Modi needs to play his cards right with Obama
US President Barack Obama's invitation to Prime Minister Narendra Modi to visit Washington showed his intention to firmly close the visa denial chapter and rapidly engage the new Indian leader armed with a thumping democratic mandate, taking cognisance no doubt also of Modi's prompt overtures to China, which if not politically balanced by pulling him towards the US, would have undermined a major strategic reason for the dramatic India-US rapprochement under President Bush centred on the nuclear deal.
Modi's visit oxygenated the stagnating relationship, with the two leaders developing a good chemistry and agreeing on an agenda fertile in political, economic and defence possibilities. Modi has followed Obama's initiative quickly by a hitherto unthinkable one of his own by inviting the latter to be the chief guest at our R-Day celebrations. The intention behind these initiatives is to give a significant fillip to the relationship by addressing the difficulties that impede its expansion in diverse fields, whether economic, nuclear or defence at the bilateral level, as well as finding common ground on larger global issues, especially climate change.
Unresolved nuclear issues still hover as damaging debris over the India-US relationship despite the civil nuclear deal. The Contact Group on implementing the compact in full has met in advance of Obama's visit to resolve the issues of supplier liability and "administrative arrangements" for handling nuclear materials used in the US supplied nuclear power plants. On the first, narrowing differences without amending our Nuclear Liability Act may be possible, but on the second we are right to resist permanent US encroachment on our nuclear sovereignty. The IAEA monitoring of our safeguarded plants is stringent enough for us to reject needless additional obligations demanded by the US.
Defence cooperation is bolstering our strategic partnership, with contracts worth $10 billion in the last six years and numerous joint military exercises. Under the US-proposed Defence Technology and Trade Initiative (DTTI), the US offer to the previous government of jointly developing and producing specific defence equipment in India got a muted response, but has got renewed life with the Modi government's emphasis on developing an indigenous defence manufacturing industry. The first meeting under the DTTI framework in September 2014 set up a Task Force to evaluate and decide on projects. A couple of them could well be announced during Obama's visit. In any case, a more ambitious Defence Cooperation Framework Agreement is being renewed for another 10 years. The Indo-US Investment Initiative was signed in Washington this month. US investments in developing India's inadequate physical infrastructure are unlikely, but US technology and services can be accessed.
The annual empowered IPR Group agreed to in Washington - a forum in which we will come under intensive pressure - has met to address differences over IPR issues. India claims its policies are in conformity with the WTO TRIPS agreement whereas the USTR is inclined to do muscle-flexing under US laws. It is likely that on projects identified during Modi's September visit, such as US involvement in three smart cities, US AID as a knowledge partner to support Modi's National Urban Development Mission and Clean India Campaign and so on, some progress may be announced.
On climate change, Obama will goad India for a compact with the US by politically leveraging the US-China agreement. The stakes for India in bending to the US or resisting it are not free of political and economic consequences. By agreeing in Washington to a "new and enhanced strategic partnership" on energy security, clean energy and climate change and committing ourselves to work with the US for the success of the 2015 Paris UN Climate Change conference, including a new global agreement on climate change, we are inviting such pressure, without necessarily securing access to US shale gas in modification of US laws or US financial support for our expanded renewable energy plans.
Obama's campaign against outsourcing and obsession with bringing jobs back home reflected powerfully in his State of the Union address accounts for US unresponsiveness to our concerns about the totalisation agreement, restrictions on movement of professionals and hike in visa fees that affect our IT industry.
The US is now outflanking the WTO by pursuing trade agreements in Europe and the Asia-Pacific, which will relegate development issues to the background and prise open global markets based on US standards and regulatory practices. This will make negotiations on an India-US Bilateral Investment Treaty more complicated.
Both sides will want to show some concrete results from the visit, even if the symbolism of the R-Day honour accorded to Obama is politically powerful in itself. The US has a stronger hand, which requires that we play our cards with special care and proceed on the assumption that the US will not do anything for us that is not in its interest.