A new chapter of openness

As he listed the reasons why he believes the India-U.S. relationship is the “defining partnership” of this century, Barack Obama dwelt in his farewell speech on all the similarities between the two nations: as diverse, multi-religious, tolerant democracies that respect human rights. Over the last three days, he made a much more vivid enunciation of where the future of India-U.S. ties lies as well. From the joint statement, to a declaration of friendship, to a strategic vision for the Asia-Pacific region, rarely has the state-of-play between New Delhi and Washington been so clearly mapped out during any Indo-U.S. summit. In inviting President Obama at short notice, having him officiate over the Republic Day parade and make a series of public appearances together, Prime Minister Narendra Modi has gone where his predecessors have often shied away from — in seeking to take bilateral ties with America to a new level. The strategic defence framework, say officials, will see their militaries move to a new level of closeness, for example. Whether it is about defence exchanges, joint production of the four projects outlined, or the MoU between national defence universities, it is clear that the interaction planned between the Indian and U.S. armed forces will be unprecedented.

The openness in ties was clear in other spheres of the relationship: from the frank discourse over economic issues, to the obvious agreement on countering climate change, to the details of the Obama-Modi personal “chemistry” that they referred to with ease. Mr. Modi went so far as to say that India and the U.S. had benefited from the bonhomie he shared with Mr. Obama. However, while the exuberance and optimism in the relationship is a positive and welcome development, especially as it comes after a period of intense negativity, it should not come at the cost of other relationships. President Obama’s criticism of Russia while in India, calling it “a bully”, was hardly something that Prime Minister Modi could have anticipated, yet it may make a dent in relations with Russia. The vision statement on the Asia-Pacific and Indian Ocean region is likely to have a more lasting impact on relations with China, as it seeks to portray an India-U.S. front against diplomatic, economic and security challenges in the region. It will be External Affairs Minister Sushma Swaraj’s task, as she heads to Beijing shortly, to assuage any fears that the pact is directed in that direction.

Meanwhile, as the euphoria from the successes of the visit subsides, Mr. Modi will need to explain domestically just how he was able to achieve the visit’s biggest “breakthrough”: on nuclear issues. For the past six years, India and the U.S. have been unable to conclude the “administrative arrangements” that would enable commercial cooperation between Indian and American companies under the civil nuclear deal. While diplomats are to be congratulated on having cleared this hurdle, the Indian public must be informed about exactly what assurances have been given to U.S. officials in return for their acceptance of the Indian liability law, and what the added costs would be. The UPA government came in for much criticism from the then-in-Opposition BJP and paid a heavy price for its lack of openness and clarity on liability issues. Mr. Modi and his government need to be more forthcoming about the details of the agreement. Since the Indian taxpayer will be the consumer, the underwriter and the potential victim of any untoward nuclear accident, the subject of liability in the nuclear deal is of utmost importance. The “coming out” of the India-U.S. relationship is indeed a welcome “new chapter” in relations, but it cannot be written fully without complete openness on the nuclear deal as well, which has been described as the “centrepiece” of India-U.S. understanding.

On the business side, there were no significant outcomes to talk about except for the resolve to expand trade ties and a $4-billion commitment from the U.S. in investment and loans. To put this in perspective, Mr. Modi returned with a $35-billion investment commitment from Japan when he visited Tokyo last year. Ironically, half of the investment committed by Mr. Obama will go into the renewable energy sector where the U.S. and India are locked in a trade dispute at the WTO. The dispute is over India’s imposition of local content requirements on solar cells and modules as part of the projects awarded under the Jawaharlal Nehru National Solar Mission. The U.S. is also unhappy with the Make in India policy, especially in the renewable energy sector where it sees great prospects for its own companies. It remains to be seen how much of the investment committed by Mr. Obama actually happens, given that it is linked to Indian companies sourcing technology and products from the U.S. If the Indian IT sector was hoping for an agreement on the issue of H1B visas, then it must be disappointed for Mr. Obama did not go beyond giving an assurance that the U.S. would look into all aspects as part of overall immigration reform. Given that both the Senate and the House of Representatives are under the control of Republicans, it would be rather difficult for the President to push through deep immigration reform; he can accomplish only as much as is possible through executive action. Mr. Obama also had India on the back foot on the subject of Intellectual Property protection, pointing out that U.S. companies were hampered by the lack of adequate protection in India. Mr. Modi also found himself defending the Make in India initiative even while promising that adversarial taxation policies would be phased out. Evidently, there are issues where the two countries have a lot of work to do to align their respective positions; but that may just have got easier now after Mr. Obama’s high-on-optics visit and the understanding struck between him and Mr. Modi.