Obama and Modi set a new course

Obama's visit to New Delhi is set to provide the US-India relationship with a fresh sense of purpose.

After several years of drift, relations between US and India are regaining a sense of purpose. American President Barack Obama will be in New Delhi next week as the chief guest at India’s Republic Day celebrations. If several major agreements result from the visit as is expected, much of the credit should go to India’s Prime Minister, Narendra Modi, who in just eight months has reoriented Indian foreign policy.

Mr Modi showed his intent during a visit to Washington in September. While there, he signed a joint US-India statement outlining the countries’ shared interest in maintaining stability in the South China Sea. It didn’t matter that the Chinese got annoyed.

Then came November’s East Asia Summit in Burma. Mr Modi’s government had earlier scuttled the World Trade Organization’s nearly completed Trade Facilitation Agreement over farm subsidies, but in Burma he signed a pact with the US extending the agreement’s so-called ‘peace clause’ protecting India’s food procurement and subsidy program. India was also able to reassure the US that it was not opposed to trade facilitation and was in fact on course to implement it. For that, Mr Obama commended Mr Modi’s ‘personal leadership’.

Inviting Mr Obama to this year’s Republic Day celebrations demonstrates Mr Modi’s intent to take bilateral relations a notch higher. Such invitations are laden with political symbolism. Last year, Japan’s Prime Minister Shinzo Abe was the invitee, underscoring the strategic transformation in New Delhi-Tokyo ties. No US president, however, has ever before attended.

India’s left-liberal political establishment remains dissatisfied with Mr Modi’s diplomatic approach. India’s longest-ruling Congress Party has maintained that India’s foreign-policy establishment can secure Indian interests only by working within the rubric of ‘non-alignment’. When some of India’s leading foreign-policy thinkers came up with a ‘new’ strategy two years ago, they titled it ‘Non-Alignment 2.0’.

The Modi government breaks with such thinking. Where non-alignment led previous governments to play down or overlook shared interests with important partners -- as was evident in New Delhi’s marginalization of Washington in the past few years -- Mr Modi focuses on affirming India’s vital partnerships. Nearly 30 years after the last visit by one of its prime ministers, India last year reached out to Australia at the highest levels to underscore the fellow democracy’s importance as a strategic partner. New Delhi is also now warmly responding to Israel’s desire for open relations, with Mr Modi meeting his Israeli counterpart Benjamin Netanyahu on the margins of the United Nations General Assembly in September and holding several other high-level visits over the last few months.

India and the US saw bilateral trade increase five-fold between 2001 and 2014. Given that Messrs Obama and Modi last September pledged to repeat that feat, economic issues will likely dominate the president’s visit. In recent weeks, Mr Modi’s government has moved on a range of reforms: enacting a uniform nationwide goods-and-services tax, changing land-acquisition laws, amending archaic labour laws, cutting wasteful subsidies on fuel and food and lifting caps on foreign direct investment in sectors including insurance, defence and e-commerce. It has also initiated reforms aimed at boosting manufacturing and encouraging capital investment. A US-India bilateral investment treaty is a likely next step that the two sides are trying to conclude during Obama’s trip.

There are also possibilities for cooperation in matters of defence. Last year Messrs Obama and Modi renewed the 2005 New Framework on Defence -- which had ushered in a new era in bilateral defense cooperation -- and expanded its scope by declaring partnerships on issues including “technology transfers, trade, research, co-production and co-development”.

Mr Modi’s arrival in office last year gave new momentum to the India-US Defense Trade and Technology Initiative, originally launched in 2012, to promote technological collaboration and co-development of critical defence systems ranging from anti-tank missiles to launch systems for aircraft carriers.

Regional security cooperation between Washington and New Delhi is also likely to expand. The Modi government favours India’s participation in the campaign against Islamic State. If Mr Modi follows through, it would mark a major shift in New Delhi’s worldview, as India has long resisted US entreaties to participate in missions in Middle East conflict zones. India is also looking for closer academic collaboration with the US, with a special focus on skills development.

Mr Modi has made his intentions clear ever since he took office. It is now up to Mr Obama to help him reshape the contours of what the president himself has described as “the defining partnership of the 21st century”. In his final two years in office, Mr Obama can start by making India a priority and galvanize American bureaucracy to work with New Delhi on achieving some concrete deliverables on defence, trade, human resources and regional security. At a time when Mr Obama is short of successes on the foreign policy front, getting India right could just be his best legacy.

Mr Pant is professor of defence studies in King’s College London.

InvestSMART FORUM: Come and meet the team

We're loading up the van and going on tour from April to June, with events on the NSW central & north coast, the QLD mid-north coast and in Perth, Adelaide, Melbourne, Sydney and Canberra. Come and meet the team and take home simple strategies that you can use to build an investment portfolio to weather any storm. Book your spot here.

Want access to our latest research and new buy ideas?

Start a free 15 day trial and gain access to our research, recommendations and market-beating model portfolios.

Sign up for free

Related Articles