India-U.S. bilateral relations have developed into a "global strategic partnership", based on shared democratic values and increasing convergence of interests on bilateral, regional and global issues UPSC Aspirants preparing for IAS Exam should know about this topic.

TOPICS

  • Overview
  • Five Pillars of Strategic Partnership

OVERVIEW

The emphasis placed by the Government in India on development and good governance has created opportunity to reinvigorate bilateral ties and enhance cooperation under the motto --- “ChaleinSaathSaath: Forward Together We Go”, and "SanjhaPrayas, Sab ka Vikas" (Shared Effort, Progress for All) adopted during the first two summits of Prime Minister Modi and President Obama in September 2014 and January 2015 respectively. The summit level joint statement issued in June 2016 called the India-U.S. relationship an “Enduring Global Partners in the 21st Century”. Regular exchange of high-level political visits has provided sustained momentum to bilateral cooperation, while the wide-ranging and ever-expanding dialogue architecture has established a
long-term framework for India-U.S. engagement. Today, the India-U.S. bilateral cooperation is broad-based and multi-sectoral, covering trade and investment, defence and security, education, science and technology, cyber security, high-technology, civil nuclear energy, space technology and applications, clean energy, environment, agriculture and health. Vibrant people-to-people
interaction and support across the political spectrum in both countries nurture our bilateral relationship.

HISTORY

  • The birth of Indian Republic was accompanied by Pakistan’s occupation of Kashmir. Nehru’s efforts to garner support from the international community was fruitless.
  • India declined the American offer to accept a seat at the United Nations Security Council and rather pushed for the membership of the People’s Republic of Chinawhich it has immediately recognized as a sovereign nation.
  • In the year 1950, India abstained from a US-sponsored resolution calling for UN’s military involvement in the Korean War. India even voted against UN forces crossing the 38thParallel and naming China as an aggressor.
  • 1955: Pakistan officially aligned with the United States via the South East Asian Treaty Organization (SEATO) and Central Treaty Organization (CEATO) also known as Baghdad Pact. Meanwhile, India, being the chief proponent of Non-Alignment Movement (NAM), held the first Afro-Asian Conference at Bandung, Indonesia.
  • The rogue state of Pakistan became an important ally to the US in the containment of the Soviet Union, giving rise to strategic complications with India.
  • In the Sino-Indian war of 1962, the US extended help to India against China’s belligerence by sending an American carrier- The Enterprise- to the Bay of Bengal. China, however, had declared unilateral ceasefire the next day. Indian leaders and public welcomed American intervention.
  • 1966: In response to India’s criticism of the US intervention in Vietnam, President Lyndon B. Johnson restricted the supply of grain shipments to India under Public Law 480 programme.
  • 1967: A predominantly Anti-American worldview led India to reject a founding membership in the Association of Southeast Asian Nations (ASEAN).
  • 1968: India rejected the Non-Proliferation Treaty (NPT) proposed by the world’s leading nuclear powers.
  • 1971: The USA had maintained a studious silence on Pakistan’s repressive policies in East Pakistan. The then Secretary of State Henry Kissinger visited Delhi to make India comply to not support liberation movements in East Pakistan. Indira Gandhi’s intransigence was met with diplomatic muscle-flexing. Next month, India signed a Treaty of Friendship, Peace and Cooperation with the Soviet Union, seen as a blatant shift from India’s Non-Alignment policies. US President Richard Nixon in a retaliatory move chose to explicitly tilt American policy in favour of Pakistan and suspended $87 million worth of economic aid to India. American naval fleet USS Enterprise traversed the Bay of Bengal, issuing mild threats. India won the Bangladesh Liberation War as the Pakistani Army embarrassingly surrendered more than 90,000 troops.
  • 1974: India conducted its first nuclear weapon test at Pokhran, and it came as a major jolt to the USA who made plans to upgrade its presence at Diego Garcia, a British-controlled island in the Indian ocean.
  • 1975: India faced considerable domestic turmoil and entered into a state of Emergency.
  • 1977: The Emergency ended and the US immediately eased restrictions it has placed on World Bank loans to India and approved direct economic assistance of $60 million.
  • 1978: US President Jimmy Carter and Indian Prime Minister Desai exchanged visits to each other’s nations.
  • The 1980s: Large amounts of military aid was pumped into Pakistan by the USA in order to fight a proxy against the Soviet Union in Afghanistan. This created significant repercussions in the internal security of India as the Pakistani mujahedeen fighters infiltrated into Kashmir as militants.
  • 1988: Prime Minister Rajiv Gandhi made a historic visit to China which led to normalization of relations between India and China.
  • 1990: India hesitatingly provided a brief logistical support for American military operations in the Gulf War.
  • Post-1991: The Soviet Union disintegratedinto independent nations and the United States emerged as the single largest hegemon, making the world unipolar. It coincided with India opening doors to foreign private capital in its historic Liberalization, Privatization, and Globalization move.
  • Trade between India and the US grew dramatically and is flourishing today.

