MAINS 2016 CURRENT AFFAIRS GENERAL STUDIES 2 2. INDIA-USA RELATIONS

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1 MAINS 2016 CURRENT AFFAIRS GENERAL STUDIES 2 2. INDIA-USA RELATIONS 18/08/2016 In the present international scenario, with the overwhelming presence of United States of America as the sole surviving Super Power, it is important to analyse the ever-evolving Indo-US relations in the post-cold war international relations. INDIA-USA RELATIONS DURING THE COLD WAR ERA Immediately after independence, till the end of Cold War, and a decade after that, Indo-US relations did not mark any significant developments. Bilateral relations between the two could not develop properly, because of Cold War calculations that conditioned Indo-US relations. Initially, India s posture of non-alignment did not find favour in the US. America condemned non-alignment as immoral. Later, certain other issues cropped up which obstructed the natural growth of bilateral relations between the two. Moreover, India s recognition of Communist China in 1949, roping in of Pakistan into military alliances like Baghdad Pact ( ), SEATO (1954) and CENTO ( ) and subsequent US arms supply to Pakistan to contain Communism became major irritants in the Indo-US relations. The Korean crisis and India s refusal to endorse the US sponsored Uniting for Peace Resolution distance the two. The Indo-Russian Treaty of Friendship of 1971 further embittered the Indo-US relations. Again during the 1971 Bangladesh liberation war, relations reached a low point. The US supported Pakistan and even tried to negotiate a cease-fire through the UNSC. However, the Soviets vetoed it. The US even moved their 7th Fleet to the Bay of Bengal to create pressure on India. The Soviet Union had come to India s rescue and they sent their Fleets to Bay of Bengal to counter the US pressure. The 1974 Pokhran Nuclear explosion by India also distanced the two countries. But one point of consideration is that, despite such irritants, in the spheres of economic, culture and education, cooperation continued. The US also provided technical assistance and also supplied food grains to meet the scarcity of food. A Joint Commission was also established to explore possibilities of fostering cooperation in economic, commercial, scientific and technological, educational and cultural sectors. Bilateral relations suffered a setback in 1979 due to Soviet invasion of Afghanistan. India refused to rally behind the US and ascribe Soviet Union as an aggressor. India also was critical about US supply of arms sell to Pakistan. During the tenure of Ronald Reagan, bitterness increased due to difference over Diego Garcia and India wanted dismantling of the US base in Diego Garcia. India demanded establishment of Indian Ocean as a Zone of Peace. The US refused to supply nuclear fuel to Tarapur Atomic Power Station. Refusal of India to sign NPT and US intent on enforcement of Missile Technology Regime against India further added to bitterness. It was only during Rajiv Gandhi s tenure that little improvement could be perceived. He visited the United States in June 1985, and struck a rapport with President Ronald Reagan. He, however, took the opportunity and pointed out the lurking dangers of a rapidly nuclearizing Pakistan. INDIA-USA RELATIONS DURING THE POST-COLD WAR ERA In , the collapse of Soviet Union, the end of Cold War and the economic liberalization of India, the two countries looked afresh at their bilateral relations. During Narasimha Rao s tenure, therefore, despite several irritants both sides tried to move forward with their bilateral relations. Two countries held Joint Naval exercise in May Prime Minister Narasimha Rao paid an official week-long visit to the US in May 1994, which helped to strengthen ties and was followed by signing of several Memorandum of Understandings (MoUs). In 1995, following the visits by the US Defence and Commerce Secretaries several agreements were signed. However, US trade laws still affected India s export which again was a disturbing factor in Indo-US relations. Relations saw set back regarding the sale of F-16 aircrafts to Pakistan. Again NEO IAS , , Page 1

2 supply of nuclear fuel to Tarapur reactor suffered, cryogenic sales was hit, which created discomfort between the two. In 1998, relations totally took a reverse turn with the Pokhran II explosion and India s refusal to sign the CTBT during the tenure of Vajpayee Government. However, due to increased functioning of terrorists in Pakistan, the US stance towards India began to change and President Clinton visited India in March When President Bush assumed the office in 2001, despite several irritants did not stop searching for avenues for new relationship with India. Only after 9/11 attacks on the United States and the 13 December attack on the Indian Parliament that Indo-US relationship took a new turn as both pledged to fight against international terrorism. India and the US both agreed to foster military cooperation according to the Kickleighter proposals. However, differences over reforms of US, supply of F-16s to Pakistan, Trade negotiations, Cryogenic engine sales, nuclear sanctions, imposition of tariff restriction of India s textile exports