Introduction
Today, the U.S. – India relationship encompasses the most intense bilateral engagement that New Delhi enjoys with any nation. Given the steady expansion of bilateral partnership over last two decades, the range of joint activities today is breathtaking: from frequent bilateral summits between heads of government to regular senior-level dialogues, the US and India today engage in numerous strategic consultations, wide-ranging defence, counterterrorism, homeland security, cybersecurity and intelligence cooperation, as well as myriad activities in energy, education, science and technology, public health and culture (Tellis, 2018).
US India Trade and Investment Relations
The U.S. is India’s largest trading partner, goods and services combined. In 2019, overall U.S.-India bilateral trade in goods and services reached $146.1 billion compared to US$ 139.6 billion in 2018 [Source: U.S. Department of State]. Two-way merchandise trade stood at around US$ 92 billion. Of this, India’s goods exports to the U.S. were valued at US$ 57.7 billion and India’s goods imports from the U.S. were valued at US$ 34.3 billion. The India-U.S. trade in services stood at US$ 54.1 billion. Of this, India’s services exports to the U.S. were valued at US$ 29.7 billion and India’s imports of services from U.S. were valued at US $ 24.3 billion. U.S. Foreign Direct Investments in India has increased to $ 45.9 billion in 2019 (MEA, 2021).
U.S.-India trade ties are key part of bilateral relations, but have faced heightened challenges in recent years. U.S. goods and services trade with India accounts for 2.5% of total U.S. world trade. Bilateral trade is more consequential for India, for whom the United States is top trading partner, representing about 17% of India’s exports and 7% of its imports (WTO, 2019).
Bilateral foreign direct investment (FDI) is limited, but growing. Market access and other barriers to U.S. trade with India have been long-standing concerns. The Biden Administration’s inaugural trade policy report states, “While India’s large market, economic growth, and progress towards development make it an essential market for many U.S. exporters, a general and consistent trend of trade-restrictive policies have inhibited the potential of the bilateral trade relationship.” (USTR, 2021a).
In terms of investments, U.S. is the 5th largest foreign investor in India with cumulative Foreign Direct Investments (FDI) equity inflows of close to US$ 30 billion from April 2000 to June 2020. FDI equity inflows in India from U.S. stand at around US$ 4 billion during FY2020. The U.S. also accounts for one-third of all Foreign Portfolio Investments.
India has limited foreign investment in sectors such as insurance and banking for decades. While India has substantially liberalized foreign direct investment (FDI) procedures, issues remain. In insurance industry has a FDI limit of 49 percent and a requirement that companies be Indian controlled. In banking, foreign ownership is capped at 74 percent. Media also face foreign investment limits differently for different categories. In single brand retail, Indian rules permit 100 percent FDI but have some local sourcing requirements. Multi-brand retail is permitted upto 51 percent FDI, however Indian states can opt in or opt out of allowing this type of foreign investment, only nine of India’s twenty nine states permit it plus one union territory. Additional requirements for multi-brand include at least $ 100 million in infrastructure investment, as well as local sourcing conditions. This makes FDI difficult and complex (Ayres, 2020).
Indian FDI in U.S. is estimated at US$ 18 billion (according to a CII Survey) (MEA, 2020). Both countries have made a commitment to facilitate actions necessary for increasing the bilateral trade to $500 billion. During Prime Minister's visit to the U.S. in September 2014, the two sides set target to increase bilateral trade in goods & services to $500 billion. In recent years, growing Indian investments into the U.S. has been a novel feature of bilateral ties. According to CII and Grant Thornton survey released in August 2015, 100 Indian companies have made $ 15 billion worth of tangible investments across 35 states, creating more than 91,000 American jobs. Among large Indian corporations having investments in the U.S. include Reliance Industries Limited, Tata Consultancy Services, Wipro, Essar America, Piramal, Mahindra, Lupin, SunPharma, etc. There are several dialogue mechanisms to strengthen bilateral engagement on economic and trade issues, including a Ministerial level Economic and Financial Partnership and a Ministerial Trade Policy Forum. For greater involvement of private sector in discussion on issues involving trade and investment, there is a bilateral India-U.S. CEO's Forum. India and the U.S. have set up a bilateral Investment Initiative in 2014, with special focus on facilitating FDI, portfolio investment, capital market development and financing of infrastructure. U.S.-India Infrastructure Collaboration Platform has also been set up to deploy cutting edge U.S technologies to meet India’s infrastructure needs. U.S. firms will be lead partners in developing Allahabad, Ajmer and Vishakhapatnam as Smart Cities. The two leaders during Prime Minister Modi’s visit to the United States in June 2016 welcomed engagement of U.S. private sector companies in India’s smart city programme. USAID will serve as knowledge partner for Urban India Water, Sanitation and Hygiene (WASH) alliance to help leverage business and civil society (Gates Foundation) to facilitate access to clean water, hygiene and sanitation in 500 Indian cities (MEA, 2017).
