Tuesday 28 February 2017

India and the US: Then and Now


Donald Trump fought a strong political battle to be elected as the 45th president of the world's oldest democracy. India's past experiences with US presidents show that a Republican president is generally better for us than a Democrat one. But in recent history, Indo-US relations have broadly stuck to a steady path — starting with Democrat Bill Clinton to republican Gorge W. Bush to Democrat Barack Obama.

Here, let us have a look at what could happen to Indo-US relations that existed so far and how would it change with the new president.



I. Introduction

  • Donald Trump holds the most powerful job in the most powerful country, thus making him the most powerful man in the world.

  • His background is in the cutthroat world of business of unchecked capitalism where braggadocio and swagger are rewarded.

  • India historically has preferred Republican presidents. But Trump is no ordinary Republican.

  • India could stand to gain more from Trump’s harsh stance on China and Pakistan. But, India may have to fear Trump’s general anti-immigrant views.

  • We will have to wait and see is how the change in the US politics change the long bonded relations between the two countries


    II. India's Historical Relations with the US

    • In 1961, India became a founding member of the Non-Aligned Movement to avoid involvement in the Cold War power-play between the United States and the Soviet Union.

    • The Nixon administration's support for Pakistan during the Indo-Pakistani War of 1971 affected relations till the dissolution of the Soviet Union in 1991.

    • In the 1990s, Indian foreign policy adapted to the unipolar world and developed closer ties with the United States.

    • Under Presidents Bush and Obama, the United States has demonstrated accommodation to India's core national interests and acknowledged outstanding concerns.

    • Past many years have seen an increase in bilateral trade & investment, cooperation on global security matters, inclusion of India in decision-making on matters of global governance.

    • In 2016, India and United States signed the Logistics Exchange Memorandum of Agreement and India was declared a Major Defense Partner of the United States.

    • According to Gallup's annual World Affairs survey, India is perceived by Americans as their 6th favorite nation in the world, with 71% of Americans viewing India favorably in 2015.

    • Exports totaled $34 billion; Imports totaled $59 billion. The U.S. goods and services trade deficit with India was $25 billion in 2012. India was currently the 11th largest goods trading partner with $63.7 billion in total (two ways) goods trade during 2013.


      III. Timeline of Key Events in the bilateral relations


      • October 1949: Prime Minister Pandit Jawaharlal Nehru meets with U.S. president Harry S. Truman on a multi-week tour of the United States. This sets the tone for U.S.-India relations throughout the Cold War, creating constraints within the relationship, as well as opportunity for amity between Delhi and Moscow.


      • December 1959: President Dwight Eisenhower is the first serving U.S. president to visit India. He addresses the Parliament.

      • October 1962: Prime Minister Jawaharlal Nehru writes to President John F. Kennedy to request support from the United States in the India-China war. Washington supports India in the conflict, recognizing the McMahon line as the border, and provides air assistance and arms.

      • 1963: Norman Borlaug travels to India to begin testing high-yield wheat varieties. His collaboration with Indian scientist Dr. M.S. Swaminathan results in the “Green Revolution,” and India.

      • 1971: The United States sides with Islamabad in the India-Pakistan war, given its mediating role in Nixon’s rapprochement with China. India also signs a twenty-year Treaty of Friendship and Cooperation with the Soviet Union in August, sharply deviating from its previous position of non-alignment in the Cold War.

      • May 1974: India detonates its first nuclear device, becoming the first nation outside the five permanent members of the United Nations Security Council to have declared nuclear capabilities. The move contributes to a period of estrangement between the United States and India that lasts over two decades.

      • March 1978: The Carter administration enacts the Nuclear Nonproliferation Act, which requires countries not included in the Nonproliferation Treaty—which includes India—to allow inspections of all nuclear facilities by the International Atomic Energy Agency. India refuses, and Washington ends all nuclear assistance to Delhi.


      • December 1984: A toxic gas and chemical leak at American-owned Union Carbide Pesticide Plant in Bhopal, India kills thousands. The incident harms U.S.-India relations, and continues to complicate the bilateral relationship years after.

      • July 1991: The government of Prime Minister P.V. Narasimha Rao, launches sweeping economic reforms that help expand economic ties with the United States.

      • May 1998: The Indian government announces the completion of a series of underground nuclear tests close to the border with Pakistan, surprising U.S. intelligence organizations and raising fears the move could spark a regional nuclear arms race. After recalling the U.S. ambassador to India, President Bill Clinton imposes economic sanctions, required under U.S. law.

      • March 2000: President Bill Clinton makes the first U.S. presidential trip to India since 1978. The visit ends the estrangement of the post-1998 Indian nuclear weapons tests, although the Clinton administration presses India’s government to sign the Comprehensive Test Ban Treaty. India’s economy begins to take off, the trip indicates a further shift in Washington’s regional orientation away from its Cold War alliance with Pakistan.

      • September 2001: The George W. Bush administration lifts all remaining U.S. sanctions that were imposed on India after its 1998 nuclear test.

      • June 2005: The United States and India sign the New Framework for the U.S.-India Defense Relationship, which sets priorities for defense cooperation in maritime security, humanitarian assistance/disaster relief, and counterterrorism.


