Expert Speak Raisina Debates
Published on Mar 13, 2020
As big-ticket items stall, the US and India are identifying areas of convergence on local governance 
US-India ties go local

Overshadowed by the euphoria over public appearances like the ‘Namaste, Trump’ event in Ahmedabad, US President Donald Trump's maiden visit to India witnessed minimal gains on the policy level. The biggest takeaway was the US and India announcing the finalisation of a defence package worth over $3 billion for 24 multi-role MH-60R Seahawk maritime helicopters and six AH-64E Apache attack helicopters. Whereas, progress on the expected limited US-India trade deal stalled amidst either party alleging the other of “changing goalposts.”

Reportedly, the same was due to the US preemptively closing the door on India seeing the restoration of its benefits under the Generalised System of Preferences (GSP) programme — a preferential arrangement for developing countries to export goods duty-free to the US.

Return to personalisation of US-India ties

Ahead of the visit, the office of the US Trade Representative (USTR) dashed New Delhi’s hopes for its reinstatement of GSP benefits by removing India from its list of developing countries, to essentially now classify it as a developed country. The move also bears ramifications for India’s position on other contentions with the US. For instance, in large parts, India’s argument for instituting price caps on pharmaceutical imports from the US stems from the imperatives posed by the middle-income consumer base that constitute its developing economy.

In addition, trade negotiations also stalled due to last-minute US insistence on India increasing the import of certain specific products like pecan nuts. Wherein, the Trump administration’s political motivation to seek the deal was apparent, as the pecan nut industry “contributes more than $3.5 billion to the 15 pecan-producing states, including Georgia, Alabama, Arkansas, Texas and Mississippi” — most of which were central to Trump’s 2016 victory coalition of “flyover states” and certain to hold central relevance in his 2020 reelection bid as well.

Similarly, there was no progress on India’s procurement of the Integrated Air Defence Weapon System (IADWS) — which was cleared for sale by the US State Department with a price tag of $1.867 billion. India plans to integrate it as part of an “overall multi-layered air defence shield” around Delhi, which would include the indigenous Ballistic Missile Defence shield, the S-400 Triumf air defence missile system from Russia, and the Indo-Israel joint venture product Barak-8.

Towards the same, in 2018, India’s Defence Acquisition Council (DAC) had approved the “acceptance of necessity (AoN)” for National Advanced Surface to Air Missile System-II (NASAMS-II) at around $1 billion. The cleared IADWS at nearly double the cost, however, encompasses the NASAMS-II with added ancillary products like 134 Stinger FIM-92L missiles and 32 M4A1 rifles as a comprehensive package.

The purchase was being seen as India dampening the threat of sanctions under a 2017 US law — i.e. the Countering America's Adversaries Through Sanctions Act (CAATSA), for opting to also purchase Russia’s S-400 system. Though the US Congress followed the legislation with an amendment on waiver provisions for India, Vietnam and Indonesia, the amendment rests authority with the office of the US president to waive sanctions for those countries. Now, it seems Trump has doubled the price for India acquiring a formal — or at the very least, an in-principle, waiver.

This high politicisation of trade negotiations and transactionalism continuing to raid certain sections of defence ties, has coaxed the bilateral trajectory to once again warrant interventions at the heads-of-state level. Overtime, this risks undoing the progress made on the gradual institutionalisation of US-India ties — which had considerably shifted the dynamic away from overt dependence on chemistry between the top political leadership. In the short-term, however, as these big-ticket items have stalled, the US-India bilateral trajectory seem to be pivoting to alternate convergences.

Is localisation of the US-India partnership the way forward?

During the visit, the US and India signed three agreements: an MoU on Mental Health between India’s Department of Health and Family Welfare and the US’ Department of Health and Human Services; an MoU on Safety of Medical Products between India’s Central Drugs Standard Control Organisation and the US’ Food and Drug Administration; and a Letter of Cooperation on supplying Liquified Natural Gas (LNG) between Indian Oil Corporation Limited, ExxonMobil India LNG Limited and Chart Industries Inc.

