GP Short Notes # 700, 25 June 2023
During 21-23 June, Indian Prime Minister Narendra Modi made a State visit to the United States, aiming to strengthen the strategic partnership between the two nations. The carefully planned visit showcased the importance of international cooperation. It was reiterated in PM Modi's words: (the cooperation) "will reinforce ties based on shared values of democracy, diversity, and freedom." The visit witnessed the symbolism of India's cultural reach, with Modi practising yoga at the UN headquarters on International Yoga Day and including millet during the state dinner held in honour of the Prime Minister.
On 22 June, a 58-paragraph joint statement was issued after the bilateral meeting between the two leaders focusing on the domains of technology, defence, space, climate, economic investments, trade, education, health, people-to-people links, and strategic convergences across geographies, platforms, and institutions.
On the same day, Modi addressed the joint US Congress. He emphasized India's commitment to climate goals, women's empowerment, the fight against terrorism, and other important issues. Talking about a growing economy, he said: "When India grows, the whole world grows."
On 23 June, Modi interacted with the Indian American diaspora—one of the largest immigrant groups in the US. He said: "The partnership between India and the United States will make the world better in the 21st Century. You all play a crucial role in this partnership."
What is the background?
First, the increasing importance of technology in the US-India partnership. The visit is significant and builds on two and a half decades of cooperation between the two countries. Various agreements, especially within the Initiative on Critical and Emerging Technologies (iCET) framework-- tech transfer, trade, capacity building, research, and co-production constituted significant takeaways from the visit. Modi also took the opportunity to meet business leaders to push for substantial investment in India in critical sectors like trade, commerce, innovation, and technology. His meeting with Twitter chairman and TESLA CEO Elon Musk received maximum coverage.
Second, the growing opportunity for New Delhi and Modi to expand their reach in the US and the expanding Indian footprints. This is Modi's sixth visit to the US since he became the Prime Minister in 2014. Once denied a visa for alleged violations of religious freedom, he was banned from entering the US for almost ten years. Since taking office, Modi has effectively embraced the White House in the nine years. The recent visit and diplomatic niceties illustrate India's growing influence in the rapidly transforming world order. The visit takes place against the backdrop of the US becoming India's largest trading partner in FY 2023 at USD128.55 billion, with India having a trade surplus of USD28 billion. The bilateral trade between India and the US increased by 7.65 per cent against USD 119.5 billion in 2021-22. It was USD 80.51 billion in 2020-21.
Third, geopolitical coupling on China. The strategic engagement between both countries can be seen with shared concerns over China and its increasing military might, growing economic influence, and territorial claims. China's actions along the Sino-India border have become increasingly antagonistic. In this regard, the two leaders discussed the nature of challenges in the Indo-Pacific with an eye on Beijing. The US perceives China as a threat that requires containment, with India as a crucial component in achieving this goal. For India, this moment marks a renewed energy in the bilateral ties and a more focused direction with the basis in shared strategic priorities.
Fourth, a confident New Delhi. India is aiming to establish itself as a regional power with renewed vigour. The current trip is the latest addition to a slew of diplomatic engagements that the Indian government has taken in the last few months. Modi has met leaders of Australia, Papua New Guinea, and Ukraine in the months leading up to the US visit. Modi's next stop after the US is the state visit to Egypt at the invitation of President Abdel Fattah El-Sisi. Underscoring India's diplomatic outreach with leaders in the Indo-Pacific region and beyond. Even as India-US relations have deepened, India keeps its strategic autonomy and follows the geopolitical balance, especially in its interactions with Russia. India has carved a special position in the Russia-Ukraine conflict. While it may have distanced itself from Russia, it has continued to purchase oil, coal, and fertilizer from Russia and abstained from condemning Moscow in the United Nations.
What does it mean?
First, the expanding collaboration in the technology domain. Some of the deliverables included the co-production of jet engines in India by General Electric and Hindustan Aeronautical Limited to power Indian military aircraft, Indian purchase of armed drones, defence industrial collaboration with the launch of innovation platform - 'INDUS-X', semiconductor cooperation, space exploration and cooperation framework for human spaceflight cooperation by the end of 2023. The US is wooing India with a USD500-million military equipment and technology package that includes jet engines, critical minerals technology, and tech transfers to lessen India's dependence on Russian weaponry.
Second, intensifying people-to-people contacts. There have been announcements regarding the opening of new US consulates in Bengaluru and Ahmedabad and an Indian consulate in Seattle. The Biden administration will also make it easier for a small number of Indians and other foreign workers on H-1B visas to renew those visas in the US without having to travel abroad, which could be expanded in the coming years. Other wins include new investments in semiconductor production with chip assembly and test plants being set up in India. In trade, both countries have agreed to terminate six outstanding disputes at the World Trade Organization. India also agreed to remove retaliatory tariffs, which it had imposed in response to the US Section 232 national security measures on steel and aluminium, on US products, including chickpeas and apples.
Third, exploring new domains. India has agreed to join the US-led Artemis Accords on space exploration and to work with NASA on a joint mission to the International Space Station in 2024. The accords will give India access to information and advance its space exploration. It can potentially bring the Indian space companies as part of a global supply chain, along with Indian SMEs and New Space startups.
The visit was about managing the differences that continue to exist between the two.
Fourth, likely obstacles and deal breakers between the two countries, based on the recent bilateral history. The star items, such as the co-production of jet engines, have a long and bumpy regulatory road ahead. It remains to be seen how much technology will be transferred and whether India will be okay with the conditions attached, if any. Notably, the India-US nuclear deal still needs to be fully operationalized. Regarding the Artemis accord, critics argue it will limit opportunities for the Indian space program to develop indigenously. During this visit, no talks took place about the restoration of the Generalized System of Preferences (GSP) status for India. About 2,000 products, including auto parts and textile materials, were allowed to enter the US duty-free. India's stance on Russia remains a prickly issue for Western countries, even as India and the US have agreed to disagree.
The thorny issue is the allegations of human rights violations and the backsliding of democracy in India. Before Modi's upcoming visit, 75 members of the US Congress issued a letter to President Biden urging him to publicly address concerns regarding human rights and democracy in India. Yet, the White House was pragmatic and avoided broaching the subject, even referring to India as having a vibrant democracy. Both sides want to showcase "mutual trust and shared strategic priorities."