PM’s US Visit: Takeaways

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TOPIC: General Studies 2

• Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests
• Effect of policies and politics of developed and developing countries on India’s interests, Indian diaspora.

The meeting between PM Modi and President of USA Trump wasn’t as awkward as many thought it might be. In a first trip by Indian PM to meet the newly elected President of USA, both the countries have tried to bring into focus many key areas into discussion without creating much hype around H1B visa issue. In a strong statement against terrorism, India and USA vowed to carry out operations against terrorist outfits like JeM and LeT while urging Pakistan to ensure that its soil is not used for terror strikes against other nations. Let us look of the key takeaways from the meet:-

The takeaways

Chemistry between the leaders

• There are million issues which the leaders of two countries have to tackle. These meetings are not about going into details and meeting a conclusion. It is whether the two leaders can get certain amount of trust with each other and be comfortable to deal on important issues. The good thing was that the areas of focus was on conversion and not diversion.

Business Meetings

• PM of India had a successful meeting with the top American CEOs of the global giants like Apple, Microsoft and Google.
• Discussions were done on issues ranging from visas, investment and job creation occupying the centre stage.

Security

• The mention about role of India in bringing peace and development in Afghanistan as well as assistance in maintaining the security in the country was good.
• On Pakistan, it was extraordinary that the Americans accepted to name Pakistan with the two leaders calling upon Pakistan to ensure that its territory was not used for terrorism. This shows that USA was getting angry on Pakistan when it came to perpetration of terror through Pakistan to Afghanistan.

Maritime security

• Maritime surveillance and situation awareness in maritime domain is one thing and the Americans have led to India to believe that armed drones could come in future. Joint naval exercise is the manifestation of collective security. India needs to build such capability and capacity independent of USA too.
• Both the leaders announced their intention to ‘build on the implementation of the “White Shipping” data sharing arrangement which allows countries to share data on maritime traffic and domain awareness.

Contentious issues

Important memberships

• India has been pushing forward in past for Permanent membership in UNSC and membership of NSG but the Americans may support India in a half-hearted way.
• The UNSC issue is a long standing issue as there are many claimants who also wish to join it. But there are rivals who are trying to pull them down like China and Pakistan in South Asia. So it is not going to be easy for India to work forward in that direction.
• However, NSG is different. Right now only China is standing up against India. But if America recognizes India’s admissibility to be a part of NSG in a formal way, then it doesn’t matter what China opines. But it is not sure if that will happen as lot of US political capital will go into it and they will not be much keen to invest so much political capital in issues which is secondary for them.

Trade

• Trump did indicate about greater openness in the Indian market for American products like farm produce etc. This is where USA is going to push India. It has a $30billion deficit in trade in favour of India.
• To balance the trade, USA asks India to buy more. But India’s options are very limited. The military hardware is good option but India has limitation there for integrating it into forces. The Transfer of Technology from USA is obsolete which restricts India from buying any military hardware from USA.
• Also against that, if USA is not giving up the strict rules on H1B visa for free flow of services and skilled manpower then it is going to be politically dicey for government to create more trade relations between both countries.
• The Trump administration is moving away from multilaterals increasingly and prefers doing business on bilateral basis. Given that, one would expect that India and US would enter into negotiation process for a bilateral trade liberalization and trade facilitation arrangement. There has been a talk about review of trade relations and also the regulatory framework that is present on both sides but more concrete steps are yet to be taken. In context of removing regulatory and facilitating obstacles, issues such as recognizing inventions, protecting IPR, pharma regulatory issues faced in USA by Indians, the two sides will looking for a solution there.
• There is no ambitious upping of the bilateral trade targets which is not an encouraging sign.

Trade commerce and investment are going to be areas of mutual cooperation going forward. High economic growth is important for both countries. For most of the large technology players in America, India is usually there no 1 or 2 market outside USA. The Indian market is too big to ignore and they need Indians to drive the talent. Thus there is a strong alliance in the start up ecosystem and venture capital private equity ecosystem. Trump has welcomed GST and it will have a huge economic impact on India, if not immediately then in medium term. So it is important in ease of doing business as it provides common Indian market that facilitates not only domestic economy but also external linkages.

Together with it, reciprocity being mentioned is good thing. India would be happy in having trade deficit with USA as such trade deficit means India tapping into foreign savings for its development provided the two way trade volume is large.

Armed drones

The Indian government wanted the armed drones and the armed predators which are not coming. It was denied explicitly by Washington. However, it cleared the sale of 22 unmanned Guardian drones to India, with the deal being termed as a “game changer”.

The Americans are talking about advanced military collaboration since 1980s but not one project has structified. They have encouraged buying other military assets but these are off the shelf buys with no ToT- technology transfer.

When it comes to technology, most of these US exports are safe in the sense that they are low in lethality index like M777 or F16s that are obsolete technology. Thus there is a low lethality ceiling which America has imposed on hardware purchases which is not good thing considering the fact that India can purchase frontline cutting edge stuff from Russia.

Conclusion

There was no negativity in the meeting which was the greatest positivity. There were skepticism about the tense level during the meeting of both leaders after what US President had said about India post leaving the Paris Climate Change agreement. However, the Americans made sure that the environment for the leaders to meet was conducive.

Chemistry is important between the leaders. But at the end of the day, it is the priority on the national agendas that the leaders have which determine the actual substance of the relation. Some direction can be given by leaders but beyond that what matters is what transpires when the two systems meet.

Connecting the dots:

• India and USA have witnessed a change in the bilateral relationship in last one decade. Do you agree? Substantiate
• Though USA may sound strict with Pakistan, it does not really force Pakistan to work against the terror outfits. This is not in favour of India-USA relations. Analyse.