Indo-American relations
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The bilateral relations between the United States of America and the Republic of India, are at an all time high. "India in the 21st century is a natural partner of the United States because we are brothers in the cause of human liberty." said U.S. President George W. Bush in a speech given at a March 3, 2006 summit meeting in New Delhi. Though international affairs are very fragile, Indo-American relations will be friendly and improve further for atleast a few decades. According to a poll conducted by Hindustan Times, 70% Indians believe that relations have improved.[1] With President Bush's India visit and approval to share nuclear technology for civilian needs, India has become a regional counterweight to China. The United States has still to recognize India as a nuclear power, approve an India-Iran natural gas pipeline and support India's permanent membership of the UN Security Council.[2]
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[edit] History
The United States and India have had diplomatic relations only since recently. In the past, the two countries were not reasonable with each other. During 1961–1963 there was a promise to help set up a large steel mill in Bokaro that was withdrawn by the US. The 1965 and 1971 Indo-Pakistani wars did not help their relations. Then during the Cold War, the US asked for Pakistan’s help because India was on the side of the Soviet Union. Weapons were traded for military bases. After India disagreed to supporting the anti-Soviet operation in Afghanistan years later, India was left with few allies. For decades, India was neutral and relations were eventless. Not until 1997 was there any effort to improve relations with the United States.
Recently after Vajpayee became Prime Minister he authorised the exploding a nuclear device in Pokhran.the atomic bomb. This got the immediate attention of the US. This made the Clinton administration’s main focus India. Clinton and Vajpayee sent representatives of their own to meet the other, which helped begin the relations. Clinton sent Strobe Talbot, the ace of foreign policy and Vajpayee sent his foreign minister, Jaswant Singh. After a two-year period, in seven countries, these things were resolved.
First, India will never give up the nuclear weapons, but future weapon developments will be closely monitored. Second, India and the US will enhance their economic ties. Third, the UN Security Council will allow India to sit as a permanent member with rights and privileges. And lastly, the US partially accepted India’s offer for a strategic role for it in South Asia and the Indian Ocean. Then to cap it all off, President Clinton visited India in 2000, which basically transformed India-US relations. During the 9-11 terrorist attacks on the US, President Bush chose India as the country to control and police the Indian Ocean sea-lanes from the Suez to Singapore. The tsunami that occurred in December 2004 allowed the US and Indian navies to work with one another to help search and rescue and reconstruct the damaged lives and land. An Open Skies Agreement was made in April 2005. This helped enhance trade, tourism, and business by the increased number of flights. Air India purchased 68 US Boeing aircraft, which cost $8 billion.
Secretary of Defense Donald Rumsfeld and Secretary of State Condoleezza Rice have made recent visits to India as well. After Hurricane Katrina, India donated $5 million to the American Red Cross and sent 2 planeloads of relief supplies and materials to help. And most recently, President Bush made a visit on 1 March 2006 that helped expand the growing relations between India and the United States.
In the future, India and the US are working to form a strong partnership based on common values shared by two nations. They have each other’s respect for individual liberty, rule of law, and democracy.
[edit] Economic relations
Economic assistance is also an important factor in the Indo-U.S. relationship. It started as a post-World War II event. At first, the aid was confined to defense assistance that began after the Lend-Lease Act in March 1941. The United States sent $700 million to India while they were fighting off the British. After the War ended, the West European countries were attempting to rebuild, but they needed outside help. On 5 June 1947, George C. Marshall introduced a plan for the United States government to help rebuild the countries of Western Europe. This plan became known as the Marshall Plan and was put into practice in 1948. During the Cold War, the U.S. feared that communism would spread to the under developed countries of Asia. This fact motivated the creation of the Truman Doctrine of 1949, which pledged to assist these countries to fight hunger, poverty, desperation, and political instability. It also allowed the United States to form relationships with these countries and keep the Soviet Union from doing the same. There are several other motives behind the United States’ aid to India. The first motive is economic expansion. The United States is always looking for a way to expand the market for their exports. India serves as a way of disposing of U.S. surplus products, which prevents the growth of a possible recession in the economy. Also, if India buys its products, it requires larger production that leads to larger employment and income. The second motive of the United States’ aid is its need for raw materials from foreign countries, to strengthen the national defense, and its need to import foreign products. Many products that an average American uses everyday are not made in the United States and are usually cheaply imported from other countries.
The United States continues to be largest trading partner for India. India’s exports to the United States during 2003 totalled nearly $13.1 billion, led by export of apparel and household goods, diamonds, and jewellery. American exports to India were valued at $5 billion.[3]
The United States is also one of India’s largest direct investors. From the year 1991 to 2004, the stock of FDI inflow has increased from $11.3 million to $344.4 million, totaling $4132.8 million. This is a compound rate increase of 57.5% annually. Indian direct investments abroad were started in 1992. Indian corporations and registered partnership firms are allowed to invest in businesses up to 100% of their net worth. India’s largest outgoing investments are manufacturing, which account for 54.8% of the country’s foreign investments. The second largest are non-financial services (software development), which accounts for 35.4% of investments.
[edit] U.S. – India military relations
The U.S.-India defense relationship derives from a common belief in freedom, democracy, and the rule of law, and seeks to advance shared security interests. These interests include maintaining security and stability, defeating terrorism and violent religious extremism, preventing the spread of weapons of mass destruction and associated materials, data, and technologies and protecting the free flow of commerce via land, air and sea lanes.