The Trump Administration, which took issue with India’s “unfair” trade practices, sought to address certain frictions in limited bilateral trade deal, which was not achieved. It is expected that under the Biden Administration, bilateral trade relations may be less strained and resolving frictions will remain a priority (Raghavan, 2021). In March 2021, U.S. Trade Representative (USTR) Katherine Tai and Indian Minister of Commerce and Industry Piyush Goyal discussed importance of bilateral trade and investment relationship and committed to strengthening cooperation on shared objectives. (USTR, 2021b)
U.S. - Indian engagement on trade issues takes place amid uncertain growth outlook for India’s economy. After several years in which it attained world’s fastest growth rate (above 7%), India’s economy grew more slowly in 2019 and was hit hard by the pandemic. The World Bank estimates that Indian economy contracted by 7.3% in 2020, and that it will expand by 8.3% in 2021, flanked by policy support from Indian government (World Bank Group, 2021). India’s COVID-19 outbreak appears to be constraining previously expected stronger economic recovery in 2021. Over the years, India-USA bilateral relations have intensified beyond the realms of trade and investments based on shared democratic values and increasing convergence of interests on bilateral, regional and global issues. The volume of merchandise trade between India and USA has significantly increased from around US$ 62 billion in FY2014 to around US$ 89 billion in FY2020. India’s exports to USA have increased from around US$ 39 billion in FY2014 to around US$ 53 billion in FY2020 while imports from USA have increased from around US$ 23 billion to around US$ 36 billion during the same period. Further, services trade between India and USA has increased from around US$ 34 billion in 2013 to around US$ 54 billion in 2019. India’s exports of services to USA have increased from around US$ 20 billion in 2013 to around US$ 30 billion in 2019 while India’s imports of services from USA have increased from around US$ 13 billion in 2013 to around US$ 24 billion in 2019. Accordingly, the bilateral trade of goods and services between India and USA has increased from around US$ 96 billion in FY2014 to around US$ 143 billion in FY2020 (PHD Research Bureau, 2020).
The spread of pandemic COVID-19 and associated global supply chain disruptions have greatly impacted economic activities and created unusual degree of uncertainty in all countries. Dynamic economies such as India and USA hold immense potential for refueling global growth to higher trajectory in coming times. Based on strong complementarities and growth prospects, both countries have significant potential to enhance bilateral trade to US$ 300 billion by 2025-26 from current level of around US$ 150 billion. Both sides have expressed desire to conclude initial limited trade package and discussed possibility of Free Trade Agreement (FTA). The intent to negotiate for preferential trade agreement in around 50-100 categories of goods and services is highly encouraging. The initial trade deal should set stage for comprehensive full-fledged FTA resulting in manifold increase in bilateral trade and investments and progressive economic growth of both economies. There is need to outline contours for sustainable full-fledged FTA between two countries which is broad based and encompasses wide ranging potential sectors of development. There exist immense synergies in expanding trade and investments horizons between two economies in areas such as defence, space, energy, aviation, insurance, infrastructure, engineering, agriculture, food processing, manufacturing, entrepreneurship, healthcare & pharmaceuticals, water & environment, financial services, ICT & digital infrastructure including frontier technologies of 5G, big data analytics, quantum computing, blockchain and Internet of things, among others (PHD Research Bureau, 2020).
Under the Biden administration, India’s trade with U.S. could recover from the dip since 2017 -18. India has always had a trade surplus with the U.S. The trade surplus had widened from US$ 5.2 billion in 2001 -02 to US$ 17.3 in 2019 -20. Trade surplus had peaked at US$ 21.2. billion in 2017 – 19 and has moderated to some extent. In 2019 -20, India exported goods worth US$ 53 billion to the U.S. which is roughly 17 per cent of all Indian exports that year and imported goods worth US$ 35.7 billion in return which is around 7.5 per cent of all Indian imports.
