PDF Download 
Trisha Ray, “India-U.S. Technology Ties: Charting an Ambitious Course for the Future,” ORF Issue Brief No. 739, October 2024, Observer Research Foundation.
Introduction
To many who come to know India for the first time, the country can appear to be a sea of contradictions. Even as its aspirational and middle classes embrace digital and emerging technologies in their daily lives and their workplaces, it must bring with it the millions who constitute the poorest 10 percent. Similarly, even as New Delhi’s rhetoric leans into aatmanirbharta (self-sufficiency), it is turning outward to offer its technologies, innovations, and talent to the world.
It is because of these contradictions, and not despite them, that India’s technology partnership with the United States (US) has gone from strength to strength in the past decade, even as points of contention remain. In May 2022, on the sidelines of the Quad Leaders’ Summit in Tokyo, US President Joe Biden and Indian Prime Minister Narendra Modi announced the United States–India Initiative on Critical and Emerging Technologies (iCET), “spearheaded by the National Security Councils of the two countries to expand partnership in critical and emerging technologies.”[1] This partnership is the culmination of a decade-long effort to position India not just as a receiver of technologies but as an emerging technology power in its own right.
To be sure, India’s technology ecosystem has had links with that of the US for decades. Indian IT companies, including TCS and Wipro, benefited from the “millennium bug” panic in the late 1990s, which served as a launchpad for these homegrown giants to take on more ambitious and complex projects and clients. Infosys, for instance, was listed on NASDAQ in 1999 and WIPRO debuted on the New York Stock Exchange in 2000.[2] In 2000, as relations between the two countries thawed with the end of the Cold War, the US and India launched the India-US Science and Technology Forum, with funding from both sides supporting collaboration in areas like health sciences, clean energy, and biotechnology, through fellowships, trainings, and joint research centres.[3] Indian talent has also been foundational to the US’s tech ecosystem. In FY 2014, the US issued 101,800 H-1B visas to Indian nationals, and Indians accounted for 29.6 percent of worldwide L-1 visa recipients, making them the single largest group of beneficiaries in both categories.[4]
The Defense Technology and Trade Initiative (DTTI) was launched in 2012, although, as the name suggests, the focus was solely on the co-development and co-production of technologies with defence applications. The lacklustre track record notwithstanding, it was an extraordinary leap forward in the relationship, and marked a concerted effort to clear bureaucratic hurdles.[5] The DTTI has arguably only truly taken flight since 2018, with a new administration in Washington, renewed energy in New Delhi, and India’s ascension to Strategic Trade Authorization Tier 1 (STA-1) status.[a]
India’s growing strategic importance in the region—especially as a balance against Beijing’s zero-sum approach under President Xi Jinping—overlaid upon its burgeoning digital economy and ambitions of becoming a technology exporter have transformed the US-India technology partnership in the past decade.
A Turning Point for India
In the last five years, India’s worsening security relations with its neighbour and US trade restrictions targeting China have prompted efforts to reduce dependence on China.
India benefited, in the years prior, from the boom in outbound FDI flows from China that peaked in 2016.[6] A number of Indian unicorns and startup ecosystem mainstays (such as digital payments platform Paytm, ridesharing app Ola, and e-commerce giant Flipkart) have received investments from Chinese tech giants like Alibaba, Tencent, and Didi Chuxing.[7] It is also worth noting that India is heavily dependent on China for semiconductors, particularly digital integrated circuits (ICs) and memory. In 2021, India imported US$5.38 billion worth of semiconductors, US$4.25 billion of which was from China, representing a 160-percent growth over the previous year, and 53-percent growth for three years cumulatively.[8]
However, China’s blitzkrieg strategy for dominating emerging tech has proved to be a double-edged sword. Its 14th Five Year Plan Six (2021-2025) prioritised cutting-edge fields like quantum, new-generation AI, ICs, brain science, genetics and biotech, clinical medicine and health, and frontier exploration (of outer space and the deep seas).[9] At the same time, Indian researchers have collaborated with their Chinese counterparts on important work, including in the field of AI, and there has been notable investment in emerging technologies between the two countries.[b] Yet, Beijing has demonstrated time and time again that it is willing— and able—to weaponise any and all linkages. In 2010, for example, following Japan detaining a Chinese fishing trawler that had ventured into disputed waters, the Chinese government reportedly threatened to halt exports of rare-earth elements. At that time, Japan was the largest buyer of these minerals from China.[c]
In 2020-21, New Delhi and Washington arrived upon similar conclusions regarding the risks of dependence on China for critical technologies and components, although both were not wholly aligned on the approach. New Delhi’s measures to restrict Chinese leverage over the Indian technology ecosystem were somewhat circuitous. In April 2020, India’s Ministry of Commerce and Industry released a press note announcing that formal government approval will henceforth be required for investments coming from entities of countries with which India “shares a land border”.[10] In June 2020, the government excluded Chinese 5G companies from its 5G trials, and in 2021, it did not invite these vendors to a briefing where it notified telcos of new requirements for conducting business in India.
