An Indian Perspective

"India-US relations:
Developments from the Fall and Winter of 2014 to the 2015 Modi-Obama Summit"

Between Symbolism and Substance: An Assessment of Obama’s India Visit

Taking a step forward from his September 2014 state visit to the United States, Prime Minister Modi invited President Obama to visit India as the Guest of Honour at the 66th Republic Day celebrations. Obama consented to pay a three-day visit starting January 25, only four months after their meeting in Washington. Accompanied by the first lady and several key officials, Obama attended back-to-back, power-packed meetings with political leaders and industry captains. He also joined Modi in addressing the people of India through “Mann Ki Baat,” a radio program that Modi uses to convey his views to the people and interact with them. In terms of both symbolism and substance, Obama’s visit turned out to be a success. The intensity of diplomatic engagements, media frenzy, and public attention proved that India’s relations with the United States have become one of the “most important diplomatic engagements in recent times.”¹ Modi and Obama’s symbolism added a “glamor quotient” to the rising Indo-US bonhomie. In terms of substance, however, several steps have yet to be taken before the partnership can be termed “mature.”

Symbolism and the Role of Personalities

From “Chale Saath Saath: Forward Together We Go” to “Saajha Prayas-Sabka Vikas-Shared Effort; Progress for All”

From using Twitter in announcing the visit to Modi receiving Obama at the airport, the symbolism of this visit showcased the rising comfort level between the two leaders and the two countries. Some in India had perceived the motto “Chale Saath Saath,” adopted during the first Modi-Obama summit as mere sloganeering meant for publicity. It was not imagined that the promises made back then would be followed up with rigor. However, in an exceptional move, the prime minister and his office (PMO) tried to expedite implementation of agreements, thereby infusing a greater sense of purpose into the relationship. Within four months, a score of high-profile meetings and visits reenergized around 40 bilateral dialogue mechanisms through which the two countries have been engaging with each other.

Dubbed by the Indian media as Modi’s “masterstroke,” the Republic Day invitation to Obama came as a surprise, considering the plateau in bilateral ties in the wake of the deadlock in the civil nuclear deal, the recent row over an Indian diplomat, US complaints at the WTO against India’s solar industry, attacks on India’s generic pharmaceutical industry and subsequent debates on intellectual property rights vs. affordable healthcare and equal market access in both India and the United States, and Modi’s own experience with the United States during his term as the chief minister of Gujarat. Nevertheless, both sides have been conscious of the need to work together. In that regard, Modi’s September visit may be termed a “watershed” event, which encouraged him to take this initiative to bring the relationship to the next level.

Obama’s visit brought along several “firsts” in Indo-US relations. Obama is not only the first US president to visit India twice during his presidency, he is also the first to be the Chief Guest at India’s Republic Day celebrations. The program “Mann Ki Baat” saw the first-ever radio address jointly delivered by an Indian prime minister and an American president. The symbolism was acknowledged even by Obama in his address, who stated, “We are making a lot of history in a short time.” As one of India’s leading weeklies noted, “Though Indian Prime Ministers enjoyed cordial relations with American Heads of State for almost three decades, Modi has entered this equation as a unique proactive force…by extending the Republic Day invitation to Obama, and by orchestrating almost every pit stop of the visit, he has reset the entire India-US chemistry by taking the lead role.”² While criticized by some for overdoing the “symbolism,” Modi’s attempts to inject positive energy into the Indo-US relationship should not be overlooked.³

The Substance

Obama’s India visit was not just about optics; it was also substantive in terms of negotiations and agreements, although most of it was a result of prior meetings. Modi’s US visit set the stage for a substantive improvement in bilateral ties. Consequently, the two sides have managed to run as many as nine Indo-US dialogue meetings since September, in addition to the eight meetings held on defense and security related issues.⁴ A closer look at the areas on which they have been working suggests the variety and scale of bilateral cooperation.

India-US Delhi Declaration of Friendship & the US-India Strategic Vision for the Asia-Pacific and Indian Ocean Region

With the aim of elevating their “longstanding strategic partnership,” the two sides issued the “India-US Delhi Declaration of Friendship.” One of the principal outcomes at the procedural level is the decision to elevate the “strategic dialogue” to a “strategic and commercial dialogue,” making it a “2+2” ministerial arrangement. In addition to the external affairs minister of India and the US secretary of state, who will continue to hold the strategic dialogue, the minister of trade and investment of India and the US secretary of commerce will hold an annual dialogue on trade and commerce. The two sides have also agreed to establish hotlines between their leaders as also between their national security advisors. A giant step towards greater bilateral communication, the initiative holds significance, as such hotlines are an exception in diplomatic parlance.