Bilateral Talks / Bilateral free trade agreement
The United States and India do not have bilateral free trade agreement, but previously engaged in now-stalled negotiations on a potential bilateral investment treaty (BIT). Under the Trump Administration, the two sides sought to negotiate limited trade deal, to address heightened trade frictions over tariffs and other trade restrictions. U.S. aims included “resolution of various non-tariff barriers, targeted reduction of certain Indian tariffs and other market access improvements.” Restoration of GSP benefits has been top priority for India. Despite concerted efforts in 2019 and 2020, trade deal did not materialise. Under the Biden Administration, the two sides have agreed “to work constructively to resolve key outstanding bilateral trade issues and to take comprehensive look at ways to expand the trade relationship.” They also committed to revitalizing their engagement through Trade Policy Forum, for which they agreed to hold next Ministerial-level meeting in 2021 (USTR, 2021b).
Regional Integration
India and the United States are absent from the Indo-Pacific region’s two major trade pacts. India negotiated, but did not join the Regional Comprehensive Economic Partnership (RCEP), signed by China and 14 other countries in November 2020. (Cimino-Isaacs and Sutherland, 2021; USTR, 2021d). India cited concerns about RCEP’s fairness and balance and also was wary of Chinese import competition. The United States withdrew from proposed Trans-Pacific Partnership (TPP) in 2017. The 11 remaining TPP parties (including 7 RCEP members, but not India or China) signed new Comprehensive and Progressive Agreement for TPP (CPTPP or TPP-11), which entered into force in December 2018.
Multilateral Engagement
The United States and India often have opposing stances on trade issues in WTO (Cimino-Isaacs, Fefer and Fergusson, 2021). With India’s growing integration in global economy, some US policymakers have called on India to be more responsible stakeholder in rules-based global trading system. They blame India for impeding WTO progress on issues such as moratorium on e-commerce customs duties, disciplines on fisheries subsidies, and previously on Trade Facilitation Agreement (TFA). The United States is also critical of India and others for self-designating as developing countries to claim special and differential treatment under WTO rules — criticisms that these countries including India refute (Cimino-Isaacs, 2021).
Active debate is underway in WTO on whether to waive WTO IP rules in relation to prevention, containment, or treatment of COVID-19, a concept initially proposed by India and South Africa in October 2020. The United States previously was opposed to general concept of waiver, but in May 2021, Biden Administration announced U.S. support for waiving IP protections for COVID-19 vaccines (USTR, 2021e).
Selected Trade Issues:Tariffs and Trade Preferences
Bilateral tensions have grown over both countries’ tariff policies. India’s average most-favored-nation (MFN) applied tariff rate (17.6%) is highest of any major world economy. India’s bound tariff rates under its World Trade Organization (WTO) commitments are even higher. This allows India to increase its applied rates further without violating its WTO commitments and has created longstanding source of uncertainty for U.S. exporters. India’s tariff hikes on range of labour-intensive products and on mobile phones, televisions, and other electronics and communication devices under its “Make in India” campaign remain particular U.S. concern.
India opposes 25% steel and 10% aluminum national-security-based tariffs imposed by Trump Administration in 2018, which remain in place (Fefer, 2021a). India delayed retaliating against the U.S. in hope of resolving issues bilaterally, but it ultimately imposed higher retaliatory tariffs of 10% to 25%, affecting U.S. exports such as nuts, apples, chemicals and steel. The two sides are challenging each other’s tariffs in WTO. India applied retaliatory tariffs soon after President Trump in June 2019 terminated India’s eligibility for Generalized System of Preferences (GSP), a U.S. trade and development programme, based on India’s failure to provide “equitable and reasonable” access to its markets according to U.S. The termination followed U.S. investigation into India’s market access practices and petitions by U.S. dairy and meal technology industries (Jones and Wong, 2021).
US’ Generalized System of Preference:
India’s exclusion from the US’ Generalized System of Preference (GSP) could come up for reconsideration under Biden. In 2019, President Donald Trump had terminated India’s designation as a beneficiary developing nation under the GSP trade programme after determining that it has not assured the US that it will provide “equitable and reasonable access” to its markets. The termination followed U.S. investigation into India’s market access practices and petitions by U.S. dairy and meal technology industries (Jones and Wong, 2021). India was the largest beneficiary of the program in 2017 with US$ 5.7 billion in imports to the US given duty-free status. India was the largest beneficiary of the programme in 2017 with US$ 5.7 billion in imports to US given duty free status. Under GSP around 10% of U.S. imports from India previously entered duty-free. GSP is designed to promote economic development by allowing duty free entry for thousands of products from designated beneficiary countries.
