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With quest for economic growth, India-US relations set to grow

Washington should come to India’s aid and help develop its relations with the immediate neighbours and the Asean grouping

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Addressing a global business forum in New York recently, a senior American defence official underscored the importance of a broad-based India-United States strategic partnership, rooted in shared values. American President Donald Trump, while hosting Indian Prime Minister Narendra Modi at White House in June, had gone one step further by declaring that the relationship between India and the US has never been stronger and better. Indeed, as Modi acknowledged in a newspaper write-up coinciding with his Washington trip, the bilateral relationship has stood the test of time, weathering all storms successfully, thus enabling the international community to reap benefits of the world’s largest and oldest democracies working together as mutually reinforcing engines of growth and innovation.

That precisely is the reason why, there has been a steady consolidation in collaboration on issues of global importance, with ever-evolving geo-economic and strategic security dimensions adding heft to the long-standing tie. Notwithstanding the apparent friction between Trump’s “America First” vision and Modi’s “Make in India” initiative, the two leaders, very aptly, emphasised the fact that both countries’ continued quest for economic growth would ultimately strengthen, and not undermine the time-tested relationship. And as Ambassador Richard Boucher, who dealt with South Asian affairs as US Assistant Secretary of State, puts it candidly: “While the new US administration has its fair share of problems, India is one area where things continue to look up.” Attributing the positive thrust in bilateral relations to a seemingly natural affinity between Trump and Modi, Boucher draws out the commonalities in their approach very succinctly. “Both are interested in creating commercial and economic benefits from the relationship, sceptical of China’s intentions, but willing to work with Beijing for results and also inclined to measure progress in terms of deals concluded and agreements signed” observes Boucher.

Apart from an expanding strategic partnership — reflected in the recently held Malabar naval exercise, hi-tech defence sales, and other regular exchanges on military and terrorism issues — Boucher believes, Washington will explore new agreements and opportunities for future cooperation, mostly in commercial areas, while some extending to other parts of the relationship as well.

Some experts reckon that India-US tie is critical to boosting trade and investment and catalysing growth globally. An enhanced trade level, they believe, is indicative of a successful economic partnership that will shape future global trend. In fact, India-US bilateral trade had touched the $115 billion-mark (Dh422.97 billion) in 2016 and the number is only expected to rise, as the Indian economy grows at a steady pace of 7 per cent annually.

Moreover, India’s positive economic outlook and demographic dividend make her a key attraction to advanced economies, including America’s.

However, in the present scenario, any marked improvement in future trade and investment relations is contingent on Trump administration’s evolving economic policies, which is expected to be extremely conservative.

For instance, the “Buy and Hire American” executive order, seeking to tighten visa rules for high-skilled foreign workers or initiation of investigations in trading patterns with countries like India, having trade deficit, coupled with the targeted crackdown on cheap import to bolster domestic manufacturing in America are all irritants that can potentially stir-up tension any moment. Besides, there is a realistic danger of economic nationalism seriously undermining the bilateral partnership, put on an impressive trajectory by years of diplomatic hard work. Amid growing apprehension and concern in India about the rift on issues of immigration, trade and investment and climate change, many believe ultra-protectionist policies can eventually imperil the delicate Indo-US global strategic partnership. Arvind Virmani, former chief economic adviser to the Indian government, however, disagrees. Denying any aggravation in India-US differences, Virmani explains: “Discord over visa issue has continued for decades and was exacerbated by the rise in US unemployment after the global financial crisis,” and goes on to add that “trade and investment matters have also been under discussion for years without being resolved sufficiently to sign either an investment treaty or a free-trade agreement.” The noted economist, who served as India’s representative at the International Monetary Fund, contends that India-US bilateral ties have been essentially driven by private foreign direct investment as well as defence hardware imports into India and technology transfers, and continues to do so.

“During his meeting with Trump, Modi deftly chose to relegate difficult matters to the background and instead prioritised areas of strategic convergence.””
-Seema Sengupta
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During his bilateral meeting with Trump, Modi, very deftly, chose to relegate difficult matters to the background, temporarily, and instead prioritised areas of strategic convergence. As Virmani suggests, the primary focus of government-to-government interaction should be on the strategic aspects of the India-US relationship, driven by the common goals of fighting terrorism and ensuring peace and tranquillity in the Indian Ocean region and its contiguous areas, rather than concentrating on resolving contentious issues immediately. With India standing firm against Chinese pressures in the Himalayas in recent times, Boucher feels, Washington should come to India’s aid and suggests New Delhi to improve and develop its relations with the immediate neighbours and Association of Southeast Asian Nations grouping, in addition to substantially opening up trade and investment flows. “For an Administration in Washington that generally does not wish to make overseas commitments, an active and open India would be a valuable strategic partner” says Boucher.

Seema Sengupta is a Kolkata-based journalist and columnist.

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