As President Barack Obama sets out for India, he will find that the same favourable winds which are driving India’s economy are also moving the U.S.-India relationship. The President will be the first American chief of state to visit India twice during his incumbency. He will also be the first President to be received as Prime Minister Narendra Modi’s guest at India’s Republic Day. The invitation to Mr. Obama and his decision to visit India speak volumes about prospects for the Indian-American relationship.
We have come a long way over the past two decades. Indian and American trade and investment are buoyant, defence trade has surged, and strategic consultations, intelligence sharing and counter-terror cooperation are closer than ever in history. The U.S., including our two political parties, believe that a strong India is good for this country; India believes a successful and prosperous America is good for India. This said, to achieve the potential of the relationship, we need to deepen strategic and economic cooperation and set new goals for the relationship.
Common problems The first issues President Obama and Prime Minister Modi need to address are strategic. The U.S. and India face common problems in dealing with the rise of China. We have many friends in the region, notably Korea, Japan, the Philippines, Vietnam, Singapore and Indonesia. These countries have similar views about China and recognise the importance of maintaining an Asian balance of power. India and the U.S. have an interest in reinforcing our respective ties to each of these powers. Our common objective should not be to confront or contain China. Rather it should be to shape the environment within which China pursues legitimate ambitions, so that China’s quest for status does not threaten its neighbourhood and the U.S.
“ India and the U.S. should not confront or contain China, but shape the environment within which China pursues legitimate ambitions ”
Similarly, India and the U.S. are preoccupied with Afghanistan’s future and with the deteriorating situation in Pakistan. Both questions demand close attention and frequent exchanges on strategy. The U.S. has serious issues with Russia and in the Middle East. We face a common threat from terrorism. This said, we have different points of view and must be careful not to surprise one another. Where we cannot agree on a given issue, it is important that our two countries seek other avenues of cooperation.
We have challenges ahead in coordinating our respective approaches to climate change; this subject will require hard and specialised work.
An additional word on terrorism is in order. The use of terror affects India, the U.S., Europe, Russia and China, among many other nations. It springs from deep political and cultural causes and has no single point of origin. It cannot be dealt with by military means alone; in fact the use of military force can be counterproductive.
To deal with terror, we need to use the full box of tools available to governments — political, intelligence, religious messaging, and police cooperation. Prime Minister Modi and President Obama should give U.S.-Indian cooperation in counter terror the highest priority.
Expanding defence cooperation is an especially promising area in the Indian-American relationship. While our two countries will not be “allies” as the term is classically defined, the security of our two nations is enhanced by the closest possible cooperation.
No two countries exercise their military forces more frequently than India and the U.S. We are not, however, cooperating as we should in preparing India’s industrial base to provide the systems it will need to cope with the security challenges of the future. Modern warfare is increasingly about intelligence systems communications and electronic warfare. India needs to strengthen its capabilities in these fields as it continues its defence modernisation. Other than the U.S., no nation offers as extensive a range of high-tech defence capabilities. Furthermore, to be able to work together in moments of crises, India and the U.S. should aim to have common defence platforms. To build these platforms, India must reach an agreement with the U.S. on the protection of defence information. Without it, the U.S. cannot share its defence “crown jewels.” The President and the Prime Minister would be well advised to reach agreement on this important question.
Prime Minister Modi is determined to grow India’s economy. He wishes to expand rapidly India’s manufacturing base, and he welcomes American and foreign investment as key drivers in India’s economic performance. To attract foreign and mobilised domestic investment, the Prime Minister, India’s government and its Chief Ministers must tackle key growth impediments. These include infrastructural inadequacies, as well as tax, land, labour and Intellectual Property Rights questions, and India’s financial services regime.
The landscape of U.S.-India economic cooperation is crowded with investment disputes, which undermine confidence in India as an investment destination. Our 2005 civil nuclear agreement has yet to produce the first investment.
The upcoming budget session of Parliament gives the Indian government an important opportunity to lay out an economic reform agenda. American investors will be watching closely the promises which the Indian government makes, and more importantly, its ability to put those promises into practice.
India can reasonably look to President Obama to set out his administration’s policy on high-tech immigration and other irksome issues like social security totalisation. India can also look forward to the President’s help in securing early passage of GSP, the trade enhancing regime that has long facilitated India’s exports to the U.S.
Setting bold goals Finally, we need to look ahead and set bold goals for the relationship. These goals must serve Indian and American interests. For ‘Make in India’ to succeed, India must sell at home and have markets abroad. To assure foreign markets, India must be competitive and able to trade without impediment. India has yet to complete a bilateral investment treaty with the U.S., and it is not party to current WTO negotiations on subjects as important as IT services and government procurement. More importantly, India is not a member of the Asia-Pacific Economic Cooperation and is not in consideration for membership in Trans-Pacific trade negotiations. President Obama will shortly seek Trade Promotion Authority to permit the U.S. to advance these new super-trade regimes for the Atlantic area and the Pacific. India risks falling between two stools and being excluded from the world’s most potentially dynamic market areas. Securing India’s trade future requires tough negotiations, and a willingness by India to become a competitive world-class economy. This subject is worth discussion between President Obama and Prime Minister Modi. It is reasonable to expect the U.S. to be India’s friend and sponsor if India decides to refocus its trade policy and go global. Expanding India’s trade horizon is central to building Indian strategic strength and in consolidating the U.S.-India relationship. The most promising days of that relationship lie ahead. Prime Minister Modi and President Obama have the opportunity later this month to align our policies and give our very promising relationship a fresh impulse.
(Frank Wisner is former U.S. Ambassador to India.)