and other issues persisted. Relations took off significantly in the In 1999, both India and USA entered into Bilateral Extradition Treaty (on Mutual Legal Assistance in Criminal Matters) and several defence cooperation deals. President Clinton visited India in March 2000, and Prime Minister Vajpayee visited the US in September. In 2001, the US lifted the nuclear sanctions. In 2002, a major milestone was achieved when Vajpayee and Bush met in New York. They identified sectors of cooperation like high technology, space research, civilian nuclear technology, economic, defence and also addressing various global issues. In 2002, National Security Strategy was agreed upon and in January 2004 President Bush announced Next Steps in Strategic Partnership (NSSP) with India. INDIA-US NUCLEAR DEAL The 123 Agreement signed between the United States of America and the Republic of India is known as the U.S. India Civil Nuclear Agreement or Indo-US nuclear deal. The framework for this agreement was a July 18, 2005, joint statement by then Indian Prime Minister Manmohan Singh and then U.S. President George W. Bush, under which India agreed to separate its civil and military nuclear facilities and to place all its civil nuclear facilities under International Atomic Energy Agency (IAEA) safeguards and, in exchange, the United States agreed to work toward full civil nuclear cooperation with India. That is the United States will facilitate India s access to global nuclear commerce, in return for India s commitment to play a major role in global non-proliferation efforts as well as harmonize its civilian nuclear programme with the norms of the nuclear non-proliferation regime. The deal was a defining moment for the non-proliferation regime, embodying its structural realignment wherein a perceived outlier was being assimilated into the system through a process that was seen by different sections as having the prospect of strengthening as well as unravelling it. Many Indian observers termed the deal as marking the country s return to the non-proliferation mainstream, even as some sections alleged a compromise of national interests by submitting a selfreliant programme to international scrutiny. On the other hand, critics across the globe questioned the privileged treatment to one country by transcending the NPT framework, which, they felt, could weaken the Treaty. Indo-US nuclear deal, was approved by the U.S. Congress, into law, now called the United States-India Nuclear Cooperation Approval and Non-proliferation Enhancement Act, on October 8, 2008 and was signed by India and US on October 10, The promise of participation in global nuclear trade, facilitated by the September 2008 Indiaspecific waiver from the guidelines of the Nuclear Suppliers Group (NSG), entailed three major outcomes for India: Uninterrupted flow of uranium for its reactors, Introduction of advanced reactor technologies to expand its nuclear energy programme. The strategic spin-off of gaining a seat at the high-tables of the non-proliferation regime. NEO IAS , , Page 2

3 UN SECURITY COUNCIL REFORMATION Recognizing India as a rising global power, the US Secretary of State, Hillary Clinton declared that the USA was definitely committed to consider India s bid for a permanent seat in the UNSC. U.S. President Barack Obama s affirmation in 2010 that the United States looks forward to a reformed UN Security Council that includes India as a permanent member was viewed as a major evolution in the U.S. position. Yet up to now, the United States has not clearly defined its position on the expansion of the United Nations Security Council, due to the fact that U.S. openness to India s hope for permanent membership on the council remains at a declaratory stage. INDIA S MEMBERSHIP IN THE FOUR EXPORT CONTROL REGIMES US President Obama expressed US support for India s membership to multilateral export control regimes like NSG, MTCR, the Australian Group (AG) and the Wassenaar Arrangement (WA) in a phased manner and removal of India s defence and space related entities from the US Entity List. US remained one of the main supporters India s Entry to MTCR and our NSG Bid. India Joined MTCR in 2016 marking India's first entry into any multilateral export control regime. But India s NSG bid failed due to adamant Chinese opposition. ECONOMIC COOPERATION As far as Indo-US economic relations are concerned, it started improving after The year 2000 witnessed the initiation of trade partnership between the two countries. On 21 March 2000, Prime Minister of India and President of United States released a document in the theme India-US Relations: A Vision for the 21st Century at New Delhi. Obviously, despite such remarkable steps, scholars point at the slow rate of progress as compared to progress of US-China trade. In 1991, the figure stood at US $5.91 billion, in 2000 US $14.35 billion, in 2004 US $ 37.1 billion, in 2008 US $43.4 billion and currently the figure stands at US $ 100 billion. US-China trade in the year has been to the tune of US $ 500 billion. Despite such sluggish pace of progress of Indo-US trade India seems to be lucrative destination of FDI and huge market of US exports and MNCs. IT sector is the major sector of