Story Of The Week

Howdy, Modi!

22nd September saw the bonhomie between the world’s biggest and the world’s oldest democracies, when leaders Donald Trump and Narendra Modi, walked together to address the huge gathering of the Indian diaspora at Houston. Apart from the bilateral talks with Trump, Modi also appeared at UN Climate Action Summit and UN General Assembly, but this is the event that gathered the most attention.

Why “Howdy, Modi” became so significant?

There is a reason why this event was so well received by the people of both the nations. US President Donald trump, in his speech at Houston, said that India is investing like never-before in the United States and it is reciprocal since US is doing the same thing in India. Both the countries are deepening their ties with each other due to a myriad of reasons.

Commonalities:

  • Both the countries share the same set of values in terms of laws devised and democracy offered to its citizens
  • The countries make sure that Indo-Pacific region stands as a region of peace, prosperity and stability
  • They fight against terrorism in various countries such as Afghanistan and Pakistan

Economic relations:

  • The quantum of trade between India and the US is increasing year-on-year. The total bilateral trade between the countries rose from $126 billion in 2017 to a thumping $142 billion, a 12.6% increase
  • In the year 2018, India purchased 48.2 million barrels of oil from the US, which was a significant increase from the previous year
  • The total number of Indian students enrolled in US colleges has contributed over $7 billion to the country. The number of students has more than doubled in the past 10 years from 81,000 in 2008 to 1,96,000 in 2018
  • Indians working in the US have a strong contribution to the economy of the country. This was unambiguous from the fact that it became one of the key parameters that came under the purview of the US government when they formulated various immigration policies
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Source: The Economic Times

International representation:

  • India and the US closely cooperate in many multilateral organizations such as United Nations(UN), G-20, Association of South-East Asian Nations (ASEAN), World Bank, the International Monetary Fund (IMF) and World Trade Organisation (WTO)
  • Also, US supports India’s entry into United Nations Security Council as a permanent member

Security:

  • When it comes to China’s increasing influence in the South China Sea, both hold a similar stance. USA does not want China’s hold to increase in the region and seeks India’s support to counter them.
  • Another common ground between the two nations is terrorism. Where US is facing the brunt of terrorism in Afghanistan, India faces the same from Pakistan. That is the reason why both the nations have begun to support each other in their fight against radical Islamic separatist groups. This was something which Trump even emphasised in the “Howdy, Modi event”. He spoke about bolstering India-Us security relations by entering into several defence deals. 

However, there are a lot of other factors at play, which make this relationship complex. 

Despite the bonhomie displayed by the two leaders, the “Howdy, Modi” event concluded without a modest trade deal. The presence of India’s Commerce minister, Piyush Goyal, for discussions with US Trade Representative, Robert Lighthizer, had raised the expectations that India and the US are close to finalising a limited trade package. But the same did not materialise.

Tensions between the two superpowers:

  • The Iran Factor: Increasing tensions between the US and Iran puts India in a tough spot. Due to the mounting pressure from US, India has had to reduce its oil purchases from Iran substantially. From being its second largest supplier in 2006, Iran became India’s seventh largest supplier by the end of 2013-14. Any further cut would not be good for India as buying Iran oil is more lucrative for Indian refineries. This is because of the 90 days of credit purchases and cheaper freight, an offer not provided by other substitute suppliers. Thus, India cannot afford to put its ties with Iran at risk, given the strategic significance of this relation. 
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    Source: Mint

     

  • Trade talks: Early this June, Trump had terminated the beneficiary status given to India under the Generalized System of Preferences (GSP) scheme. The reason given by Trump for the same was that India has not assured the US an equitable and reasonable access to its markets.  This was expected to be renegotiated in their current meeting at “Howdy, Modi”. But as per the analysts, the talks have broken down for the time being after US had made asymmetrical demands for market access in India. Whole lot of tariff reductions on agricultural products, dairy products, medical devices, information and technology products have been sought by them. Additionally, the removal of duties India had imposed in retaliation on aluminium and steel products under Section 232 and changes to e-commerce laws, including access to cloud computing and storing of data, have also been demanded. Given this long list of demands that the US has delivered to India, it could become tough for India to negotiate a bilateral trade agreement. 
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Source: The Economic Times

  • Environment: This has been another area of contention between the US and India, When US came out of Paris Climate Agreement last year, it blamed India and China, saying that they are the ones benefiting from the agreement and it was unfair to the US. India too has been vocal in raising their concerns on the global platforms, that countries like the US and Europe who have contributed a lot to global warming, should be held accountable. 

In Conclusion

With several issues at play between the two countries, the relationship is getting better and stronger due to the strategic importance the two nations hold in the geopolitical sphere. As foreign policy experts say, when two nations develop deeper ties, conflicts do arise, but the nations must overcome the conflicts by mutual understanding. India-US relation is not just significant to the national interest of these nations but also for the world at large to attain peace and prosperity.

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