In order to deepen their strategic cooperation, the two sides also issued the “US-India Strategic Vision for the Asia-Pacific and Indian Ocean Region” agreeing also to “promote infrastructure connectively and economic development that links South, Southeast and Central Asia.” China too has been striving to improve connectivity and economic cooperation in these regions through its “One Belt, One Road Initiative (Silk Road Initiative)”, and the “Maritime Silk Route.” However, what irked it is the mention of the South China Sea, and (indirectly) the Air Defence Identification Zone (ADIZ) in the document, leading to a flood of criticism in China’s media of India, the United States, and their “superficial” relationship. The document mentions trilateral cooperation too, indicating that India, the United States, and Japan will synergize their strengths and increase their engagement. This is in sync with India’s “Act East” policy, which aims to strengthen relations with East Asian countries, including Japan.

Indo-US Civil Nuclear Deal

Across the Indian media, the leap forward in the nuclear deal has been exalted as a remarkable breakthrough in elevating bilateral relations. Obama’s promise to use his “executive powers” to roll back the condition regarding tracking nuclear supplies was seen as a goodwill gesture, accepting that the International Atomic Energy Agency (IAEA) inspections suffice. While the nuclear negotiations had been going on for months, the two leaders officially gave them a green light during their January 25 meeting. Since 2010, when these states signed the Part 810 Assurances, the mandatory license issued to American companies permitting them to conduct nuclear trade outside the United States, the administrative arrangements have been at a deadlock. That seems to be resolved now.

Some provisions in India’s nuclear liability law, a major point of disagreement, have also been resolved with India’s assurances that the US firms supplying nuclear materials would not come under the purview of litigation. Anti-nuclear groups and left-wing parties in India have been demanding stringent accountability provisions in the deal, citing the Bhopal Gas tragedy of 1984. The liability clause posed a massive challenge to the US nuclear firms, which were apprehensive that such a provision would open the floodgates for insurance claims. With the mutual understanding on the liability clause, such fears are likely to be allayed. During Modi’s visit, it was decided to set up a “contact group” to expedite complete implementation of the nuclear deal. While further details have yet to appear in the public domain, it is clear that through its three meetings in New Delhi, Vienna, and London, India persuaded the United States on the compatibility of the Civil Liability for Nuclear Damage (CLiND) Act 2010, CLiND Rules 2011 and the US Convention on Supplementary Compensation for Nuclear Damage. This seems to be leading to a mutual understanding that Indian laws are compatible with the US convention.⁵ The India Nuclear Insurance Pool is a “risk transfer mechanism which is being formed by GICRE and other public sector general insurance companies. These companies would together contribute 7.5 crore rupees to the pool and the balance capacity would be contributed by the government on a tapering basis.”⁶ While the details of the negotiations and list of outstanding issues, including concerns on combined reading of clauses 17(b) and 46 of the CLiND Act, have yet to be made public, the good news is that the agreed administrative arrangements are in line with the Indo-Canada agreement. Resolution of disagreements on clauses 17(b) and 46 would also pave the way for GE Hitachi and Westinghouse to start their India operations. This would also help Indian nuclear companies to link up with US firms for joint ventures, and contribute to Modi’s “Make in India” campaign.

Stating that the civil nuclear agreement is at the core of the new phase in Indo-US relations, Modi, during the joint press interaction with the US president, said:

“The civil nuclear agreement was the centrepiece of our transformed relationship, which demonstrated new trust. It also created new economic opportunities and expanded our option for clean energy. In the course of the past four months, we have worked with a sense of purpose to move it forward. I am pleased that six years after we signed our bilateral agreement, we are moving towards commercial cooperation, consistent with our law, our international legal obligations, and technical and commercial viability.”⁷

Obama’s reiteration of support for India’s entry into the Australia Group, the Missile Technology Control Regime, the Nuclear Suppliers Group, and the Wassenaar Arrangement has also been applauded. Together, that would finally end the post-1974 technology denial regime against India. The two sides are still working on the sequence of India joining these groups. While the logjam at the official level has ended, a lot of homework is still needed to make the long-debated nuclear deal a reality, the responsibility of which lies with the Indian and the American bureaucracy.

Defense cooperation

In what has been lauded as a major achievement, the recent finalization of the 2015 “Framework for the US-India Defense Relationship,” aims to strengthen the bilateral defence and strategic partnership over the next ten years. They have also reached a consensus to jointly develop new defense technology and produce advanced defense projects, which would be an impetus to indigenous defense production while contributing to India’s defense capabilities. As part of the Defense Technology and Trade Initiative, Four Pathfinder Projects were identified during Obama’s visit.

