international analysis and commentary

China, climate and convergence: the new India-US relationship

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The standard book on the India-United States relationship, by the former US diplomat Dennis Kux, was titled “Estranged Democracies”. In a slow process going back to the Bill Clinton administration, however, the two countries have been working to address and get past accumulated differences and grievances. Today, the two are the closest they have been since the last apogee of their relations, during the Kennedy-Nehru years, back in the early ‘60s.

US President George W. Bush gave the relationship an enormous boost when he lifted layers of dual-use technology sanctions imposed following India’s 1974 nuclear tests. Barack Obama, since followed up by Joe Biden, added climate cooperation as a new pillar of the relationship. But the strategic core of the relationship is mutual alarm at China’s aggressive and unilateral actions to reshape the Asian and global world order. The two largest democracies both believe they must work together to maintain what US officials once called a “balance of power for freedom”.

President Biden is proving to be a remarkably good partner for Indian Prime Minister Narendra Modi, despite the two being, outwardly, on opposite ends of the political spectrum. They both share a deep concern about the dangers of a Sino-centric world order, as well as a sense of mission regarding climate. Biden is also conscious that the US can no longer afford to be the global policeman and needs new international partners with both economic and military capability. He sees Modi, with his vision of an economically and politically more confident India, as a good fit for this worldview. As the US President told Modi, “There is so much that our countries can and will do together. I am committed to make the US-India partnership among the closest we have on earth.”

India’s Narendra Modi with US President Joe Biden at the White House, September 2021.

 

Even with the Ukraine war ongoing, the US grand strategy is today centered around the Indo-Pacific, the Quad (US, Japan, India and Australia) is the pillar of the Indo-Pacific and India, with its 7% annual growth rates and 1.5 million strong military, as essential to the Quad. It helps that Modi, with his enormous domestic popularity and considerable political capital, is seen as one of the few world leaders who can deliver on what he promises.

One of Biden’s first foreign policy acts was to raise the Quad to summit level in 2021. The Quad had gone through a tortuous birth, with one member Australia even resigning in 2007 and returning to the fold later. One of the key debates was what strategy the four would adopt against China and how to increase the linkages between them. India, conscious it was the only Quad member with a land border with China and the only one that was not a formal US treaty ally, resisted a Cold War-style military alliance. Instead, the four governments concluded the real threat from China lays in its attempts to dominate critical and strategic technologies. The Quad today has over 20 working groups on technologies ranging from artificial intelligence and green hydrogen, to quantum computing and pharmaceuticals.

 

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Simultaneously, bilateral relations continue to move forward. Once a rarity, the Indian and US military today hold regular exercises of almost every possible kind including for high altitude warfare, special forces operations and submarine rescue. In a first, a US warship used an Indian port for servicing this year. Two army mountain exercises have been held this year, Yudh Abhyas and Vajra Prahar; the former is now in its 15th iteration and the latter in its 13th. Already a major buyer of US military transport planes and helicopters, if India decides to buy F-18 Super Hornets for its latest aircraft carrier, it will signal a major milestone in defense relations. Until now, India has tended to avoid using American equipment for its main offensive weapons platforms.

All of this goes along with the US emerging as the most important economic partner of India. In April, the US overtook China as India’s number one trading partner, even if it was because of inflated natural gas prices and, thus, probably temporary. The US is far and away the most important FDI source for India with a cumulative investment of about $45.5 billion with more such funds coming through tax havens like Singapore and Mauritius. Notably, much of this is in software, pharmaceuticals and other technology sectors that will experience the most growth in the coming years. The US is also the largest source of remittances to India, about $20 billion a year, in turn reflecting the fact the US is home to the largest and most successful Indian diaspora in the world. The contrast with China could not be greater. Deliberate barriers set up by Indian officialdom have seen Chinese FDI to India fall by three-quarters in the last fiscal year.

No better example of the flow of US investment to India exists than the size of the footprints of Amazon, Apple and Walmart – the three largest US firms. Amazon and Walmart, the latter through its Indian subsidiary Flipkart, dominate e-commerce in India, but are also significant players in fintech, cloud computing and other digital sectors. Apple has already shifted enough of its iPhone supply chain to India that it will be manufacturing about a quarter of its global production of phones in India within the next three years. Washington has openly called upon US firms to look to India as an alternative to China and encouraged firms from allied countries, ranging from Japan to Taiwan, to do the same.

One of the less reported areas of cooperation is in climate. Biden administration officials say they know that Modi is among the emerging economy leaders most committed to the green energy transition. The US is already working closely to help India fulfill its ambitions in solar and wind power, green hydrogen, electrical mobility and more. It is an open secret that this is partly motivated by a desire to not see China become the dominant green energy player. Climate and security were top of his mind when US Secretary of State Tony Blinken recently declared, “I think no two countries have a greater ability and, I think, opportunity and responsibility to try to shape the future of this century than the United States and India.”

This does not mean the two countries have differences. India argues that its response to China includes working with countries like Russia and Iran, both of which are members of its larger neighborhood. While unhappy with New Delhi’s neutrality regarding the Ukraine invasion, Washington declined to place any pressure on the Modi government accepting that the larger relationship was more important. Similarly, the US maintains a cordial relationship with Pakistan, India’s regional rival, that includes the occasional provision of military aid. Washington argues that Islamabad remains important because of its nuclear arsenal and its influence on the Taliban regime in Afghanistan. Blinken has also publicly expressed concern about the Modi government’s patchy civil rights record, a complaint New Delhi has rejected.

Both Indian and US officials are clear that they see the strategic skies as the limit to the bilateral relationship. India’s Foreign Minister, and a former diplomat, Dr. S. Jaishankar told Blinken that the shift in US-India relations was “the single biggest change” he had observed in decades of service as a diplomat and indicated it was a positive for both sides.