INDIA – USA

INDIA – USA

Current Relations

1. Economic
   • Bilateral trade: $119.42 billion (FY22) [During 2021-22, India’s two-way commerce with China aggregated at $115.42 billion]
     • Export to USA: Exports to the U.S. from India increased to $76.11 billion in 2021-22 from $51.62 billion in the previous fiscal year.
     • Import from the USA: Imports to India from the USA rose to $43.31 billion in 2021-22 from about $29 billion in the previous fiscal year.
   • Trade Relations:
     • USA is the biggest source of Indian exports
     • USA is the largest trade partner of India
     • Trade Surplus of $33 billion
   • FDI: USA replaced Mauritius as the second-largest source of FDI into India during 2020-21 with inflows of USD 13.82 billion, according to government data.
   • STA status to India: It exempts specific licenses on Indian exports

1. Strategic
   • Defence acquisition from US: $13 billion
   • Defence Technology and Trade Initiative (DTTI): It simplifies technology transfer policies
   • LEMOA agreement: Agreement for mutual logistics support
   • BECA agreement: Access to American geospatial intelligence
   • COMCASA agreement: Communications and security agreement
   • QUAD: Safe and secure Indo-Pacific; it has also been upgraded to an annual summit-level meeting between the heads of each state.
   • Military exercises: Yudh Abhyas, Tiger Triumph, Malabar

• Top 5 Arms exporter to India
• ISRO-NASA: NISAR project collaboration
• Formal Mechanism: 2+2 Ministerial Dialogue between the Defence minister and External affairs ministers of both nations

1. Security/Energy and Others
   • 48.2 million barrels of U.S. crude oil imported (2018)
   • Shale gas -> India first country in Asia to import US Shale
   • 10-year defence framework agreement -> enhance bilateral security
2. Cultural
   • Namaste Trump & Howdy Modi tour events
   • 2 lakh Indian students in the US
   • Tourism
   • Yoga -> World Yoga Day
   • Diaspora -> Indian lobby in American politics
3. Multilateral
   
   • G20
   • QUAD
   • East Asia Summit
   • FATF
     

Importance/Benefits

1. Economic Importance
   • Market Access: USA is currently one of the biggest markets for Indian Goods, thus it is extremely attractive for both industry as well as potential service investments.
     • Example: The Indian Diaspora played a vital role in sending COVID-related supplies during the second wave from the US.
   • Connectivity: High flight connectivity and travel ease
   • Indian Students: Indian students comprise a large proportion of foreign students in the US.

1. Science and Technology
   • NISAR: The ISRO and NASA are working together to realize a joint microwave remote sensing satellite for Earth observation, named NISAR.
   • Clean Energy: Prime Minister Manmohan Singh and President Barack Obama launched the U.S.-India Partnership to Advance Clean Energy (PACE) under the U.S.-India Memorandum of Understanding to enhance cooperation on energy security, energy efficiency, clean energy, and climate change.
   • USA-SERB: In 2013, the U.S. signed an agreement with SERB to launch a new jointly funded collaborative research program on hypertension. DST and NSF are discussing plans to partner through NSF’s Graduate Research Opportunities Worldwide.
   • Indo-USA S&T Fund: The United States and the Indian Department of Science & Technology (DST) endowed the India-U.S. Science & Technology Forum (IUSSTF) in 2000 with matching funds to facilitate mutually beneficial bilateral cooperation in science, engineering, and health.
   • Space Cooperation: India and the U.S. have a long history of cooperation in the civil space arena in Earth Observation, Satellite Navigation, Space Science, and Exploration.

Concerns/Issues in the Indo-US Relationship

1. Economic

• Trade Barriers: The US has often criticized India at the WTO for setting protective trade barriers and curbing American access to Indian markets.
• Low-intensity Trade War: The two countries are locked in a ‘low-intensity trade war’ through the imposition of tariffs, restricting trade. The United States has longstanding concerns over India’s tariff regime, especially in agriculture.
  • Example: India opposes the continued U.S. steel and aluminum tariffs applied since 2018.
• No GSP: The US withdrew the Generalised System of Preference, which made many Indian products liable to entry duties by the US.
• Immigration: The US has frequently initiated actions to curb the number of H1B visas to Indian professionals and is also reviewing the norms guiding them.
  • Data: The number of immigrants under the H1-B visa program holding high-tech jobs dropped by 9% in the United States, the highest drop in a decade.
• Absence of a Totalization Agreement: The absence of this agreement leads to a duplication of social security taxation in both nations.
• Farm Subsidies: India has refused to give access to American agricultural products owing to the higher subsidies given to them, leading to lower prices compared to Indian products.
• ‘Special 301’: India is on the watch list for IP framework compliance, with the US claiming that India is largely non-compliant with global Intellectual Property Rights frameworks.
• IPR Issues: The main divergences are in pharma patents, data flows, e-commerce, and regulatory precision.
  • Example: In pharma, Americans want long-term protection to monetize and recoup investments, whereas Indians want lower costs and greater access.
• Indian Restrictions: India has frequently restricted American exports, violating WTO norms.
  • Example: India had lost a case at the WTO in 2015, filed by the US against restrictive imports of American poultry products.