Digital Trade
With the rise of the digital economy and wit India’s growing heft as a hub for information technology services and for digital businesses, new frictions have emerged over data localisation, data privacy and e-commerce. India uses many US platforms, and many US companies have back office operations in India. These platforms generate enormous data flows and Indian leaders are aware of the tremendous value of this data. Prime Minister Modi has called it the ‘new oil’ and ‘new gold’. However, the U.S. is concerned with how India has handled this resource. In 2018, the India’s central bank ordered companies that operate a payment system in India i.e. credit card companies and digital payment platforms to store all data on local servers. This led to confusion about jurisdiction for cross border transactions and then a clarification that such data could be processed abroad but must be stored in India. India allows for 100 percent FDI in business-to-business (B2B) electronic commerce, but prohibits foreign investment in business-to-consumer (B2C) electronic commerce. India also does not allow foreign-owned e-commerce firms to take ownership of inventory that requires them to operate, as a marketplace-based electronic retailing model. In December 2018, India announced new regulations that expressly prohibit subsidiaries of foreign-owned marketplace-based e-commerce sites from selling products on their parent companies’ sites. The new rules also prohibit exclusivity arrangements by which e-commerce retailers can contract to offer any product on an exclusive basis. The only exception allowing FDI in B2C electronic commerce permits investment in single-brand retailers that meet certain conditions, including the operation of physical stores in India. This narrow exception limits the ability of most potential e-commerce investors to access the Indian market (Ayres, 2020).
In March 2020, India adopted a 2% digital services tax (DST) that applies only to non-resident companies. The Trump Administration concluded that India’s DST is discriminatory, inconsistent with international taxation principles, and burden to U.S. commerce, but it deferred taking specific action (Schwarzenberg, 2020). India has defended its DST as a way to level the playing field between domestic and foreign companies.
In early 2021, Biden Administration announced its determination to apply additional tariffs of 25% on certain products from India, as well as to immediately suspend additional tariffs for up to 180 days to provide additional time to complete ongoing multilateral negotiations on international taxation at Organisation for Economic Cooperation and Development (OECD) and in the G20 process (USTR, 2021c).
Other bilateral issues for U.S. businesses include India’s restrictions on business activities of e-commerce platforms and requirements for data localisation of certain financial flows (Fefer, 2021b).
New guidelines for social media, including requirements to remove content deemed by government threat to national security, public order and “decency or morality,” with imprisonment for non-compliance, have also raised concerns (Horwitz and Purnell, 2021).
Supply Chains
Pandemic-related disruptions have highlighted foreign companies’ reliance on Chinese origin goods in their supply chains. These disruptions have spurred some companies to consider restructuring their supply chains. India has increased efforts to attract firms relocating production from China. President Biden’s focus on diversifying U.S. supply chains could make India’s potential role more prominent, but certain barriers to investment could present challenges (Federal Register. 2021).
US Temporary Visa Policies H1-B Visa Issue
A key issue for India is U.S. temporary visa policies, which affect Indian nationals working in the United States. How a US President looks at the H1-B visa issue, affects the prospects of Indian youth far more than the youth of any other country. Under President Trump, who severely curtailed the visa regime, owing to his policy of “America First”, India had suffered the most. H-1B visa is a non-immigrant visa that allows American companies to employ foreign workers in specialty occupations that require theoretical or technical expertise.
The Indian government has continued to highlight services trade and the “movement of natural persons” procedures typically involving the visa regime by which a citizen of one country can perform services work in another country. For India, this squarely falls in the world of trade, but for the United States, these are immigration matters that cannot be deliberated in trade deliberations. Due to its large pool of highly skilled workers, India is extremely competitive in services and its professionals work around the world. Of the top ten companies with H1B approved petitions in 2018 petitions, four were Indian firms, three of which were at the very top. Over the past fifteen years, the proportion of approved H1B Petitions from India went from just under 40 percent to more than 70 percent (Ayres, 2020).
