Why India needs to tread cautiously while strengthening ties with US

mangaloretoday.com/firstpost

by Rajeev Sharma

Firstpost, Jun 8, 2013: The upcoming Indo-US strategic dialogue is likely to throw up some concrete deliverables as both the sides have made concerted efforts to give a fillip to their strategic partnership.

India and the United States will have their fourth strategic dialogue in New Delhi on 24 June. John Kerry will be on his maiden India visit since being appointed US Secretary of State to meet his Salman Khurshid.

 

Any bilateral mechanism between two nations these days boils down to the ‘show me more money’ theme. The upcoming meet too will be rich on this theme.

The Americans will be pushing their Indian interlocutors for preferential access for its merchandise and would be keen on sewing up a deal with the Indians on Preferential Market Access. The American push in this direction has gathered momentum as India and the European Union are on the verge of firming up a Free Trade Agreement (FTA).

However, it will be a delicate political issue for the UPA government as the Left parties have opposed both FTA with EU, and granting preferential market access to the Americans. In this election year, the Congress-led UPA government would not like to annoy the Left parties.

Even if the government were to dangle the carrot of more lucrative trade terms for the US and the EU, the nay-sayers like the Left parties cannot be completely ignored and the final texts of agreements with the US and the EU will have to be suitably diluted to keep the Reds on board.

From the Indian point of view, the issue of the US opening up more employment opportunities for its skilled workers will be on the front burner. The Americans have thus far dithered on this Indian demand, which is a major issue for the increasingly powerful Indian lobby within the US.

India had strongly raised this point with two senior officials of the Obama administration Under Secretary of State for Political Affairs Wendy Sherman and Deputy Secretary of State William Burns who had back-to-back visits to New Delhi last month. With both these officials India had stressed the need for Washington to speed up its immigration reforms and allow easier and more liberal access for Indians in the highly–skilled non-immigrant categories.

Apart from these issues, the meeting will also have a laser beam focus on core strategic issues like energy and defence. Topics like Liquefied Natural Gas (LNG) sales from the US to India (which India is very keen on), American company Westinghouse’s multi-billion dollar proposal for setting up a series of nuclear power plants in Gujarat and the Defence Trade Initiative or DTI (a US-driven agenda) are also likely to come up for some intense discussions.

DTI a Veritable Gamechanger

The Americans have been wooing India for signing the DTI and have redoubled their efforts since last year after India awarded some big-ticket co-development and co-production defence orders to France, Russia and Israel. The latest instance of the US nudging India on the issue was in February 2013 when Foreign Secretary Ranjan Mathai, during his trip to the US, met Deputy Secretary of Defence Ashton Carter.

India’s vast defence market has made the Americans review some of their long-held policies on defence exports. The Americans are now prepared to relax their stringent conditions and allow American companies to set up shop in India for production of sophisticated defence equipment like radar guided air to air missiles with stealth features and next generation night vision devices – all this with transfer of technology that the Americans have always been reluctant to share.

This is a sea change in the way the Americans are looking at India and indicates that the Indo-US strategic partnership is poised to become truly strategic from Indian viewpoint.

The Obama administration had cleared the DTI legal framework in late 2012. In many ways, the DTI is an old wine in a new bottle for the Americans and a substitute for many defence agreements that they unsuccessfully tried to hardsell to the Indians. Three of these — the Logistics Sharing Agreement, Communication Interoperability and Security Memorandum of Agreement and the Basic Exchange and Cooperation Agreement for Geo-spatial Cooperation – were red rags to the Indians. Mercifully, the Americans have now stopped pushing these as they are hoping that India will be more amenable to the DTI.

The Russia Factor

The increased Indo-US proximity in the defence sector will not go down well with China and Russia. While India is not answerable to China, the Indians cannot afford to rub its time-tested friend Russia the wrong way.

The Russians are already miffed with India for losing out on a series of mega defence deals. Despite these losses Russia still continues to be India’s number one defence exporter. Though the Russians are notorious for long delays and cost overruns in their defence commitments with India – in contrast, the Americans delivered six C-130J transport planes to India on time – the Russians are very liberal in transfer of technology.

Now that the Americans too are willing to transfer technology, India will have to wait and see whether there are any hidden conditions. The Americans can no longer afford to renege on their promises now because it will go against their own interests.

India has emerged as the second largest FMS (Foreign Military Sales programme) customer in 2011 for the US with 4.5 billion dollars in total FMS transactions. This partnership can blossom further only if the Americans walk their talk and do not go back on their promises.

The Americans definitely have superior technology than Russia. But Indians know that they will have to keep the Russians happy. The Russians will be satisfied if they continue to get a fair part of the Indian defence pie. Indians will have to come up with a government-to-government route (akin to the FMS programme of the US) to purchase defence equipment from Russia given Moscow’s poor track record in winning highly competitive global tenders.