had conducted its first nuclear weapon test at Pokhran, Rajasthan.
  • This was seen as a hostile move by the US as it was, during this time, planning on enhancing its presence at Diego Garcia.
  • During the time of Pokhran II tests, India faced strong criticism from the international community.
  • The US was not able to detect India’s preparations for nuclear tests. Under 1994 anti-proliferation law, it had put economic sanctions on India.
  • In 1977, India’s national emergency was lifted and the US eased the restrictions it had placed on the loans from the World Bank and provided direct economic assistance worth $60 million.
  • The 1980s saw the closer ties between the US and Pakistan to counter the Soviet Union in Afghanistan.
  • This created negative implications for India’s internal security as Pakistan funded terrorists were strengthened and were increasing their presence in Kashmir.
  • In 1990, India had provided limited logistical support to the American forces during the Gulf War.
  • Liberalization of the Indian economy saw increasingly close ties between the US and India.
  • Trade between India and the US had flourished since then.
  • The conclusion of the civil nuclear pact in 2008 was the turning point for the bilateral ties between the two countries. It is till date the significant element in India-US relationship.
  • Since the end of the Cold war, the relationship has been in the upward trajectory despite the frequent frictions between the two countries
  • However, under the Trump Administration, there is an increasing difference between India and the US with regards to trade.
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Why is the relationship with India vital for the US?

  • India’s alliance is vital for the US due to its growing dominance in international politics.
  • India is critical for the US while dealing with China’s growing dominance in the region.
  • India is located in a strategically significant position. With the growing economic development of the Asian nations, the Indian Ocean has become vital for trade connection, with nearly 50% world container products and 70% oil trade depends on this route.
  • According to the recent report by the Stockholm International Peace Research Institute (SIPRI), India is the second-largest arms importer after Saudi Arabia.
  • Between 1950 and 2017, the US is the largest supplier of arms in the world.
  • Thus, India holds a huge potential in the arms market.
  • India’s strong stance on countering terrorism is on par with the US’ interests.
  • India, like the US, is one of the largest democracies in the world. Thus, both the countries have common aspirations and ideas.
  • Therefore, Indians can easily partner with US institutions and firms for cooperation in various sectors.
  • India is currently the 9th largest goods trading partner with $87.5 (two ways) in 2018.
  • India, one of the fastest-growing economies in the world, holds a huge consumer market for the US.
  • India is committed to rule-based world order – the one the US advocates for. Therefore, cooperation between the two countries is beneficial for both economic and political aspects.
  • India is increasingly becoming vital for US’ strategic interest, especially in the Indo-Pacific.

Why is the relationship with the US important for India?

  • The US is vital for safeguarding India’s national interests with regards to Afghanistan and Pakistan.
  • The US’ role in UNSC and international monetary institutions is of significance to India.
  • India’s aspiration to become a permanent member of the UNSC can be achieved through closer ties with the US.
  • The US is also one of the top sources of FDI in India.
  • It also plays a significant role in countering China’s dominance in the Indian Ocean Region.
  • The US has, for a long time, called for free and open navigation at the international waters.
  • It is playing a crucial role in providing naval security at the high seas which is critical for India’s oil imports.
  • The US has a technological edge in the areas of commerce, aerospace, defence and intelligence.
  • Having access to this expertise is crucial for India.
  • Thus, the diplomatic relationship with the US is not only important for India’s economic growth, but also for its national interest.

What are the areas of cooperation between the two countries?

