3 Takeaways From Obama’s India Trip

Source: Flickr, John Haslam, http://bit.ly/1D6qZ2L

By Hemal Shah

This week, President Barack Obama became the first U.S. president to preside as the chief guest at India’s annual Republic Day celebrations. What does this mean for U.S.-India relations? Coming on the heels of Indian Prime Minister Narendra Modi’s successful visit to the U.S. last September, Obama’s latest trip to New Delhi reiterates the intention of friendship on both sides. Marked by drift and disagreement less than a year ago, ties between the world’s largest democracy and the world’s oldest democracy are now on the upswing.

So what was achieved on this visit? Three signs show growing optimism for this partnership.

First, Obama’s visit was marked by strong symbolism. He is not only the first U.S. president to be the chief guest at India’s Republic Day – a grand celebration of India’s democratic constitution and military might – but also the only U.S. president to visit India twice. Obama even moved the date of his State of the Union address just so he could accept Modi’s invitation. Breaking from New Delhi’s obsolete foreign policy of nonalignment, Modi’s invitation to Obama signals that India is unafraid to show that a closer U.S.-India partnership is in India’s national interest. Dismissing protocol, Modi received Obama at the airport with a warm bear hug. Both leaders announced a string of agreements, jointly addressed the Indian masses on national radio (another first time for a U.S. president visiting India), and engaged with top business leaders. Finally, the signing of the Delhi Declaration of Friendship clearly highlighted their common goals and commitments.

Second, Obama and Modi reportedly broke the seven-year-old impasse on a civil nuclear deal. In 2008, former President George W. Bush and former Prime Minister Manmohan Singh created a landmark in U.S.-India ties by signing a civil nuclear deal that paved the way for India to buy nuclear reactors to produce fuel. With this in hand, India became the only country with nuclear weapons that wasn’t party to the nuclear Non-Proliferation Treaty to be allowed to access civilian nuclear technology from other countries. However, India’s passage of a liability law in 2010 compromised the deal by calling for foreign suppliers to shoulder all risks from potential accidents. Ending this logjam, both the U.S. and India agreed to float the notion of an insurance pool to cover liabilities, leaving the decision with partner companies to share risks.

Third, Obama and Modi renewed the U.S.-India defense framework agreement for another 10 years. For the first time since its inception in 2012, the Defense Trade and Technology Initiative is set to become fully operational with four distinct projects – including unmanned Raven drones, equipment for C-130 transport planes, and military gear – selected for codevelopment and coproduction. In the past, India complained about America’s failure to reliably supply technology parts on time and the U.S. was wary of India’s close defense relationship with Russia. However, last year, America surpassed Russia as India’s largest arms supplier. The scale of the initiative’s projects outlined above may be modest, but they will mark a concrete start to lead on to codeveloping more high-end weapons, such as jet engines.

Obama and Modi also set goals to increase two-way trade from $100 billion to $500 billion in the coming decade. Obama ended the trip by pledging to invest a total of $4 billion in India to further business ties, including $2 billion to develop the country’s renewable energy sector. In a veiled reference to rising Chinese aggression, both sides also agreed to beef up maritime security in the South China Sea.

Symbolism makes for a great start, and the potential break to the impasse on defense and civil nuclear energy cooperation is commendable. But now comes the tough part – actually following through. The U.S. and India may have identified distinct projects for codevelopment in defense. But India still needs to fix its corrupt procurement process and lengthy bureaucratic procedures. New Delhi also needs to invest more into research and development to modernize its defense industry in order to attract serious foreign capital if it desires joint development of high-end weapons to replace its Russian-supplied Soviet-era equipment. Both sides have characterized the nuclear deal as “done,” but no one has seen the fine print that will operationalize the agreement to prove it is any different from the short-lived glory of 2008. India’s local component requirements, and tough land acquisition and labor laws, stand in the way of the U.S. supplying solar energy panels or setting up factories to produce them as part of bolstering India’s renewable energy capacity. Moreover, Americans are wary of India’s policy flip-flop on investment rules and consequent economic slowdown under the previous government.

Last year, the Indians bet on Modi to revive the economy by awarding him the biggest electoral mandate in three decades of Indian history. Now he has his work cut out for him. His economic messaging shows that he wants the U.S. to be a part of his reform plan and vision for India. With economic growth starting to pick up at 6.3 percent, and the IMF predicting that India will beat China’s growth by next year, Obama is also betting on Modi’s ability to build a stronger India and forge a deeper strategic partnership with the U.S. One hopes that the symbolism from this visit matches the promises made. The world will be watching closely as these democratic giants take the leap forward, together. 

Republished from U.S. News and World Report.