2. Strategic

• Russian Arm Imports: The US has expressed particular concern regarding new streams of arms like the S-400 air defense system, as these purchases fuel Russian power.
  • Example: The Ukraine situation has the potential to significantly reduce India’s scope to negotiate the matter with the USA.

• Russia-USA relations: Since the beginning of the Russia-Ukraine war, India has been having a hard time trying to balance its relations with the USA as well as with Russia.
  • Example: Since the war in Ukraine began, India has abstained from various procedural votes relating to the conflict at the UNSC.
• Indian Hesitancy to full integration: India remains reluctant to become fully plugged into US defense systems due to India’s longstanding commitment to non-alignment (and its post-Cold War variants of strategic autonomy/Omni- or multi-alignment).
• Ukraine: India has chosen to take a neutral, pro-deliberative stance on the Ukraine-Russia-NATO issue. It has also abstained from a resolution led by NATO and the US in the UN.
• US Foreign Policy: American politics around Russia and Iran creates issues for India’s trade with these nations.
• Aid to Pakistan: The US also has arms shipments to Pakistan as well as aid to fight terrorism; frequently, these funds are diverted against Indian interests.
• Aatmanirbhar Bharat: The mandate of this scheme seeks to reduce import dependence on the US and may cause issues in the relationship.
• COVID Related: US companies have not been willing to waive off IP regulation of vaccine formulas needed by India.
• Higher Market Access: The US wants higher FDI caps in the Indian defense sector.
• Chinese dependence for Pharma ingredients: 70% of APIs for Pharma products come from China, so there is a need to start seeking US-based APIs.

India-US Healthcare Cooperation

1. American Aid: Over the last 20 years, US foreign assistance to India has exceeded $2.8 billion, including more than $1.4 billion for healthcare.
   • Example: 25,000 pneumonia deaths and 14,000 diarrhea deaths were prevented through USAID support.
2. Tuberculosis: The United States and India have worked together to fight tuberculosis (TB) through improved diagnosis, treatment, and prevention.
3. HIV/AIDS: The US and India have worked together to reduce new HIV infections by 37 percent between 2010 and 2019.
4. Capacity Building: The US and WHO have supported initiatives at the District, State, and National levels to build frontline disease detection capacity.
5. Family Planning: USAID has strengthened family planning service provision and expanded the range of family planning methods available.

US Support to India during COVID

• Oxygen Supplies: Through production units, oxygen cylinders, and concentrators.
• Personal Protective Equipment: 15 million N95 masks to protect both patients and Indian healthcare personnel.
• Vaccine-Manufacturing Supplies: The US has sent AstraZeneca manufacturing supplies to India, allowing India to make over 20 million doses of the COVID-19 vaccine.
• Rapid Diagnostic Tests (RDTs): The US sent 1 million rapid diagnostic tests that provide reliable results in less than 15 minutes.
• Therapeutics: The first tranche of a planned 20,000 treatment courses of the antiviral drug remdesivir to help treat hospitalized patients.
• Augmenting Domestic Facilities: Partnered with more than 1,000 Indian healthcare facilities to strengthen preparedness and training.
• Awareness: Launched joint public messaging with UNICEF on COVID prevention that has reached more than 84 million people.

• Public Health Assistance: US CDC experts will work hand-in-hand with India’s experts in various areas related to prevention and disease control.

Way Forward

• Strategic Autonomy: India must continue to maintain its strategic autonomy even in affairs where the USA wants Indian support; all actions must be taken first with India’s view and then that of India’s partners.
• Strengthening Global Democracy: India and the US need to work together to strengthen the global governance regime and the institutions.
• Formalizing Mechanisms: Informal mechanisms like the QUAD must be formalized to show a clear mandate.
• Blue Dot Network: India can consider joining the QUAD nations in this initiative to aid in better certification of transparency and infrastructure development.
• Cyber Security: Both nations must work on data standardization and provide clarity on data protection norms to enable efficient data sharing.
• Defence Co-Production: India wants co-development and co-production of defence technologies to augment its domestic capabilities.
• Preventive Health Cooperation: Cooperation on preventive services, which are currently weak in India, could help lead to early diagnosis and intervention.

The U.S.-India partnership is founded on a shared commitment to freedom, democratic principles, equal treatment of all citizens, human rights, and the rule of law. It appears highly likely that in strategic, political, security, defence, and economic terms, relations between India and the USA will continue their upward trajectory.