Opinion | The evident potential of a tighter American embrace4 min read . Updated: 24 Feb 2020, 11:54 PM IST
Both countries have a vital role to play in firming up the global governance of key domains
Former US president George W. Bush was instrumental in getting India out of the clutches of a nuclear apartheid that lasted for over three decades. By this action, his administration implicitly acknowledged the unfairness of the treatment meted out to India, a responsible nuclear power. In all those years, India had not signed the Non-Proliferation Treaty as a matter of principle and, hence, was not in breach of any international law. But it was a pariah for nuclear fuel and technology suppliers, and even suffered severe international sanctions after the Pokhran tests of 1998. However, the transformation of the Indo-US relationship from one of apartheid and sanctions to the historic civilian nuclear treaty of 2006 was nothing short of spectacular. Determined to get the deal ratified by Parliament, the then Manmohan Singh government even risked losing power over it, but survived a Lok Sabha vote of confidence in 2008. Leaders of both the US and India faced domestic flak, but the deal was sealed nevertheless. Whether America took this initiative to stop unfair treatment of a friendly nation or for commercial benefits from India’s growing nuclear power industry is immaterial. The strategic embrace was symbolic of a larger alignment between the world’s two largest democracies.
Even though separated by ten thousand miles, the two countries have linked destinies. The 1770s’ American war of Independence is said to have started with a tax revolt, with rebels dumping tea in the Boston harbour. That tea came from India. One of modern India’s most influential saints and philosophers, Swami Vivekananda, became famous because of his thunderous speeches in the 1893 Parliament of World Religions held in Chicago. America’s civil rights leader Martin Luther King Jr. was inspired in the 1960s by the civil disobedience movement led by Mahatma Gandhi. Both India and the US are characterized by immense diversity of ethnicity, religion and culture, and in India’s case, also language. Americans often describe themselves in hyphenated identities, reflecting not just the “melting pot", but “salad bowl" nature of their society. India’s Constitution not only has echoes from its American counterpart, the chief of its drafting committee, B.R. Ambedkar, was educated at Columbia University in New York.
In more tangible and current economic terms, the US is now India’s largest trading partner, and India enjoys a significant trade surplus. Inbound foreign domestic investment from the US is in excess of $50 billion, and Indian investment flows into the US are above $10 billion and rising. India is home to the world’s leading software and offshoring companies, many of them American with US clients. The productivity and efficiency gains of offshoring substantially flow back to American corporations, which are currently enjoying high profitability. Many patents held by American companies owe their existence to research and innovation done on their Indian campuses. Major innovations like Google Maps have Indian origins. In fact, WhatsApp and Facebook probably have the highest number of users in India, since they are shut out of China. The same is more or less true of the number of users that Google, YouTube, Twitter and Amazon have.
Against this backdrop, the visit of US President Donald Trump to India is momentous. Of the 13 post-war presidents, he is the seventh to have come to India. His visit is remarkable because it comes just months before his bid for a second term in the White House, which would usually have kept an incumbent engaged at home. Since the US economy is doing very well, with unemployment at a multi-decade low and US stock markets at all-time highs, Trump’s approval rating is at a three-year high. He has also emerged victorious from a fractious and partisan impeachment trial. His tariff moves and other steps against China seem to be working, with phase one of a trade deal having been signed, obliging Beijing to increase American imports substantially. India has also expressed eagerness to sign a mini-trade deal with the US, under which New Delhi may promise to increase imports of American walnuts, dairy, poultry and cotton products. This would be significant, as concerns over dairy imports were among the reasons why India walked out of the Regional Comprehensive Economic Partnership.
So, what would tighten the India-US embrace? India has already shown a willingness to import American agricultural products. Its defence and aircraft procurement is increasing, and there is also talk of a bilateral investment treaty to safeguard American investments in India. The US, in exchange, may consider restoring the recently withdrawn benefits to India under its preferential import rules. It may also consider supporting India’s desire to get a share in the prosperity of the world’s most valuable companies. America’s top five tech companies have huge user bases in India, and should be asked to list here for Indian investors to gain from their wealth creation. The US could also back India in forging a global consensus on the taxation of digital companies. We need to end the era of tax havens. Tactically, the US ought to relax its work visa regime at a time of growing trade in services. This applies not just to software personnel, but also nurses, teachers and other professionals. Finally, both countries have a vital role to play in strengthening global governance, be it for trade, climate change, nuclear power, or navigational freedom on the high seas. Welcome, Mr Trump!
Ajit Ranade is an economist and a senior fellow at The Takshashila Institution