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In US, Modi has his work cut out: sort out issues to get a partnership going

Modi’s summit meeting with Japanese PM Shinzo Abe failed to yield a nuclear-technology deal.

Written by Praveen Swami | New Delhi |
September 26, 2014 2:06:36 am

Prime Minister Narendra Modi left for the United States on Thursday, beginning a journey that was hailed as historic long before it began. And this visit, long after it is over, will be remembered for what it does to reverse a strategic partnership adrift since 2008.

Indian and US experts who spoke to The Indian Express agree there is plenty of low-hanging fruit that both sides can pluck with relative ease. The government has eased rules governing foreign direct investment in infrastructure, and the United States is hoping for a slice of the cake. Modi has promised to address concerns of American businesses over intellectual property rights, and may offer to reconsider his opposition to FDI in the retail sector.

He will, in turn, expect some concessions on a visa regime that Indian businesses in the US complain is too restrictive, and ask for taxes on short-term expatriate workers there to be lifted.

Experts say putting muscle into the economic relationship will need more substantial issues hammered out. India and the US hope to set a deadline to conclude negotiations for a Bilateral Investment Treaty, guaranteeing international minimum standards in the treatment of foreign investments. Negotiations, underway since 2008, have stalled over India’s insistence that its national courts have the last word, rather than the customary international mediators.

New Delhi’s effective veto of the World Trade Organisation’s Trade Facilitation deal last month, said Alyssa Ayres, a former diplomat and now a scholar at the influential Centre for Foreign Relations, “pulled the rug out under those of us who were arguing for India to be pulled into the Asia-Pacific Economic Cooperation forum, or for a Free Trade Agreement”.

Leading up to the next US elections, Ayres said, Modi will need to take tangible measures to show that the two countries “can find successful steps to collaboration”.

“Even small things, like signing the Bilateral Investment Treaty, would help,” she said. “The US is hopeful that the Modi government will, for its own domestic reasons, do more to make it easier to do business in India.”

Sumit Ganguly, an eminent scholar of South Asia at Indiana University, said Modi could also send out positive signals by enhancing defence cooperation. “He can give a nod to the US on co-developing new anti-tank missiles; he could begin negotiations on defence acquisitions, he could jump-start greater military-to-military cooperation,” he said.

Progress to thaw the New Delhi-Washington relationship, experts say, will need a blueprint for heavy hauling —something the PM’s foreign policy hasn’t shown much interest in so far. Modi’s summit meeting with Japanese PM Shinzo Abe failed to yield a nuclear-technology deal. This month’s dialogue with Chinese president Xi Jinping, against the backdrop of an embarrassing standoff between the two countries’ armies in Ladakh, led to commitments of only a third of the hoped-for $100 billion in investments.

India has been dismayed by what it sees as misplaced US policies which have destabilised regimes across West Asia and, thus, threatened the country’s energy security. The US, in turn, laments India’s unwillingness to cooperate in multinational interventions, both in and outside the neighbourhood. “New Delhi and Washington broadly share a strategic viewpoint,” Ayres noted, “but often conflict on near-term policy. Nowhere is this more the case than with Afghanistan, regional stability and the troubles in Pakistan”.

“For example,” she added, “it puzzles me why India has been so silent on the brutality of the Islamic State, and reluctant to take part in the coalition against it.”

Ganguly, for his part, said India needed a clearer vision of its geostrategic interests to the table. “There is now some willingness in the US to entertain a broader Indian role,” he said. “Modi should seize this opportunity and proffer some concrete ideas about what India is ready to do as the drawdown in Afghanistan nears.”

Finally, India-US engagement on the civil nuclear deal is stuck. The US is insisting on the right to visit Indian nuclear plants to verify that externally-sourced fuel is not being used for military purposes. India argues that its sovereign assurances, backed by technological means, are adequate.
“There’s been a lot of progress these past weeks,” says an official in the Ministry of External Affairs, “but we’ll have to wait and see how much paper we manage to sign off on”.

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