India’s treatment of intellectual property (IP)
For the U.S., India’s treatment of intellectual property (IP) is a critical issue since 1989. Concerns include piracy of software, film, music and weak patent protectiuons. India was one of the eight countries placed on priority watch list in 1989. India amended its Patent Act to recognise product rather than process patents. This came into effect in 2005. However, U.S. continues to seek further improvements. In 2018 U.S. cited insufficient patent protections, restrictive standards for patents and threats of compulsory licensing. USTR continued to identify India on the U.S. 2021 Special 301 Priority Watch List, identifying as of concern India’s treatment of patents, high IP theft rates, and lax trade secret protection, for instance (Ayres, 2020). The two countries historically have differed on how to balance IP protection to incentivize innovation and support other policy goals, such as access to medicines, including for COVID-19.
India US Bilateral Energy Relations:
The U.S.- India Energy Dialogue was launched in May 2005 to promote trade and investment in the energy sector, and held its last meeting in September 2015 in Washington DC. There are six working groups in oil and gas, coal, power and energy efficiency, new technologies and renewable energy, civil nuclear co-operation and sustainable development under the Energy Dialogue. Investment by Indian companies like Reliance, Essar and GAIL in the U.S. natural gas market is ushering in a new era of India - U.S. energy partnership. The U.S. Department of Energy has so far given its approval for export of LNG from seven liquefaction terminals in the U.S., to countries with which the U.S. does not have a free trade agreement (FTA) - with two of these five terminals, the Indian public sector entity, Gas Authority of India Limited (GAIL) has off-take agreements, totaling nearly 6 million metric tonnes per annum (MTPA).
As a priority initiative under the PACE (Partnership to Advance Clean Energy), the U.S. Department of Energy (DOE) and the Government of India have established the Joint Clean Energy Research and Development Center (JCERDC) designed to promote clean energy innovations by teams of scientists from India and the United States, with a total joint committed funding from both Governments of US$ 50 million.
India and the U.S. are advancing cooperation and dialogue on climate change through a high-level Climate Change Working Group and a Joint Working Group on Hydroflurocarbon. In November 2014, an MoU between U.S. EXIM Bank and Indian Renewable Energy Development Agency (IREDA) was concluded to provide US$ 1 billion in financing for India’s transition to a low-carbon economy. A new U.S.-India Partnership for Climate Resilience has been agreed to, in order to advance capacity for climate adaptation planning, as also a new U.S.-India Climate Fellowship Program to build long-term capacity to address climate change-related issues.
To further collaboration in the area of clean energy and climate change, in June 2016, the two sides announced finalization of a package to provide concessional finance to support clean energy projects on track, to coordinate U.S. Government efforts on clean energy investment in India jointly with leading Indian financial institutions, and to provide liquidity to small scale renewable energy investors.
The U.S. has emerged as a key partner for India in the field of energy. The bilateral Strategic Energy Partnership launched in April 2018 between the two countries is robust and witnessing increasing diversification across both conventional and renewable energy sources. An India-U.S. Natural Gas Task Force was also created in 2018. India has started importing crude and LNG from the U.S. from 2017 and 2018 respectively. The total value of crude and LNG imports from the U.S. is currently estimated at US$ 6.7 billion. In February 2019, the Indian Oil Corporation finalised term contracts for import of crude oil of U.S. origin. These are the first term contracts finalised by any Indian PSU for import of U.S. origin crude oil grades.
One of the key deliverables of the SEP Ministerial meeting held on 17 July 2020 was signing of a Memorandum of Understanding (MoU) between MoPNG and US DoE on co-operation in the area of Strategic Petroleum Reserves (SPRs). The scope of MoU covers cooperation in the areas such as safety, technology development and management of SPRs. It will also facilitate in exchange of operational best practices, exchange scientific and technical information and conducting Emergency Response Exercises and sharing data on release and replenishment mechanisms (MEA, 2020).
The U.S. has emerged as a key partner for India in the field of energy. The bilateral Strategic Energy Partnership (SEP) launched in April 2018, is robust and enabled diversification across both conventional and renewable energy sources. An India-U.S. Natural Gas Task Force was also created in 2018. India started importing crude and LNG from the U.S. from 2017 and 2018 respectively. Bilateral hydrocarbon trade reached US$ 9.2 billion during 2019-20, a 93% increase since 2017-18 (MEA, 2021).