Modest as they are, the success of these projects would set the stage for bigger and more complex bilateral defense projects such as aircraft carriers and jet engines, which also figure in the joint statement issued after the meeting.

Cooperation in counter-terrorism operations

Indo-US cooperation in fighting terrorism has been growing from strength to strength in recent years. One success for India was the inclusion of Pakistan-based terror groups and the mafia group led by Dawood Ibrahim in the US list of banned terror outfits.

The economic dimension

In the past few years, the total trade volume has increased rapidly, rising 60 percent to reach USD 100 billion. During Obama’s visit, the two nations took up issues concerning investment and trade, aiming to achieve a manifold increase ahead. Developments on two fronts are worth noting:

1. Bilateral Investment Treaty (BIT): During Obama’s visit, the issue of BIT figured in the discussions, with the two sides agreeing to explore its prospects further. BIT has been facing roadblocks lately in the wake of controversial policies, such as telecom licensing, of the previous government. Nevertheless, a model BIT is likely to be taken up by the Modi government soon to make it more robust and foolproof. Seemingly, BIT will involve intense negotiations as India and the United States have divergent views on it.

2. Totalization Agreement: During Obama’s visit, the two sides agreed to discuss the modalities for pursuing an India-US Totalization Agreement, which has been stuck for the past few years. It would enable Indian professionals working in the United States to receive annual social security refunds worth around USD 3 billion. Since the US authorities do not acknowledge contributions made by such professionals in Indian social security contribution schemes, i.e., the Employees Provident Fund and the New Pension Scheme, they have to make contributions in the US social security system. The contributions are lost upon the return of these professionals. Since the issue is close to the hearts of India’s middle class and the younger generation, Modi is hard-pressed to find a way forward soon.

As regards the essentials of economic cooperation, the India-US Trade Policy Forum meeting in November 2014, after a hiatus of four years, gave a major thrust to the economic agenda. In order to woo American and other foreign companies, the Modi government has recently decided to open up the insurance sector for foreign investments. Additionally, an inter-ministerial committee, to fast track US investments in India, will be established. The Indo-US Investment Initiative has also been conceptualised. Clearly, the government has travelled more than half way to make Indo-US relations work, also manifested in breaking the WTO impasse on agriculture subsidies.

Climate change and emission targets

During Obama’s visit, the two nations agreed to tackle the challenge of climate change. A five-year MoU on “Energy Security, Clean Energy and Climate Change” has already been concluded, and the two sides are working towards signing an agreement soon. PACE-R and PACE-D will also be strengthened. However, critics, both in India and elsewhere, point out that during Obama’s visit, nothing substantial could be achieved on the issue of carbon emissions, failing to put in place a deal similar to the US-China agreement, signed in November 2014, under which they have agreed to set their respective emission cut targets. Even so, in terms of emissions, India is far behind China and the United States and the nuclear deal, when implemented, would help India cut its emissions substantially. Additionally, the 100-Giga Watt Solar energy plan, in which the United States has also shown interest, would help India reduce emissions considerably.

The Sino-Pakistan dimension

Both China and Pakistan reacted sharply to Obama’s visit. While Pakistan seemed anxious about Indo-US cooperation on the anti-terrorism front, China seemed nervous about the “US-India Strategic Vision for the Asia-Pacific and Indian Ocean Region.”

Four decades ago, China had bandwagoned with the United States to balance the USSR. Pakistan has done the same to “box-in” India on the Indian subcontinent. Reactions from both China and Pakistan indicate that at least some in the corridors of power in Islamabad and Beijing are apprehensive of the likelihood of India using the same strategy to “tether” China and Pakistan in one shot. India is mindful of Chinese anxieties on the matter, and is trying to allay these concerns. In that regard, the just-concluded China visit of the External Affairs Minister Sushma Swaraj may be seen as India’s message that China should not see Indo-US bonhomie as a “zero-sum game.”

Conclusion

In several official statements, the term “qualitative reinvigoration” of Indo-US ties was included. While it would be an exaggeration to term Obama’s visit alone a trigger in “qualitative reinvigoration,” Modi’s US visit and Obama’s return visit, coupled with the intense diplomatic follow-ups, have signalled, in no uncertain terms, that if such multi-dimensional engagement is sustained with the same velocity and intensity, New Delhi and Washington will soon realize “qualitative reinvigoration” in their bilateral relationship. Although the visit may not have resulted in spectacular and out- of-the-box announcements, the breakthroughs have been substantive, clearing the roadblocks and paving the way for a transformational relationship between India and the United States.