cooperation between the two countries. However, outsourcing has been a serious problem and the domestic public opinion in USA is quite averse to outsourcing of jobs to India, China and elsewhere. In 2010 both countries to boost the bilateral trade in macroeconomic policy, financial sector and infrastructure financing launched a new Economic and Financial Partnership between India s Ministry of Finance and the Department of the Treasury in April Earlier in 2005, to promote real and meaningful cooperation in trade and investment a US-India Trade Policy Forum was set up followed by the establishment of a Private Sector Advisory Group (PSAG) in There are several dialogue mechanisms to strengthen bilateral engagement on economic and trade issues, including a Ministerial level Economic and Financial Partnership and a Ministerial Trade Policy Forum. India and U.S. are negotiating a Bilateral Investment Treaty (BIT). Both countries have committed to work through Trade Policy Forum to promote mutually attractive business/investment environment. There exists a Commercial Dialogue which provides the framework for both Governments and the private sector to collaborate on trade and commercial issues of mutual interest with a view to facilitating trade and investment opportunities across various sectors. For greater involvement of private sector in discussion on issues involving trade and investment, the bilateral India-US CEO's Forum was reconstituted in During Prime Minister Modi's visit in September 2014, it was decided to establish an India- US Investment initiative, with a special focus on facilitating FDI, capital market development and financing of infrastructure. The newly established US-India Infrastructure Collaboration Platform seeks to deploy cutting edge U.S technologies to meet India s infrastructure needs. US firms will be lead partners in developing Allahabad, Ajmer and Vishakhapatnam as Smart Cities. USAID (United States Agency for International Development) will serve as knowledge partner for the Urban India Water, Sanitation and Hygiene (WASH) alliance with to help NEO IAS , , Page 3

4 leverage business and civil society (Gates Foundation) to facilitate access to clean water, hygiene and sanitation in 500 Indian cities. THE RECENT DOUBLING OF H1B AND L1 VISA FEES H1B and L1 visas are temporary work visas for skilled professionals. H-1B visa is popular for companies wishing to bring in staff for short-term assignment in the US. U.S. needs 120,000 new computer engineers annually but American universities only produce one-third of that number. Hence, the need for the H-1B programme, which allows the U.S. to fill the Science, Technology, Engineering, Mathematics (STEM) gap. India is the largest user of H1B visas (67.4 per cent of the total 161,369 H1B visas issued in FY14 went to Indians) and is also among the largest users of L1 visas (Indians received 28.2 per cent of the 71,513 L1 visas issued in FY14). Two US lawmakers has introduced in the House of Representatives a legislation, which if passed by the Congress would prevent Indian companies from hiring IT professionals on H-1B and L1 work visas. The H-1B and L-1 Visa Reform Act of 2016 is seeking to double H-1B and L1 visa fees for companies if they employ more than 50 people and more than 50% of their employees are H- 1B and L-1 visa holders. Since the revenue model of majority of big Indian IT companies is heavily dependent on H-1B and L1 visas in the US, such a bill is likely to have a major impact, if not sound a death knell, on their businesses. National Association of Software and Services Companies (NASSCOM) had termed America s decision to double the fees for certain categories of H1B and L1 visas as discriminatory because it will mainly impact Indian IT firms. Nasscom said the decision s financial implications for the Indian technology sector would be around $400 million a year. Indian IT companies contributed $22.5 billion in taxes to the U.S. Treasury between 2011 and Plus, they supported over 411,000 jobs in the U.S., including 300,000 jobs for U.S. citizens and permanent residents during that time. More importantly, those jobs make U.S. companies more efficient so that they can compete globally. During , India s export of computer services and IT/ITES services was around $146 billion, of which exports to the U.S. and Canada accounted for nearly 60 per cent. India will soon schedule discussions with the U.S. to raise its concerns over the Obama administration s recent decision to hike visa fees. India will also consider retaliatory measures and even explore the possibility of dragging the U.S. to the World Trade Organisation s dispute settlement body, but only if talks fail to amicably resolve the issue. The fee thus collected, likely to be over $1 billion every year, will be utilised to finance a biometric tracking system and healthcare requirements of the 9/11 terror attack victims. The firms mostly affected by the 50/50 rule are those from the IT sector, the largest users of the H1B and L1 visas. However to successfully challenge the fee increase before the WTO panel, India will have to first establish how Indian companies are more affected than those from other countries. But before