India US Ministerial Meeting developments September 2021:
In accordance with U.S.-India Climate and Clean Energy Agenda 2030 Partnership that was announced in Leaders’ Summit on Climate in April 2021, India and the USA have launched Strategic Clean Energy Partnership (SCEP). A revamped version of the US - India SCEP was announced on the 9th September 2021. India and U.S. engage across five pillars of cooperation - Power and Energy efficiency. Responsible oil and gas, Renewable energy, Sustainable growth, Emerging fuels. A new India U.S. task force on Bio-fuels was announced and the Gas task force to be renamed as India – U.S. Low Emissions Gas Task force.
India US Bilateral Relations in Space and Science Technology sector
A bilateral Joint Working Group on Civil Space Cooperation provides a forum for discussion on joint activities in space, including (i) exchange of scientists; (ii) OCM2, INSAT3D collaboration; (iii) Cooperation on Mars mission; (iv) nano-satellites; (v) carbon /ecosystem monitoring and modeling; (vi) feasibility of collaboration in radio occultation: (vii) Earth Science Cooperation: (viii) international space station; (ix) global navigation satellite systems; (x) L&S band SAR; (xi) space exploration cooperation; (xii) space debris mediation. The last meeting of the JWG was held in September 2015 in Bengaluru. NASA and ISRO are collaborating for India's Mars Orbiter Mission and for a dual-band Synthetic Aperture Radar (NISAR). In June 2016, ISRO successfully launched record 20 satellites onboard PSLV rocket, which included 13 satellites from the United States (MEA, 2017).
Both countries also have a long history of cooperation in civil space arena that includes cooperation in earth observation, satellite navigation, and space science and exploration. The India-U.S Joint Working Group on Civil Space Cooperation regularly reviews the status of cooperation and identifies new areas for furthering space cooperation. The seventh meeting of this group was held in Bangalore in November 2019. ISRO and NASA are also working towards intensifying cooperation in Mars exploration, heliophysics, and human spaceflight through relevant working groups between both sides (MEA, 2020).
Indian Space Research Organisation (ISRO) and U.S. National Aeronautical and Space Administration (NASA) are working together to realise a joint microwave remote sensing satellite for Earth observation, named NASA-ISRO Synthetic Aperture Radar (NISAR). This joint mission is targeted to be launched in early 2023 (MEA, 2021).
The India-U.S. S&T cooperation has been steadily growing under framework of U.S.-India Science and Technology Cooperation Agreement signed in October 2005. There is Indo-U.S. Science & Technology Joint Commission, co-chaired by the Science Advisor to U.S. President and Indian Minister of S&T. The U.S. attended as partner country at Technology Summit 2014 at New Delhi. In 2000, both governments endowed the India-U.S. Science & Technology Forum (IUSSTF) to facilitate mutually beneficial bilateral cooperation in science, engineering and health. Over past decade, the IUSSTF has facilitated more than 12,000 interactions between Indian and U.S. scientists, supported over 250 bilateral workshops and established over 30 joint research centers. The U.S.-India Science & Technology Endowment Fund, established in 2009, under Science and Technology Endowment Board promote commercialization of jointly developed innovative technologies with potential for positive societal impact. Collaboration between Ministry of Earth Sciences and U.S. National Oceanographic and Atmospheric Administration has been strengthened under the 2008 MOU on Earth Observations and Earth Sciences. A "monsoon desk" has been established at U.S. National Centers for Environmental Prediction. India's contribution of $250 million towards Thirty-Meter Telescope Project in Hawaii and Indian Initiative in Gravitational Observations (IndiGO) with U.S. LIGO Laboratory are examples of joint collaboration to create world-class research facilities (MEA, 2017).
The multi-faceted cooperation between India and the U.S. in field of Science and Technology has been growing steadily under framework of India-U.S. Science and Technology Cooperation Agreement signed in October 2005, which was renewed for period of ten years in September 2019. The Indo-U.S. Science & Technology Forum (IUSSTF) which was established by India and U.S. as an autonomous, bi-national organization in year 2000 to promote cooperation in Science, Technology and Innovation is playing important role in strengthening cooperation in this field (MEA, 2021).
India-U.S. Dialogue Architecture:
There are more than 50 bilateral dialogue mechanisms between the two governments. The first two meetings of the Strategic and Commercial Dialogue at the level of EAM and MoS (Commerce & Industry) were held in Washington DC in September 2015 and New Delhi in August 2016. This apex-level dialogue has added commercial component to five traditional pillars of bilateral relations on which the erstwhile Strategic Dialogue of Foreign Ministers had focused, namely: Strategic Cooperation; Energy and Climate Change, Education and Development; Economy, Trade and Agriculture; Science and Technology; and Health and Innovation. The second meeting of the Strategic and Commercial Dialogue took place on 30 August 2016 in New Delhi. In addition, there are Ministerial-level dialogues involving home (Homeland Security Dialogue), finance (Financial and Economic Partnership), commerce (Trade Policy Forum), HRD (Higher Education Dialogue), Science & Technology (Joint Commission Meeting on S&T) and energy (Energy Dialogue).