Strategic Convergence
The US-India partnership on emerging technologies has made headway in the last three years, both bilaterally and under the aegis of the Quad. The Quad Critical and Emerging Technology Working Group was launched at the 2021 Quad Leaders’ Summit, with five work areas: principles for technology, design, development and use; technology standards; telecommunications vendor diversification; supply chains; and horizon scanning for other critical and emerging technologies.[11] In 2024, the Quad also launched the second iteration of the Quad Fellowship, which enables promising young STEM talent in the Indo-Pacific to study in the US.[12]
In the bilateral relationship, the most significant recent development is iCET, which stands on six pillars[13]:
(1) Strengthening Innovation Ecosystems: Research partnerships and standards in AI, quantum technologies, and high-performance computing.
(2) Defense Innovation and Technology: Co-production, R&D on intelligence surveillance reconnaissance use cases.
(3) Resilient Semiconductor Supply Chains: Joint ventures for semiconductor fabs in India, workforce development, and long-term ecosystem assessment.
(4) Space: Collaboration between commercial entities, training, and developing ISRO-NASA relationship.
(5) STEM Talent: University partnership and research collaboration.
(6) Next-Generation Telecommunications: 5G, 6G and beyond, Open RAN adoption.
iCET has served as a platform for the two countries to involve a range of stakeholders in offering ideas on how to take the relationship forward, including practical considerations about regulatory hurdles and industry investment.[14] It is also significant that the process is led by the national security advisors, Jake Sullivan (US) and Ajit Doval (India), speaking to the level of leadership buy-in as well. Within a year of iCET’s operationalisation, the two sides have announced partnerships ranging from joint research and development programmes aimed at “designing, manufacturing, and commercializing semiconductor chips,”[15] to a “Quantum Entanglement Exchange Programme”.[16]
The Next Decade
Perfect alignment is impossible even between the closest of allies, and India’s closeness with the US is in a stage of relative adolescence. Some obstacles remain, including differing perspectives on fair competition in the digital economy, tariff and non-tariff barriers, and procurement standards that are peculiar to India. The Indian government views the market dominance of technology giants, which are mostly US-based, as a threat to fair competition. In 2020, it expanded the Equalization Levy—which in 2016 introduced a 2-percent levy on “nonresidents” engaged in online advertising—to include e-commerce operators broadly. The US Trade Representative’s investigation called the levy discriminatory, given that 72 percent of the companies liable under the levy are US companies.[17] In February 2024, India’s Ministry of Corporate Affairs released a Draft Digital Competition Bill, which takes inspiration from global regulations like the EU’s Digital Markets Act to promote fair competition.[18] The Bill, if accepted, would introduce a penalty of up to 10 percent of a large digital enterprise’s global turnover.
US immigration policy has also periodically caused friction in the relationship, including the decades-long wait time that some Indian citizens face for their green card application. While the US Congress has vacillated on the issue of visa reforms, a bipartisan bill in the Senate could offer some relief.[19] A longer-term solution would enable two-way mobility, including mutual recognition of qualifications. This is in consideration of the fact that in the area of emerging tech, while India remains a major exporter of talent, its ability to retain and reattract talent has grown. In 2022, for instance, one-fifth of Indian AI researchers ended up staying to work in India.[20]
Speaking at ORF in February 2024, the US’s Deputy Secretary of State for Management and Resources Richard R. Verma noted how far the US-India relationship has come, from the Cold War chill to the current spring: “Our work on new and emerging technologies will take on even more promise. From semiconductors to critical minerals to space exploration and innovation in clean energy to battling climate change, and so much more, this is about economic and physical security…We are the perfect partners in so many ways, given our existing base of technical cooperation”.[21]
As elections have taken place, and are scheduled, in the world’s largest and oldest democracies, the range and depth of institutional relationships built in service of technology cooperation between the two countries promise that the momentum will continue to build. Stakeholders on both sides are bullish about the relationship, and while India and the US may be unusual partners, a series of initiatives, not least under iCET, will only see the two grow closer in the coming decade.
The first version of this brief appeared in the ORF-GP volume, Aligned But Autonomous: India-US Relations in the Modi Era, which can be accessed here:
Endnotes
[a] This is another remarkable development in the relationship, as STA-1 had only previously been granted to treaty allies.