any action at the WTO, discussions on the issue will be held shortly over digital videoconference between both governments. These discussions will be part of the high-level India-US Services Working Group meetings. Pointing out that U.S. visa fee increases hurt India-US services trade, the Indian Commerce Ministry has been insisting that all visa-related issues should be part of discussions on bilateral services trade, the India-US Trade Policy Forum (or TPF, the premier bilateral platform to discuss and resolve bilateral trade and investment issues) and the India-US Strategic and Commercial Dialogue (S&CD, the primary forum to discuss issues of mutual interest on regional security, trade, economic cooperation, defence and climate challenges). The U.S. Commerce Department and the U.S. Trade Representative have informed that visa-related matters should be kept out of the TPF, S&CD and services discussions as, according to the U.S., NEO IAS , , Page 4

5 they are security-related issues dealt by the Department of State and Department of Homeland Security. India is looking to resolve the issue before the term of the Obama administration ends. There is a myth that high-skilled workers on H-1Bs earn less than and as a result, displace their native-born counterparts. In fact, high-skilled IT workers on temporary visas earn competitive salaries and cost their employers as much or more than their American counterparts. The free movement of high-skilled workers plagues the U.S.-India bilateral relationship unlike any other issue, and it can be fixed with pragmatic reforms. Innovation and new technologies rests on a global, mobile workforce. PRIME MINISTER S RECENT VISIT TO SILICON VALLEY Prime Minister Narendra Modi s visit to Silicon Valley will be instrumental in enhancing foreign investment and is a shot in the arm for the country s manufacturing sector. Modi s visit to the Silicon Valley in the US was the first by an Indian Prime Minister in more than three decades. Modi s Make-in-India will strengthen by this visit. This visit will benefits to India in achieving programs like Digital India which is an enterprise for India s transformation on a scale that is, perhaps, unmatched in human history. Digital India is an ambitious programme of the Government of India to empower Indians through the electronic and online media, to create a countrywide digital infrastructure to serve the people of the country. The Digital India platform will immensely help in ease of doing business and bringing in necessary transparency in the Indian system and industry would contribute nearly 4.5 lakh crore to the initiative. This programme offers number of new possibilities for Indo-US collaboration including a new level of engagement between the government, private sector and citizens. In order to facilitate the participation of industry, small & large, from both countries in the growing defence business in India, is launching a private sector industry think-tank, in partnership with its counterpart industry bodies. The mandate of the think-tank will be to clear the maze of procedures and facilitate B2B interactions. The platform will provide a transparent mechanism for industry both public and private to engage in a dialogue to nurture technology incubation, industry academia interface and allow technology to be an enabler to help the Indian defence companies understand opportunities to become a part of the global supply chains, licensing and export control norms and help to create a conducive offset delivery mechanism for the development of the local industry. DEFENCE RELATIONS DEFENCE COOPERATION AGREEMENT 2015 India s formal cooperation with US in the area of defence started in January 1995, when the Agreed Minute on Defence Relations between the two nations was signed. This led to the establishment of a Defence Policy Group (DPG). Defence Policy Group worked as apex institutional dialogue mechanism for Defence Cooperation between India and United States. In June 2005, a New Defence Framework Agreement for the U.S.-India Defence Relationship was signed. This document focused on defence trade, joint exercises, personnel exchanges, collaboration and cooperation in maritime security and counter piracy operations, exchanges between each of the Services, etc. In 2015, India and United States have renewed this Defence Framework Agreement for the next 10 years with the emphasis on following aspects. DEFENCE TECHNOLOGY AND TRADE INITIATIVE (DTTI) The DTTI seeks to deepen defence cooperation between India and the United States by elevating dialogue on cooperative research & development and defence trade to the highest levels of government. NEO IAS , , Page 5