High-Level Dialogue Mechanisms: India and the U.S. have more than 50 bilateral inter-governmental dialogue mechanisms for exchange of views on issues of mutual interest. A number of such dialogue mechanisms are held at the Ministerial-level including:
India-U.S. 2+2 Ministerial Dialogue: India-U.S. 2+2 Ministerial Dialogue is led by the heads of foreign and defence ministries of India and the U.S. Two rounds of this Dialogue have been held so far in September 2018 and December 2019.
India-U.S. Commercial Dialogue: The India-U.S. Commercial Dialogue is led by the Minister of Commerce and Industry (CIM) and the U.S. Secretary of Commerce. This was last held in Delhi in February 2019.
India – U.S. Economic and Financial Partnership: The India – U.S. Economic and Financial Partnership is led by the Finance Minister (FM) and the U.S. Secretary of the Treasury. This was last held in Delhi in November 2019.
India-U.S. Trade Policy Forum: The India-U.S. Trade Policy Forum is led by CIM and the U.S. Trade Representative (USTR). This was last held in Washington, D.C. in October 2017.
India-U.S. Strategic Energy Partnership: The India-U.S. Strategic Energy Partnership is led by the Minister of Petroleum and Natural Gas and the U.S. Secretary of Energy. This was last held in Delhi in April 2018.
India-U.S. Homeland Security Dialogue (HSD): The India-U.S. Homeland Security Dialogue is led by the Minister of Home Affairs and the Secretary, U.S. Department of Homeland Security. This was last held in Washington, D.C. in May 2013.
India and Biden administration
President Biden’s earlier policies towards India have remained largely positive. In 2008, as a senator he voted to approve the 2008 nuclear deal that had a huge bearing on India-US relations. He was the chairman of the Senate Foreign Relations Committee at the time, and led the effort to ratify the agreement. This was despite the fact that Vice President Biden had criticised India for carrying out the nuclear tests in 1998. In 2013, Vice President Biden had visited India with the ambitious aim of raising bilateral trade to US$ 500 billion. On the Iran issue as well, President Biden’s approach is more flexible. President Trump’s Iran policy put India in a difficult position. India relies on Iran’s crude oil, and was left scrambling for energy security after President Trump’s sanctions on Iran. Even as the US administration offered to replace the loss of Iranian oil, many Indian refineries are configured to process Iranian oil. This had an adverse impact on India-Iran diplomatic relations, even as Indian policy makers have sought to convince Iran regarding seriousness of the bilateral relations. Under Biden, other points of contention between India and the U.S. – such as the tricky issue of data localisation or capping prices of medicines and medical devices – have a chance of getting towards a resolution. In China, it is more likely that Biden administration will help India against China, instead of clubbing the two together. Biden has promised to rejoin the Paris Climate Accord, and this may help countries such as India in dealing with the massive challenges – both technical and financial – on this front (Bhatnagar, 2021; Economic Times, 2021).
Way Forward for US – India Bilateral Relations
The density of these interactions makes clear that the U.S. seeks closest possible relationship with India, while remaining respectful of India’s constraints, even as New Delhi seeks deeper affiliation with Washington that bolsters its national power. The partnership still lacks requisite depth; mitigating this deficit remains key task for both countries in years ahead. The strategic partnership between Washington and New Delhi will remain perpetually handicapped if trade relations between two countries remain un-reformed. India under Modi has made significant progress in opening its economy to foreign investment, which is a major step forward. Trade liberalisation matters because deepened two-way trade contributes towards increasing prosperity in both countries and, in doing so, creates enduring stakes in each other’s success (Tellis, 2018).
India-U.S. relations have become increasingly multi-faceted, covering cooperation in areas such as trade, defense and security, education, science and technology, civil nuclear energy, space technology and applications, environment, and health. Grassroot-level interactions between the people of the two nations provide further vitality and strength to this bilateral relationship. There have been regular contacts at political and official levels with a wide-ranging dialogue on bilateral, regional and global issues have taken place.
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