 INDIA- USA : FIVE PILLARS OF STRATEGIC PARTNERSHIP

  1. Strategic Issues
  2. Energy and Climate Change
  3. Science and Technology
  4. Health and Innovation
  5. Education and Development

India-US Civil Nuclear Deal

The deal is seen as a watershed in India-USA relations and introduces a new aspect to international nonproliferation efforts. Since July 18, 2005, the deal lifts a three-decade U.S. moratorium on nuclear trade with India. It provides U.S. assistance to India’s civilian nuclear energy program and expands India-USA cooperation in energy and satellite technology.

 INDIA- USA TRADE RELATIONS

India and the US agreed to deepen economic cooperation and resolve outstanding issues through regular official engagements in a recent meeting between the US commerce secretary Wilbur Ross and Indian trade minister Suresh Prabhu. While the US is India’s largest export destination, India is only the 13th largest for the US due to “restrictive market access barriers”.

Major Issues

Tariffs

  • Bilateral tensions have increased over each side’s tariff policies. These include the US 25% steel and 10% aluminum tariffs.
  • India is considering the retaliatory tariffs.
  • According to US, market barriers in Indian market include both tariff and non-tariff barriers, as well as multiple practices and regulations that disadvantage foreign companies.
  • India is considering challenging the US tariff increases in the World Trade Organization (WTO).
  • President Trump has called India “a very high-tariff nation” and criticized tariff imbalances.

Generalised System of Preferences (GSP) Programme

  • Recently, the US has decided to withdraw duty-free benefits to Indian exporters under the GSP programme.
  • India is GSP’s top beneficiary. In 2018, GSP represented 11% ($6.3 billion) of US merchandise imports from India, such as chemicals, auto parts, and tableware. GSP removal would reinstate US tariffs.

Services

  • A key issue for India is US’s temporary visa policies, which affect Indian nationals working in the United States. India is challenging US fees for worker visas in the WTO, and monitoring potential US action to revise the H-1B visa program.
  • India also continues to seek a “totalization agreement”to coordinate social security protection for workers who split their careers between the two countries.

Agriculture

  • Sanitary and phytosanitary (SPS) barriers in India limit US agricultural exports.
  • Each side also sees the other’s agricultural support programs as market-distorting.

Intellectual Property (IP)

  • The two sides differ on how to balance IP protection to incentivize innovation and support other policy goals, such as access to medicines.
  • India remains on the “Special 301” Priority Watch List for 2018,based on such concerns as its treatment of patents, infringement rates, and protection of trade secrets.

"Forced" Localization

  • The United States continues to press India on its “forced” localization practices.
  • Initiatives to grow India’s manufacturing base and support jobs include requirements for in-country data storage, domestic content (such as laws protecting India’s solar sector), and domestic testing in some sectors.
  • India’s new data localization requirements for electronic payment service supplierssuch as MasterCard, Visa, etc.

Investment

  • US concerns about investment barriers remain nevertheless, heightened by new Indian restrictions on how e-commerce platforms such as Amazon and Walmart owned Flipkart conduct business.

Defense Trade

  • The United States urges more reforms in India’s defense offsets policyand higher FDI caps in its defense sector.

Generalized System of Preferences (GSP)

  • The GSP is a US trade program designed to promote economic growth in the developing world by providing preferential duty-free entry for up to 4,800 products from 129 designated beneficiary countries and territories.
  • GSP was instituted on January 1, 1976, by the Trade Act of 1974.

Totalization Agreement

  • A Totalization Agreement is a convention between two countries preventing duplicate social security contributions for the same income.
  • India had signed Social Security Agreements (SSAs)/Totalization Agreement with several countries (presently 18 countries).
  • US has also signed the totalization agreements with 24 countries.
  • India has been trying to sign such agreements with US since 2007.

Defence Offset Policy 2016

  • It is a part of Defence Procurement and Procedure (DPP) 2016.
  • The offset policy mandates foreign suppliers to spend at least 30% of the contract value in India.
  • The key objectives of the Defence Offset Policy is to leverage the capital acquisitions to develop Indian defence industry by fostering the development of internationally competitive enterprises; augmenting capacity for research and development in defence sector and to encourage development of synergistic sectors like civil aerospace and internal security.
  • The offset can be discharged by many means such as direct purchase of eligible products/services, FDI in joint ventures and investment towards equipment and transfer of technology.
  • The foreign Original Equipment Manufacturer (OEM) is free to select any Indian company as its offset partner.

“Special 301” Priority Watch List

  • The Office of the United States Trade Representative (USTR) releases its annual Special 301 Report on the adequacy and effectiveness of trading partners’ protection of intellectual property rights and the findings of its Notorious Markets List.
  • The 2018 report has placed India on ‘Priority Watch List’ over challenges in India’s IP framework.

