As the Narendra Modi-led National Democratic Alliance government settles in its second term with a plethora of foreign policy challenges looming large, it faces unusual headwinds from what should be a natural partner – the United States – on both economic and strategic fronts.
In June, the Trump administration announced the revocation of India’s special trade status on the grounds that “India had not assured the US that it will provide equitable and reasonable access to its market.” Special trade status, also known as the Generalised System of Preferences allows duty-free imports of goods up to $5.6 billion into the United States from India. This trade dispute has been brewing for some time. In 2018, Washington had imposed tariffs on steel and aluminium exported from India under section 232 of the Trade Expansion Act of 1962 on the grounds of national security.
A series of protective measures against India led to a tit-for-tat response from New Delhi which imposed tariffs of $235 million on US goods worth $1.4 billion, prompting speculation about growing Indo-US tensions with trade as the focal point.
However, hasty assumptions can lead to deceptive conclusions. Despite negative headlines dominating the Indo-US diplomatic engagements in recent months, the underpinnings of the relationship remain rather robust. Secretary of State Mike Pompeo, at the 44th annual meeting of the US Business Council, pointed out the idea of a US-India partnership isn’t new and had been in the offing for seven decades, since India won independence: “Our two democracies and a close relationship seemed inevitable, a matter of ‘when’ not ‘if.’” He went on to highlight the advances made in Indo-US relations under the Trump administration and need for both countries to cooperate further in the Indo-Pacific region and the world at large. Former acting US Secretary of Defense Patrick Shanahan echoed similar sentiments during the Shangri-La Dialogue in Singapore, hailing US-India defence relations and India as a major defence partner.
Pompeo’s address reflects India’s increasing centrality in US strategic calculations. A report on the Indo-Pacific, released in June by the Pentagon, emphasises the value of the Indo-Pacific region to global trade and commerce: “We have an enduring commitment to uphold a free and open Indo-Pacific in which all nations, large and small, are secure in their sovereignty and able to pursue economic growth consistent with accepted international rules, norms, and principles of fair competition.”
Notwithstanding some frictions, the Indo-US relationship has been on the upward trajectory since the end of the Cold War. Alignment of strategic interests has led to deeper cooperation in diplomatic as well as defence cooperation. The conclusion of landmark civil nuclear pact in 2008 was the high point of the bilateral ties and defence relationship and remains today the defining element of this relationship.
India’s elevation to Strategic Trade Authorisation-1 list in 2018 allows it to import high-end sensitive technologies like armed drones. Bestowing STA-1 status can be seen as a logical step after the United States recognised India as a “major defence partner” in 2016, enabling the sale of high-end technology at par with the US allies. Last year saw the inauguration of India-US 2+2 ministerial dialogue, signing of Communications Compatibility and Security Agreement to facilitate real-time information sharing between both countries, altering the nomenclature of US Pacific Command to the US Indo-Pacific Command and consensus on the first tri-service exercise. These agreements demonstrate the intent of the United States and India to forge a security partnership in the Indo-Pacific to meet the challenges of these turbulent times.
On the trade front, while the American trade deficit declined from $27 billion in 2017 to $21 billion in 2018, differences persist with President Donald Trump complaining about Indian trade practices. Other issues such as India’s trade ties with Iran and purchase of S-400 long-range air-defence missiles from Russia also have the potential to derail momentum. Pompeo’s visit to India, coinciding with Prime Minister Narendra Modi’s meeting with Trump on the G20 summit in June was aimed at ironing out differences on crucial issues and minimising divergences. It must be noted that some differences are not a direct consequence of the Indo-US relationship, but arise from the United States targeting a third country.
Washington’s sanctions on Russia through CAATSA – Countering America’s Adversaries through Sanctions Act – will have bearing on India’s decision to import weapon systems. In terms of a defence-industrial setup, there exists path dependency as most Indian platforms are of Russian origin, given Cold War-era ties. Besides, New Delhi’s distance from Moscow could lead to it to supplying sophisticated defence systems to Pakistan with severe implications for regional stability. Similarly, flaring tensions with Iran and Venezuela put India’s energy security at stake with India dependent on imports for more than 80% of its energy. New Delhi also remains concerned about the trajectory of US policy in Afghanistan, where Pakistan wields influence and India’s substantive investment in building capacity might come to nothing as US engagement with the Taliban makes the extreme faction a central pillar of the Afghan politics.
During a recent US visit by Pakistani Prime Minister Imran Khan, Trump suggested that the Indian prime minister wanted the US president’s mediation on the Kashmir issue – resulting in a political backlash in New Delhi, with many questioning the intentions of the Trump administration towards India.
Autonomy in foreign policymaking has been a major objective for India. Though Modi has taken India considerably closer to the United States, he has managed to balance it with outreach to China and Russia. As Indian Foreign Minister S Jaishankar has noted, “We have many relationships… they have a history. We will do what is in our national interest and part of the strategic partnership is the ability of each country to comprehend and appreciate the national interest of others.” In this age of fluid global environment, all major powers are building partnerships with multiple actors, and New Delhi also wants to engage in “issue-based alignments.”
Though differences exist on issues ranging from trade and West Asia to Russia and 5G, these are no longer irreconcilable. Despite huge political and bureaucratic mistrust of the past, India and the United States have managed to overcome all odds including on complex issues like non-proliferation, Pakistan and terrorism. Bilateral engagement is on a much stronger footing today. In fact, the Trump administration’s recent decision extending a lifeline to Huawei by allowing US companies to sell hardware components has given considerable space to India to craft its 5G policies.
Similarly, on the energy security front, the United States has tried to fill the Iranian void. Estimates show that while India’s imports of Saudi oil grew by 11%, US imports grew by 34%. The US Senate’s decision to pass a resolution elevating India to the status of a non-NATO ally further points to the growing salience of India-US relations in the Indo-Pacific. Besides, India is looking to lock in a US defence deal worth $18 billion over the next few months.
As US-India ties enter seemingly turbulent waters, both nations recognise the relationship’s value for the strategic underpinnings of their respective foreign policies. Each nation must keep the big picture in mind in dealing with the inevitable irritants in their ever-expanding engagement. After all, it is the willingness to discuss differences that makes two democracies like India and the US natural partners.
Harsh V Pant is director of the Studies at Observer Research Foundation, New Delhi, and professor of international relations at King’s College London. Paras Ratna is a research associate at Vision India Foundation, New Delhi.
This article first appeared on YaleGlobal Online.