6 As a key outcome from President Obama's January 2015 visit to India, the United States and India decided to pursue four pathfinder DTTI projects for possible co-development and/or co-production, as well as cooperation on aircraft carriers and jet engine technology. Since that time, the United States and India have reached agreement to implement two government-to-government DTTI projects: Mobile Electric Hybrid Power sources and Next Generation Protective Ensembles for chem-bio protection. MARITIME SECURITY As strategic interests continue to converge in the Indian Ocean and Asia-Pacific regions, both the countries have highlighted maritime security as a key area of cooperation. Naval engagements, such as the bilateral MALABAR exercise, improve the cooperation of U.S. and Indian maritime forces and contribute to both sides' ability to counter threats at sea, from piracy to violent extremism. These engagements also present opportunities to engage with other partners. Joint Strategic Vision Statement for the Asia-Pacific and Indian Ocean Region 2015: which called for freedom of navigation and over-flight throughout the Asia-Pacific Region. MALABAR NAVAL EXERCISE Malabar Naval Exercise is a trilateral naval exercise involving the United States, Japan and India as permanent partners. Originally a bilateral exercise between India and the U.S., Japan became a permanent partner in Past non-permanent participants are Australia and Singapore. COUNTER TERRORISM INITIATIVE The US President, Barack Obama acclaimed India as an indispensable partner as both nations would strive to build a future of security and prosperity for all nations. Thus, a new phase of strategic partnership between India and USA took off. In November 2009 only, India and US signed the India-US Counter Terrorism Initiative which aims at strengthening cooperation to counter terrorism. The United States Pakistan policy remains a problematic issue. The objective of the two countries to advance regional security together is impeded by the continuation of U.S. military aid to Pakistan. This is done through presidential waivers to overcome the provisions of the Kerry-Lugar legislation, which requires Pakistan to act verifiably against terrorist groups on its soil before U.S. aid can be released. Furthermore, the United States does not consider the Taliban as a terrorist organization. The U.S. is, in reality, engaged in an effort to accommodate the Taliban politically in Afghanistan in a Pakistanbrokered deal, which is a risk to India s security. It is thus difficult to see how, in these circumstances, the counter-terrorism partnership between India and the U.S. can be a defining one for the 21st century. U.S ASIA PIVOT THEORY Since the Obama administration announced a "pivot" or "rebalancing" to Asia, the military components of this larger strategic shift have quite understandably dominated much of the public debate. At their core, the military dimensions of the rebalancing to Asia are about maintaining conventional deterrence in the face of Chinese military modernization. This is a major problem because the Chinese, among others, are embarking on a systematic campaign that threatens to undermine American conventional deterrence. The Chinese are building a robust network of what are termed anti-access/area-denial (A2/AD) technologies that essentially threaten to keep American forces at arms' length through a variety of means designed to attack American forces, networks, satellites, and communications. While these technologies may be insufficient to produce a Chinese victory in a protracted engagement against the United States, they could conceivably produce a Chinese victory against local NEO IAS , , Page 6

7 American and allied forces in the early stages of a conflict, which China would seek to limit and conclude on favourable terms. The rebalancing to Asia is extremely important for two major reasons. To begin with, an effective military presence in the Asia-Pacific is the best way to maintain conventional deterrence and thereby preserve peace. Second, if the unthinkable should happen-as it did in 1941, when a rising Asian superpower launched a risky preventative strike against American and allied interests in hopes of a quick victory-an effective buildup could help weather the initial strike and ensure an eventual American triumph. US ASIA PIVOT IMPACT ON INDIA The US-India strategic partnership has been reaffirmed in the Obama administration s rebalancing or pivot to Asia. The Indian Navy will be important in helping to achieve the US strategic rebalance to Asia and central in attaining objectives in securing the Indian Ocean Region (IOR). At present, the Indian Navy is able to help provide security with anti-piracy and anti-submarine patrols, especially in the sea lanes running from the Gulf of Aden to the Strait of Malacca. Currently, there are debates about how capable and modern the Navy is in regard to doctrine, warships and weaponry. There are also concerns about where and if the Navy fits in India s unwritten national security strategy. The current Indian government views the development of interoperability as the path to a possible alliance, which would impinge on India s strategic autonomy. The strategy requires a long-term partnership with India, as an economic and security anchor in the region. Priorities for both countries vary, particularly in regard to China, leading to divisions within each country as well. Many in India do not want their nation to take part in any Sino-American cold war or conflict and accuse the US of ignoring shenanigans from Pakistan. Indians are also wary about US plans to withdraw troops from Afghanistan and the likely resulting chaos. Both countries have conservatives who oppose reliance