What does Prime Minister Narendra Modi’s reelection to a second term mean for India’s evolving relationship with the United States? If he continues the path charted in his first term, Modi will work to strengthen that relationship and to evolve the current U.S. strategic partnership, which is still very much in its formative stages.
There are numerous factors that indicate that evolution can be accomplished successfully. They include Modi’s leadership style, India’s need for economic development partners and a strong base of U.S. allies, but there are stressors in the relationship as well.
Unlike many of his predecessors, Prime Minister Modi is committed to establishing relationships and alliances with other nations. As Ashley J. Tellis of the Carnegie Endowment for International Peace notes, “…Modi has freely reached out to the United States (as well as Japan, Israel, Germany and France) in the hope of building a robust strategic partnership that would enhance India’s power and standing.”
The biggest challenge preventing India from becoming a major player on the world stage is the country’s significant developmental needs, especially in the areas of economic opportunity, education, health care and climate change.
Modi initiated reforms in these areas, but much remains to be done and India will not be able to address these issues alone. It will need substantial collaboration and investment from international partners, including the U.S., to do so.
The link between foreign partnerships and domestic development is not lost on the Modi government. Shortly after the election results were announced, a high-level advisory panel submitted a report to India’s minister of Commerce and Industry recommending rationalizing India’s tariff structure to make it more predictable and the creation of an Empowered Investment Promotion Agency.
There is considerable support for enhanced bilateral relations from U.S. business groups such as the U.S-India Business Council (USIBC) at the U.S. Chamber of Commerce.
Nisha Biswal, president of the USIBC, commended Prime Minister Modi on his accomplishments but noted that “much remains to be done to unlock the expansive growth potential of the Indian market.”
Finally, Indian Americans such as myself have committed to work to bring the two countries closer together to see growth potential realized.
Many of the conditions for a stronger and better strategic partnership seem to be in place. Alice Wells, the principal deputy assistant secretary of State for South and Central Asia observed that 2018 was “a landmark year for U.S.-India ties as we build out stronger relationships across the board.”
Combine all of this, and it might appear that a closer and better U.S. strategic partnership is already a done deal. Unfortunately, it’s not that simple. While there has been progress made, there have been some setbacks to U.S.-India relations over the past several months.
An April 3 report from the Congressional Research Service highlighted increasing bilateral tensions over tariff policies. One of the main flashpoints for tariff tensions was the March 3 announcement by President Trump that he intended to terminate India’s Generalized System of Preferences (GSP) eligibility providing duty-free tariff treatment to certain Indian exports to the U.S.
The full termination of GSP status, effective June 5, added $300 million in tariff costs to U.S. imports of Indian products and added a further chill to the relationship. India responded Sunday by slapping tariffs on 28 U.S. exports.
A confounding factor in the U.S.-India relationship is the ongoing U.S.-China trade war. This escalating game of tariff one-upmanship is creating opportunities for India by diverting trade and investment to India that would normally go to China.
The U.S.-India relationship is at a pivot point, meaning that despite the challenges, there are also opportunities to effect change and achieve positive outcomes. Modi’s election has brought that pivot point front-and-center.
What is needed now is for representatives of the U.S. and India to come together to develop a collaborative framework for the partnership going forward.
The only obstacle to that collaboration is a U.S. president who cares little for detail and who operates reactively rather than strategically. Such an approach could torpedo the U.S. strategic partnership. If this occurs, we will need life rafts to keep the partnership afloat until there is someone new at the helm.