Apart from the defence package, the last agreement was unarguably the most significant outcome of Trump’s visit to India. The same holds central relevance to the Indian government’s aim “to increase the share of natural gas in India’s energy basket from current 6.2% to 15% by 2030.” As per ExxonMobil’s press release on the agreement, the project will “implement a gas infrastructure initiative that leverages LNG ISO intermodal containers to move gas as a reliable, cleaner and cost-effective fuel. The initiative seeks to develop a pilot project and create a roadmap for mobile gas infrastructure expansion at scale, improving access to an abundant and cleaner fuel source.” Further, towards delivering “liquefied natural gas by road, rail and waterways to areas not connected by physical pipelines”, the envisioned Indian Virtual Pipeline Initiative will “accelerate India’s ability to offer cleaner energy within its growing cities.

In addition, the US Treasury Department is reportedly working towards inking Memorandums of Understanding with six Indian cities. Following its assistance to the city of Pune on municipal bonds, the new agreement would offer necessary groundwork for “floating municipal bonds to raise money for big ticket urban renewal projects” to Mysuru and five smart cities of Rajkot, Vadodara, Lucknow, Pimpri Chinchwad, Mangaluru.

Earlier this month, in fostering cooperation on exploring alternate power sources for cities, the US Department of Energy signed a Memorandum of Understanding to “provide collaboration and support to India in the establishment of Solar Decathlon India in 2021.” The same would build on the US Department of Energy Solar Decathlon, to now organise an Indian edition of a “collegiate competition that challenges students to design and build high-performance, energy-efficient homes powered by renewable energy.” The announcement followed the intent to explore another avenue of cooperation on local governance. Following Trump’s visit, the US Ambassador to India Kenneth Juster penned an oped offering support for the Indian government’s National Clean Air Programme.

Need for institutionalisation of US-India ties 

The exploration of these nascent avenues of cooperation signify a sense of “compartmentalisation to have been instituted – unarguably a rare feat under Trump’s conduct of US foreign policy, in the US-India bilateral dynamic.” However, the discussed stalemates that have come to impair US-India trade ties — the fundamental underpinning of any bilateral relationship, seem to have now emerged due to natural inertia running out.

Despite lacking a formal trade agreement and even a security treaty alliance, the trajectory of US-India ties has been impressive. Since the Bill Clinton and George W Bush administrations began the US’ strategic outreach to India at the turn of the century, bilateral trade between India and the US reached $142.6 billion in 2018. The same has now come to resemble US trade with its long-standing allies like South Korea ($167 billion) or France ($129 billion). This progress has been possible chiefly due to natural convergences informed by an American bipartisan consensus undergirding US-India bilateral ties.

However, in the past year alone, the US and India have exacerbated the strain on US bipartisan support for India — which had increasingly already come under pressure owing to heightened polarisation in the US. For instance, the ‘Howdy, Modi!’ event’s apparent partisan fervour in favour of Trump, only accentuated the Democrats’ apprehensions on India backsliding on its liberal democratic ethos. In addition, Trump’s remarks at the ‘Namaste, Trump’ event for instance, conveyed that his administration too has a partisan approach to US-India ties. As a result, Rep. Pramila Jayapal’s (D-WA-07) House Resolution (H.Res.745) on urging India to end the communications lockdown and mass detentions in Kashmir, for instance, now has 66 cosponsors — most of them Democrats.

Hence, the need for greater institutionalisation of US-India ties no longer only pertains to guarding against the occasional transactional nature of the Trump administration. The same is warranted also from the standpoint of formalising political capital which has long animated the US’ will to seek robust ties with India. Thus, even as the return to personalisation of US-India ties paves way for cooperation on nascent areas of convergence on local governance, the bilateral dynamic nevertheless warrants greater institutionalisation.

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Kashish Parpiani

Kashish Parpiani

Kashish Parpiani was Fellow at ORFs Mumbai centre. His interests include US-India bilateral ties US grand strategy and US foreign policy in the Indo-Pacific.

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