on partnerships and agreements that could constrain their military. Indian strategists worry that Washington seeks to draw New Delhi into more active opposition to Chinese ambitions in the South China Sea or elsewhere in East Asia, and accuse the United States of wilful blindness toward Chinese intrigues in South Asia more directly threatening Indian interests-such as Beijing s activities in Pakistan, including Chinese construction on the port of Gwadar and most especially Chinese support for Pakistan s nuclear activities, but also alleged Chinese inroads in Myanmar, Bangladesh, Nepal and Sri Lanka. INDIA-US-CHINA TRIANGLE There are two defining characteristics of the security environment in the Asia-Pacific region after the end of Cold War: a) The United States has become the only superpower in the world today. It is also the most important external power in Asia, and plays a key role in South Asian security. b) China and India is emerging Asian powers. Each has a population of over a billion; possess nuclear weapons and numbers among the fastest growing economies in the world. Relations among these three countries will undoubtedly dominate the course of events within the Asia Pacific region in the 21st century. Their interactions and how they deal with the triangle will, to a large extent, influence future peace and stability in the region. China and India, the two largest developing countries in the world, have a commonality of history, culture, economy and social characteristics, and profiles of development. Each applies itself to internal economic development, carries out an independent foreign policy and strives for a peaceful international environment. China is a big power in East Asia while NEO IAS , , Page 7

8 India is a big power in South Asia. Each has advantages and influence in their respective regions. However, they are not world powers that have global influence. For America, China and India, at one end, are two emerging markets offering economic benefits and developing opportunities. At the other end, China and India are also two transitional countries demonstrating uncertainty, from the United States strategic point of view. Washington fears most is the possibility of China and India, with Russia, forming an alliance based on a common understanding and interests of a new international political and economic order and a multipolar world. The United States and India is the largest democracies in the world, share common political values and strategic interests. Their common geo-political, economic and socio-political interests are advancing a co-operative agenda (which their differences over nuclear proliferation may not be able to halt). With the US-India relationship moving forward over the past two years, the two countries have developed a comprehensive co-operative framework covering democracy, economy and security. The United States now pays more attention to India s role as the largest democracy than it did before. India s continuous and fast-growing economy, especially its information technology industry, attracts great investment from transnational corporations based in America. In the security arena, the U.S. leadership has gradually begun to forget India s nuclear tests and has come to recognize India as a de facto nuclear power, as also its preponderant position in South Asia. With India s support for America s unilateral action in missile defence, the US and India moved from divergence to co-operation in the field of non-proliferation. After 9/11, counterterrorism has been a new field of strategic co-operation for U.S. and India. In a related development, Pakistan turns out to be less of an obstacle for the US-India framework of relationships. China and the United States, the largest developing and developed countries respectively, also have comprehensive common strategic interests. Besides large potential economic cooperation, they also share broad interests in other fields such as regional stability and the role and reform of the United Nations. There might be emergence of a "soft balance of power" system among the three countries. At the other end, it is possible for China, the US and India to establish a relatively harmonious relationship if they can seek out common views and interests, and push their differences aside to deal with bilateral and trilateral relations within a strategic perspective. PREVIOUS YEARS QUESTIONS (MAINS) 1. Discuss the likely negative impact of the protectionist measures proposed by the US on India s software industry. (2012) 2. Comment on the reasons for the recent hike in visa processing fees for certain categories of US visas. What is the likely impact of this hike on India? (2010) 3. Discuss the Indo-US knowledge initiative in Agriculture, (2009) 4. Comment: India-US as strategic partners. (2009) 5. Write about Indo-US military cooperation. (2006) 6. What is the strategic partnership between India and Unites States of America? What are its implications for both the partners? (2006) 7. Discuss the major issues in Indo-Us relations in recent times. (2003) MODEL QUESTION 1. Increasing strategic engagements between India and United States have its pros and cons. Critically examine. NEO IAS , , Page 8