Wednesday, Sep 17, 2014

How the relationship soured

Progress has been below par on all key initiatives. On trade, the story has headed south with no ideas in place to arrest this negative trend. IE Progress has been below par on all key initiatives. On trade, the story has headed south with no ideas in place to arrest this negative trend. IE
Written by Pranab Dhal Samanta | Posted: April 2, 2014 1:21 am

Nancy Powell’s tenure was part of a larger drift in the India-US partnership, as bureaucratic pettiness took over.

Nancy Powell’s scripted exit from Roosevelt House would end a rather uneventful tenure, which saw no real movement in the strategic relationship. Instead, her term coincided with a downturn in the partnership, punctuated by lows like the Devyani Khobragade affair that has definitely become the best advertisement of the relationship’s plummeting stock.

But convenient as it may be, pinning all the blame on Powell would not just be grossly unfair, but also wrong. She is after all a career diplomat, posted to India during a difficult time and one who eventually acted on Washington’s cue. The problem actually lay in the milieu — both in Washington and New Delhi — she worked in and gradually became a part of, just like any other bureaucrat.

In fact, for the last few years, the Indo-US relationship has become the playfield of and for bureaucrats. It’s about throwing the rulebook at each other, talking about inspections, drawing up negative reports for each other’s political leadership, finding faults in procedures, turning them into legal encumbrances, fighting over it, convincing the political boss and again fighting over it.

It all probably started with the unravelling of the historic nuclear deal after India passed the civil nuclear liability act. This adversely affected US business opportunities in this sector, an outcome that went against all arguments the US administration had made internally while canvassing support for the deal. The US wanted exemptions, which the UPA government was unable to give.

As a result, lawyers were brought into the picture to assess the nature of liabilities on the US supplier. This led to installing more safeguards, which meant escalating the per unit price of nuclear power and that, in turn, translated into more threadbare negotiations. Eventually, the whole affair slipped out of the domain of the lawmaker and into a web of techno-legal details from which it has yet to resurface.

At present, India and the US are in the middle of an escalating fight on trade issues. Complex as these issues are, US concerns boil down to four broad points: One, India’s tax bureaucracy is harassing US companies with scores of complaints on invisible duties and raising charges that outstrip profitability in trying times. Two, the Indian pharmaceutical industry is threatening established patent regimes and was fast emerging as a hub for challenging patents. This is like setting a wrong precedent and, if not checked, could present a template to other developing countries. Three, India insists on domestic content in telecom, power and, now, the solar energy industry that makes investment continued…

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