  • Strategic relationship:
  1. The strategic partnership between the two countries has thrived in recent years.
  2. Defence relationship between the US and India had enhanced following the signing of New Framework for India-US Defense Relations as it had led to the increase of defence trade, joint military exercises, cooperation in the maritime security aspects etc.
  3. India had participated in the Rim of the Pacific (RIMPAC) exercise between July and August 2016.
  4. Both countries had signed the following strategic agreements :
  5. Information Exchange Annexe (IEA) on Aircraft Carrier Technologies
  6. Fuel Exchange Agreement
  7. Logistics Exchange Memorandum of Association (LEMOA)
  8. India was recognized by the US as a “major defence partner” in 2016.
  9. As a consequence, India has been elevated to the Strategic Trade Authorization-1 list in 2018. This allows India to import high-end sensitive technologies like armed drones.
  10. The year 2018 saw the inauguration of India-US 2+2 ministerial dialogue and signing of Communications Compatibility and Security Agreement (COMCASA) to help share intelligence between the two countries.
  11. This year also saw the altering of nomenclature of the US-Pacific Command to the US-Indo-Pacific Command and agreement of first tri-service exercise.
  • Economic relationship:
  1. In 2016, both countries have pledged to explore new and diverse opportunities to break the existing barriers to the movements of goods and services between the two countries.
  2. There exist several dialogue mechanisms to solve economic and trade issues like Ministerial Level Economic and Financial Partnership and Ministerial Trade Policy Forum.
  3. There are even forums for the involvement of private sectors of both countries like India-USA CEO’s Forum.
  4. In 2014, both the countries have set up a bilateral investment initiative to facilitate FDI, portfolio investment, capital market development and infrastructure development projects.
  5. The US is also involved in the Smart City projects in Allahabad, Vishakhapatnam and Ajmer.
  • Energy:
  1. The India-US Energy Dialogue was held in May 2005 to boost trade and investment in the energy sector.
  2. The cooperation will be on mobilizing secure, clean, reliable and affordable sources of energy with special focus on oil and natural gas, coal, power and energy efficiency, new technology and renewable energy and civil nuclear energy.
  3. In 2015, both the governments had announced the launch of Promoting Energy Access through Clean Energy (PEACE) – a new tract under the Partnership to Advance Clean Energy (PACE).
  4. Under PACE, Joint Clean Energy Research and Development Centre (JCERDC) was also established.

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What are the recent challenges faced by the US-India relationship?

  • Special trade status, also known as Generalised System of Preferences was revoked by the US to India on the grounds that India had not assured the US that it will provide equitable and reasonable access to its market.
  • Generalised System of Preferences had allowed India the duty-free imports of goods up to USD 5.6 billion into the US from India.
  • This dispute had been brewing for some time.
  • In 2018, the US had imposed tariffs on steel and aluminium imported from India on the grounds of national security under Section 232 of the Trade Expansion Act of 1962.
  • This was followed by a series of protective measures by the US against India.
  • India responded to these moves by imposing tariffs of USD235 million on the US goods worth USD1.4 billion.
  • America’s trade deficit had declined from $27 billion in 2017 to $21 billion in 2018.
  • Despite this, the Trump Administration is still complaining about India’s trade practices.
  • The other issues that are challenging India-US relationship include India’ ties with Iran and India’s purchase of S-400 from Russia.
  • It must be noted that some of the differences between India and the US are not direct consequences of India-US relationship but due to US’ hostility towards third countries like Iran and Russia – the traditional allies of India.
  • The India-us relationship is complicated as there are few sensitive differences between the two countries.
  • US’ sanctions on Russia through CAATSA – Countering America’s Adversaries through Sanctions Act – are threatening India’s strategic interests.
  • US’ call for India to distance itself from Russia may have a far-reaching consequence to South Asia’s status quo.
  • This is because, if India distances itself from Russia, it may lead to closer ties between Pakistan and Russia.
  • Similarly, US sanctions on Iran and Venezuela are putting India’s energy security at stake.
  • India is also concerned over the US’ policy in Afghanistan as it is jeopardizing India’s security and interest in the region.

What can be done to improve the ties between the two countries?

  • As it was earlier mentioned, most of the differences are due to US’ aggression toward third countries.
  • Autonomy in foreign policy has always been the major objective for India.
  • India, in recent years, has considerably inclined closer to the US.
  • Despite this, India has maintained balance and strategic autonomy.
  • India has maintained close ties with the US while also maintaining a diplomatic relationship with China and Russia.
  • From this, it is evident that India is aiming for “issue-based alignments”.
  • Despite the differences existing between the two countries on the range of issues from trade and the Middle East to Russia and 5G, measures are being taken by both the sides to resolve the issues.
  • The Trump Administration has recently decided to extend the lifeline to Huawei by allowing the US companies to sell the hardware.
  • This has provided India with considerable space to craft its 5G policies.
  • On the energy security front, the US has taken measures to fill the vacuum created by sanctions on Iran.
  • Estimates show that India’s oil imports from Saudi Arabia has increased by 11% and the US imports have grown by 34%.
  • US Senate had decided to pass a resolution to elevate India’s status of “non-NATO ally” proves the growing prominence of India-US relations for both the countries.
  • On the trade front, it is necessary for both the countries to negotiate based on the philosophy of quid pro quo.
  • It does not help if one side intimidates the other into submitting totally to its interest.

Conclusion

In spite of the political mistrust and differences in the past, the US-India relations have managed to overcome all odds including the issues related to non-proliferation and Pakistan. Regardless of the differences due to economic policies, both countries recognize the strategic importance of US-India ties. Both the nations must keep in mind the big picture while dealing with minor issues related to trade so as to not jeopardize common national interests during the time of negotiations.




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