On 31 January 2014, the United States Federal Aviation Administration (FAA) downgraded India’s rankings in aviation safety to the same level as airlines from Sub-Saharan Africa. The downgrade from category I to II implies that no Indian airline can start new flights to any US destination.

While warnings from the FAA have been incoming for over a year, the timing of the downgrade is suspicious. Is this business as usual or an attempt to protect the market share of American airlines? The India-US sector is one of the most profitable and poised for a large boom, according to the Centre for Aviation (CAPA). No deadline is in sight for reversing the downgrade, which means India’s financially stretched airlines could be shut out of this profitable market for a long time.

The downgrade also has other implications. The Indian aviation industry had been poised for its next phase of growth: high-profile partnerships with Singapore Airlines and AirAsia, high unmet demand and a hike in fares following Kingfisher’s closure. With quality issues and a ban on expanding to the US, these partnerships could be jeopardized.

After reaching a peak in the last few years, India-US ties have taken a beating in recent times. In the wake of the diplomatic spat, it is difficult to miss the implication these moves in the aviation industry have for the larger India-US economic relationship. While Indian foreign minister Salman Khurshid and US secretary of state John Kerry may have affirmed a commitment last week to restore economic ties, these developments are definitely not business as usual.

What does this imply for India’s relationship with the US?

On the Indian side, the question that gets thrown up is whether we in India are simply a lethargic bunch of rule breakers. We violated visa laws in the Khobragade case, and then despite warnings for several months, failed to do much about it. We failed FAA quality inspections, and then despite warnings for several months, failed to do much about it. Then when the eventuality occurred, we got blindsided and cried foul. Both political will and bureaucratic efficiency get called into question. There needs to be a sense of urgency, especially on matters of national importance.

On the American side, what both the Khobragade incident and the FAA downgrade have highlighted, is just how fragmented authority has become in the US. The central administration is unable to control the actions of federal agencies who pre-empt actions with international implications. On the Khobragade case, an Attorney General and the US Marshals pre-empted the arrest. The US secretary of state expressed regret and then hardened his stance, saying there was little that could be done in dealing with American laws and agencies. Now, not more than a week after the secretary of state committed to closer economic cooperation with India, another federal agency, the FAA, pre-empted a hostile economic move. President Barack Obama, in what is largely perceived as a frothy State of the Union address last week, gave a similar message to Americans: there isn’t much he can do.

While the India-US relationship is in the capable hands of its new stalwart ambassador, S. Jaishankar, the structural implications of such fragmentation is important for India. Does India need to expand routine diplomatic efforts in the US to the various agencies and regulators relevant to her business interests? If business with the US can no longer be managed through high-level diplomacy, perhaps a rethink is in order for securing India’s economic interests.

Tanvi Ratna is a foreign policy analyst and member of the Citizens for Accountable Governance. She has worked on Capitol Hill and the MEA. Comments are welcome at otherviews@livemint.com

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