As recent as March 2006, India and the United States has been working to improve and bring stability to the southern Asia region. Prior to this time, India wasn’t the least bit interested in chemical and nuclear warfare. The U.S. is only worried about one thing and that’s testing the bombs. There are many motives that are required to mention why India is in need of nuclear warfare. However, a wrong move by India may leave them with out one of their most influential trading partners, the United States. “The U.S. is India’s largest foreign investor and trading partner.” If India’s security concerns become too important then their economic relationship may falter. Having many regime and leadership changes, India is unsure which route to take. If the government believes that security is more essential than improving their already top national economy, this will lead to less spending in areas that have placed India among the top nations, overall. However, since India and the U.S. signed the 1994 Prevention of Proliferation Act, it would stall India’s efforts to gain that elite status among south Asia’s defensive nations.
[edit] Security concerns
“India’s national security concerns are based on its location, history and complex domestic economic, social and political situations.” Surrounded by nations with undemocratic governments, India views these countries as potential threats. Pleas from America have done nothing but reassure India that self defense is at its utmost importance. Pakistan and China, two regional neighbors to India, have had nuclear capabilities since 1962. This puts a burden on India to protect itself and its integrity with other elitist nations, particularly the U.S. During the 1980s, Pakistan and China traded, reviewed, and previewed each other’s nuclear plans. Meanwhile, India was transitioning to a democratic powerhouse, like the U.S. Boosting India’s Economy vs. Boosting National Defense.
The defense relations between the U.S. and India extend out as far as India’s unlimited want to enhance their economy and become a global player. However, something has to give. Either security concerns or economic concerns must be appointed. Since India is taking such an extreme approach in their effort to improve the national security, large dividends could be lost with powerful nations because India will lose its status as owning a superior economy. There is only so much money to go around. The World Bank has named India as one of its ten “big emerging markets”. India doesn’t want to lose their already stellar gross domestic product but technology, defense, and political ties are also the U.S.’s worries. Due to this, India fears that an unbalanced budget will occur.
India is the United States primary trading partner. They are both the world’s biggest democracies. India exports a large majority of its resources to the U.S. “India is South Asia’ key player and the U.S. basically controls the global arena.” Both nations share similar interests and nationwide goals. This makes for the perfect ‘team’.
[edit] U.S. – India Trade Policies
In July 2005, President George W. Bush and Indian Prime Minister Dr. Manmohan Singh created a new program called the Trade Policy Forum. It is run by a representative from each nation. The United States Trade Representative is Rob Portman and the Indian Commerce Secretary is Kamal Nath. The goal of the program is to increase bilateral trade which is a two-way trade deal and the flow of investments.
There are five main sub-divisions of the Trade Policy Forum which include: Agricultural Trade group- This group has three main objectives: agreeing on terms that will allow India to export mangoes to the United States, permitting India’s APEDA (Agricultural and Process Food Products Export Development Authority) to certify Indian products to the standards of the USDA, and executing regulation procedures for approving edible wax on fruit. Tariff and Non-Tariff Barriers group- Goals of the group include: agreeing that insecticides that are manufactures by United States companies can be sold throughout India. India had agreed to cut special regulations on trading carbonated drinks, many medicinal drugs, and lowering regulations on many imports that are not of agricultural nature. Both nations have agreed to discuss improved facets on the trade of Indian regulation requirements, jewelry, computer parts, motorcycles, fertilizer, and those tariffs that affect the American process of exporting boric acid.
The two nations have discussed matters such as those who wish to break into the accounting market, Indian companies gaining licenses for the telecommunications industry, and setting polices by the interaction of companies from both countries regarding new policies related to Indian media and broadcasting. This group has strived to exchange valuable information on recognizing different professional services offered by the two countries, discussing the movement and positioning of people in developing industries and assigning jobs to those people, continuation of talks in how India’s citizens can gain access into the market for financial servicing, and discussing the limitation of equities.
The two countries have had talks about the restriction of investments in industries such as financial services, insurance, and retail. Also, to take advantage of any initiatives in joint investments such as agricultural processing and the transportation industries. Both countries have decided to promote small business initiatives in both countries by allowing trade between them.
The majority of exports from the United States to India include: aviation equipment, engineering materials and machinery, instruments used in optical and medical sectors, fertilizers, and stones and metals.
Below are the percentages of traded items India to US increased by 21.12% to $6.94 billion.
- Diamonds & precious stones (25%)
- Textiles (29.01%)
- Iron & Steel (5.81%)
- Organic Chemicals (4.3%)
- Machinery (4.6%)
- Electrical Machinery (4.28%)
Major items of export from US to India: For the year 2006, figures are available up to the month of April. Merchandise exports from US to India increased by 20.09.26% to US $2.95 billion. Select major items with their percentage shares are given below
- Engineering goods & machinery (including electrical) (31.2%)
- Precious stones & metals (8.01%)
- Organic chemicals (4.98%)
- Optical instruments & equipment (7.33%)
- Aviation & aircraft ( 16.8%)
[edit] Works Cited
Blake, Jr., Robert O. "U.S.-India Relations: the Making of a Comprehensive Relationship." U.S. Embassy India. Army War College, Indore, India. 23 August 2004, 6 October 2006 <www.state.gov>.
"India - U.S. Economics Relations." Embassy of India - Washington DC. 8 October 2006 <www.indianembassy.org>.
Kronstadt, K. A. India-U.S. Relations. Library of Congress. 2006. 17–19. 8 October 2006.
Roy, Dr. P. C. Indo-U.S. Economic Relations. Rajouri Garden, New Delhi: Deep & Deep Publications, 1986. 73–125.
http://www.indianembassy.org/newsite/induspolAug06.asp
http://www.state.gov/p/sca/rls/rm/22615.htm
http://www.ustr.gov/assets/Document_Library/fact_sheets/2006/asset_upload_file830.pdf
http://www.fas.usda.gov/itp/us-india.asp
