Source: Live Mint
For the last several years, there have been countless meetings, seminars and op-eds emerging out of both New Delhi and Washington in search of the next big thing in US-India relations. A constant refrain of this elusive quest is that the two sides need to identify a transformational deal, in the vein of the 2005 civil nuclear cooperation pact, to galvanize their bureaucracies and elevate the partnership to the next level.
Here’s a little secret: there are no new, big ideas in US-India relations.
Judging by the ongoing difficulties negotiating the terms of a bilateral investment treaty and the fraught trade politics in Washington, a US-India free trade agreement (FTA) is a distant dream.Indian environmental negotiators have repeatedly made it clear that a breakthrough deal on climate change, akin to what the US and China brokered, is not on the cards.
Announcements of massive new Chinese and Japanese investments in India have spurred hopes that the US will follow suit and increase its commitment to Indian infrastructure, but the US government quite simply does not have the capital—or the tools—to launch a massive building spree.
These obstacles to blockbuster deals might prompt fears of renewed stagnation in US-India relations. But here’s why the future still looks bright.
Given the fallout of the Devyani Khobragade affair, the sinking Indian economy, perceived American indifference to India, and Prime Minister Narendra Modi’s decade-long visa denial, the commentariat was chock full of gloomy predictions about the state of India-US affairs in the wake of the 2014 general election.
Yet, Modi took many people by surprise, including some in his inner circle, by unhesitatingly embracing the US. To be fair, the Obama administration deserves credit for swiftly inviting the new Prime Minister to visit Washington within hours of his election and making good on that invitation by rolling out the red carpet for Modi four months ago.
During that September trip, expectations for concrete deliverables were low; it was a getting-to-know-you visit, a first chance for the two leaders (and administrations) to size one another up.
By all accounts, both leaders liked what they saw. Ever since, there has been a whirlwind of activity. The two leaders have met twice in the interim; innumerable high-level delegations have crisscrossed the Atlantic; and, along the way, trade negotiators forged a compromise to salvage the trade facilitation agreement.
With relations back on firmer ground, what is needed now is to not to dream up new initiatives, but to consummate old ones. US-India relations have not meandered because of a lack of ideas; they’ve ebbed and flowed thanks to over-hyped pledges followed by half-baked implementation. Whatever creative energies both parties can summon must be channelled into devising solutions to break through the usual logjams rather than creating new gridlock.
The good news is that both sides seem, for the first time in recent memory, ready and willing to do just that. Three areas appear ripe for making headway.
Many in Washington are still reeling from the failure to realize collaboration in the civil nuclear domain, their hopes dashed by India’s stringent nuclear liability legislation. The Modi government, in contrast to its predecessor, seems genuinely willing to find ways to calm investors’ nerves.
For instance, there are Indian proposals on the table to create an insurance pool to indemnify nuclear suppliers and to amend the liability law to limit exposure, in the event of a disaster, to criminal—rather than civil—liabilities.
On defence, the inability to jointly develop and manufacture defence materiel has been a glass ceiling on the partnership. Now, the co-production and co-development of defence technology appears to be matter of when, not if. The nomination of Ashton Carter to be the next US secretary of defence bodes well; as the former number two at the Pentagon, Carter was widely credited with helping to usher in a positive shift in the defence department’s stance on India.
Although a game-changing pact does not appear to be on the cards on energy and environmental issues, there is a bargain to be had where both sides can claim victory. The Obama administration has been riding India hard to make stepped up commitments to reducing carbon emissions. Judging by India’s statements at the recent Lima climate conference, it is not willing to move very far without hard commitments from the West on financing and technology transfer. However, India covets shale gas exports from the US (which are restricted to FTA partners) and the Obama administration is considering new funding for research and development of green technologies. Throw in progress on nuclear liability, and there’s something for everyone.
In some ways, there is a unique window of opportunity to get things done. The US economy is buoyant, with gross domestic product growth expected to clock in above 3% in 2015. The Obama administration and members of Congress, on both sides of the aisle, are energized by a new Indian government, which appears willing to engage even on issues once viewed as intractable. By visiting India twice, and with the latter visit on an occasion as symbolic as Republic Day, the President is elevating the status of the world’s largest democracy in Washington. On the Indian side, while domestic investment still struggles, there are green shoots in the economy thanks to subsiding inflation and rising private consumption. The government, its economic team now in place, is slowly unveiling its reform vision. On foreign policy, the PM seems keen to move beyond the straitjackets of the standard talking points.
But what could sink this newfound momentum is a failure to close out past business. During the final two years of the United Progressive Alliance-II, India’s status had plummeted in the eyes of the DC establishment thanks to its foundering economy and moves toward protectionism; from Delhi’s perspective, Washington talked a good game about defining partnership, but failed to back it up. We could yet revert to this dejected disappointment if the two sides do not demonstrate to their respective domestic constituencies that they can pluck the low-hanging fruit.
In this era of US-India relations, it’s time to sweat the small stuff.