 INDIA- USA DIALOGUE ARCHITECTURE

  • There are more than 50 bilateral dialogue mechanisms between the two governments.
  • India-USA bilateral trade in goods and services increased from $104 billion in 2014 to $114 billion in 2016.
  • Both countries have made a commitment to facilitate actions necessary for increasing the bilateral trade to $500 billion.
  • In June 2016, Prime Minister Modi and President Obama pledged to explore new opportunities to break down barriers to the movement of goods and services, and support deeper integration into global supply chains, thereby creating jobs and generating prosperity in both economies.
  • The U.S. is the fifth largest source of foreign direct investments into India.
  • Among large Indian corporations having investments in the U.S. include Reliance Industries Limited, Tata Consultancy Services, Wipro, Essar America, Piramal, Mahindra, Lupin, Sun Pharma, etc.
  • There are several dialogue mechanisms to strengthen bilateral engagement on economic and trade issues, including a Ministerial Level Economic and Financial Partnership and a Ministerial Trade Policy Forum. For greater involvement of private sector in the discussions on issues involving trade and investment, there is a bilateral India-USA CEO’s Forum.
  • India and the US have set up a bilateral Investment Initiative in 2014, with a special focus on facilitating FDI, portfolio investment, capital market development and financing of infrastructure.
  • US firms will be lead partners in developing Allahabad, Ajmer and Vishakhapatnam as Smart Cities.

This apex-level dialogue has added a commercial component to the five traditional pillars of bilateral relations on which the erstwhile Strategic Dialogue of Foreign Ministers had focussed, namely: Strategic Cooperation; Energy and Climate Change, Education and Development; Economy, Trade and Agriculture; Science and Technology; and Health and Innovation. The second meeting of the Strategic and Commercial Dialogue took place on 30 August 2016 in New Delhi. In addition, there are Ministerial-level dialogues involving home (Homeland Security Dialogue), finance (Financial and Economic Partnership), commerce (Trade Policy Forum), HRD (Higher Education Dialogue), Science & Technology (Joint Commission Meeting on S&T) and energy (Energy Dialogue)

 INDIA- USA DEFENCE COOPERATION

  • Defence relationship has emerged as a major pillar of India-USA strategic partnership with the signing of ‘New Framework for India-U.S. Defense Relations’ in 2005 and the resulting intensification in defence trade, joint exercises, personnel exchanges, collaboration and cooperation in maritime security and counter-piracy, and exchanges between each of the three services.
  • India participated in Rim of the Pacific (RIMPAC) exercise in July-August 2016.
  • The agreements signed during the past one year include:
  1. Logistics Exchange Memorandum of Association (LEMOA)
  2. Fuel Exchange Agreement
  3. Technical Agreement (TA) on information sharing on White (merchant) Shipping
  4. Information Exchange Annexe (IEA) on Aircraft Carrier Technologies

 INDIA- USA CLIMATE CHANGE AND ENERGY

  • The India-USA Energy Dialogue was launched in May 2005 to promote trade and investment in the energy sector.
  • There are six working groups in oil and gas, coal, power and energy efficiency, new technologies and renewable energy, civil nuclear co-operation and sustainable development under the Energy Dialogue.
  • As a priority initiative under the PACE (Partnership to Advance Clean Energy), the U.S. Department of Energy (DOE) and the Government of India have established the Joint Clean Energy Research and Development Center (JCERDC) designed to promote clean energy innovations by teams of scientists from India and the United States, with a total joint committed funding from both Governments of US$ 50 million.

 INDIA- USA CLIMATE CHANGE AND ENERGY

  • The India-USA Energy Dialogue was launched in May 2005 to promote trade and investment in the energy sector.
  • There are six working groups in oil and gas, coal, power and energy efficiency, new technologies and renewable energy, civil nuclear co-operation and sustainable development under the Energy Dialogue.
  • As a priority initiative under the PACE (Partnership to Advance Clean Energy), the U.S. Department of Energy (DOE) and the Government of India have established the Joint Clean Energy Research and Development Center (JCERDC) designed to promote clean energy innovations by teams of scientists from India and the United States, with a total joint committed funding from both Governments of US$ 50 million.

 INDIA- USA COOPERATION ON EDUCATION

India is learning from the U.S. experience in community colleges in order to meet our demands for skill-development. It has been agreed to collaborate with U.S. institutions in the area of Technology Enabled Learning and Massive Open Online Courses (MOOCs) to extend the reach of education in India. Under the Global Initiative of Academic Networks (GIAN) launched by India, up to 1000 American academics will be invited and hosted each year to teach in Indian universities at their convenience. The two sides are also collaborating to establish a new Indian Institute of Technology in Ahmedabad.

 

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