[b] Of course, the US and China form a larger proportion of research collaboration and investment with each other. See: https://cset.georgetown.edu/publication/quad-ai/
[c] Between 2000 and 2010, 78.3% of Japan’s rare-earths were imported from China. This share is now under 50%. See: https://cepr.org/voxeu/columns/revisiting-china-japan-rare-earths-dispute-2010
[1] “Readout of President Biden’s Meeting with Prime Minister Modi of India,” White House, May 24, 2022, https://www.whitehouse.gov/briefing-room/statements-releases/2022/05/24/readout-of-president-bidens-meeting-with-prime-minister-modi-of-india/
[2] Sundeep Khanna, “Backstory: Wipro’s Turn of the Century Listing on NYSE,” CNBC-TV18, February 28, 2022, https://www.cnbctv18.com/business/companies/backstory-wipros-turn-of-the-century-listing-on-nyse-12650002.htm
[3] “U.S.-India Joint Fact Sheet: A Remarkable Expansion of U.S.-India Cooperation on Science & Technology,” US Department of State, June 24, 2013 [Archived], https://2009-2017.state.gov/r/pa/prs/ps/2013/06/211028.htm
[4] Bureau of Consular Affairs, U.S. Department of State, “The Straight Facts on U.S. Visas in India,” https://travel.state.gov/content/dam/visas/Straight%20Facts%20on%20US%20Visas%20in%20India.pdf
[5] “Fact Sheet: U.S.-India Defense Relationship,” US Department of Defense, https://dod.defense.gov/Portals/1/Documents/pubs/US-IND-Fact-Sheet.pdf; Girish Luthra, “The India–US Defence Technology and Industrial Cooperation: It’s Time for Delivery,” Observer Research Foundation, February 26, 2024, https://www.orfonline.org/research/the-india-us-defence-technology-and-industrial-cooperation-its-time-for-delivery
[6] “Foreign Direct Investment, Net Outflows (BoP, current US$) – China,” World Bank, https://data.worldbank.org/indicator/BM.KLT.DINV.CD.WD?locations=CN
[7] Soumya Bhowmick, “Chinese Investments in Indian Startups: Trends and Controversies,” Observer Research Foundation, June 5, 2021, https://www.orfonline.org/expert-speak/chinese-investments-in-indian-startups-trends-and-controversies
[8] “Semiconductor Devices in India,” Observatory of Economic Complexity, https://oec.world/en/profile/bilateral-product/semiconductor-devices/reporter/ind
[9] Rogier Creemers et al., “Translation: 14th Five-Year Plan for National Informatization – Dec. 2021,” DigiChina, January 24, 2022, https://digichina.stanford.edu/work/translation-14th-five-year-plan-for-national-informatization-dec-2021/
[10] Ministry of Commerce & Industry, https://dpiit.gov.in/sites/default/files/pn3_2020.pdf
[11] “Quad Critical and Emerging Technology Working Group,” Australian Department of Foreign Affairs and Trade, April 16, 2021, https://www.internationalcybertech.gov.au/node/137
[12] Quad Fellowship, https://www.quadfellowship.org
[13] “Fact Sheet: United States and India Elevate Strategic Partnership with the initiative on Critical and Emerging Technology (iCET),” White House, January 31, 2023, https://www.whitehouse.gov/briefing-room/statements-releases/2023/01/31/fact-sheet-united-states-and-india-elevate-strategic-partnership-with-the-initiative-on-critical-and-emerging-technology-icet/
[14] “Fact Sheet: United States and India Elevate Strategic Partnership with the initiative on Critical and Emerging Technology (iCET)”
[15] “Purdue and India Establish Milestone Semiconductor Alliance; Sign Partnership in the Presence of Minister Ashwini Vaishnaw,” Purdue University, May 10, 2023, https://www.purdue.edu/newsroom/releases/2023/Q2/purdue-establishes-milestone-semiconductor-alliance-with-india-agreement-provides-foundation-to-advance-workforce-development-joint-research-and-innovation-and-global-industry-collaborations.html
[16] “International Collaborations,” Department of Science and Technology, Government of India, https://dst.gov.in/quantum-entanglement-exchange-programme
[17] Office of the United States Trade Representative, “Section 301 Investigation: Report on India’s Digital Services Tax,” January 6, 2021, https://ustr.gov/sites/default/files/enforcement/301Investigations/Report%20on%20India%E2%80%99s%20Digital%20Services%20Tax.pdf
[18] “Report of the Committee on Digital Competition Law,” Ministry of Corporate Affairs, India, February 27, 2024, https://www.mca.gov.in/bin/dms/getdocument?mds=gzGtvSkE3zIVhAuBe2pbow%253D%253D&type=open.
[19] “Emergency National Security Supplemental Appropriations Act, 2024,” Senate Appropriations Committee, February 4, 2024, https://www.appropriations.senate.gov/imo/media/doc/emergency_national_security_supplemental_bill_text.pdf
[20] “Global AI Talent Tracker 2.0,” Macro Polo, https://macropolo.org/digital-projects/the-global-ai-talent-tracker/
[21] Richard R. Verma, “U.S. and India Relations – The Long View,” US Department of State, February 20, 2024, https://www.state.gov/u-s-and-india-relations-the-long-view/
The views expressed above belong to the author(s). ORF research and analyses now available on Telegram! Click here to access our curated content — blogs, longforms and interviews.
Trisha Ray is an associate director and resident fellow at the Atlantic Council’s GeoTech Center. Her research interests lie in geopolitical and security trends in ...
Read More +
PREV