      • March 2006: The finalized nuclear deal, completed in July 2007, makes India the only country outside of the Nonproliferation Treaty that has nuclear capabilities and is allowed to participate in nuclear commerce.

      • April 2010: U.S. Treasury Secretary Timothy Geithner makes his first official trip to India to launch the new U.S.-India Economic and Financial Partnership.


      • November 2010: President Obama visits India, where he addresses Parliament and backs the country’s long-held bid for a permanent seat on the United Nations Security Council. The trip also highlights the countries’ economic ties, with Obama announcing $14.9 billion in trade deals.

      • May 2012: Secretary of Defense Leon Panetta visits India to bolster military ties in the wake of the Obama administration’s announced “pivot” to Asia.

      • May 2014: President Barack Obama congratulates Modi and invites him to the White House, reversing an earlier visa ban.

      • September 2014: Modi and President Obama reach agreement on a MoU between the Export-Import Bank and an Indian energy agency, which provides up to $1 billion to help India develop low-carbon energy alternatives and aid U.S. renewable energy exports to India.

      • January 2015: Obama and Indian PM Modi announce a breakthrough on nuclear-related issues that could help implement the U.S.-India civil nuclear deal. Six months later, the ten-year U.S.-India Defense Framework Agreement is renewed.


      IV. Way forward in the bilateral relations


      • India-U.S. collaborative economic agenda should include co-production and co-development of defense products under the Make in India program, coal gasification technologies, and the issuance of a non-FTA country waiver in order for India to gain access to U.S. fossil fuel reserves.

      • Extend to partnerships in the area of agricultural technology, the civil aviation sector, life sciences, infrastructure financing, and green financing, among others.

      • Bilateral dialogues should also address visa issues in the IT/ITES (i.e. outsourcing services) sectors, focus on exporting synergies in the biotech and pharmaceutical sectors, and find means to support university and other skill development exchanges.


      V. US relations with India under the new administration




      A. India loses on:

      • Trump's hawkish 'trade policy' of 'America first' and his plans to renegotiate all foreign trade deals will affect treaties with India.

      • His protectionist stance could impact Indian exporters such as IT and pharma, trade relations as well as fund flows to India.

      • Trump terms H1B visa program as 'unfair' and has stated purpose to bring modifications to it. US business accounts for 50%-80% of the total business of the Indian IT companies and a minimum wage hike to $100,000 may translate into 9%-25% EPS cut in FY'18.

      • The proposed import tax of 35% is likely to impact pharma and other companies with higher sales.

      • Bringing jobs back to America would mean stricter conditions for entry to immigrants from India.

      • Trump's promise to reduce US corporate tax rate from 35% to 15% could result in companies like Ford, GM and Microsoft rushing back to the US.

      • The rush of the US firms will hit the Make in India program.

      B. India gains on:
      • Trump may go for stricter immigration rules, he says he wants to woo Indian entrepreneurs and students to the US.

      • Trump criticized China on most occasions and sometimes described it as US's top adversaries. His stand on Pakistan is also not very positive. This could be an advantage for India.

      • He stressed that he would China as a currency manipulator and impose heavy tariffs if China didn't agree to rewrite trade agreements. This may bring more trade opportunities to India.

      • Trump's hard stance on terrorism could result in deeper Indo-US defence and strategic ties. In fact, recent increase in the defence budget clearly shows his strong views on strengthening the US defence power. This could further push Indo-US business ties


      VI. Conclusion


      • The U.S.-India bilateral relationship had been on a solid trajectory since the turn of the century. The Trump administration will certainly attempt to build on that progress.

      • The promising growth potential and stability in India definitely makes it a safe haven within the emerging markets.

      • The government has prudently reached out to the members of the Trump's team to show its problems with various policies in the pipeline. India is strategically important to the US and any regulations will definitely take that factor in account.

      References

      1. https://ustr.gov/countries-regions/south-central-asia/india
      2. https://en.wikipedia.org/wiki/India%E2%80%93United_States_relations
      3. http://economictimes.indiatimes.com/news/politics-and-nation/for-india-there-are-opportunities-in-trumps-election-but-concerns-in-his-asian-policy/articleshow/55391027.cms
      4. http://www.cfr.org/india/timeline-us-india-relations/p32994
      5. http://thediplomat.com/2016/02/what-to-expect-from-us-india-relations-in-2016/
      6. http://asiasociety.org/blog/asia/three-challenges-us-india-relations-under-president-trump
      7. http://www.businessinsider.in/2016-election-results-Donald-Trump-and-his-affect-on-India/articleshow/55312791.cms
      8. https://thewire.in/27048/a-trump-presidency-will-be-a-blow-to-india-on-many-counts/
      9. http://www.livemint.com/Opinion/MVqKvlW0e2rNL4VtG7Y7aM/Donald-Trumps-presidency-and-its-implications-for-India.html
      10. http://economictimes.indiatimes.com/news/international/heres-how-a-win-for-donald-trump-will-impact-india/articleshow/55325954.cms
      11. http://economictimes.indiatimes.com/markets/stocks/news/the-good-bad-or-ugly-what-trump-regime-would-mean-for-indian-market/articleshow/56688608.cms

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