June 6, 2016
DESPITE HIS initial reservations about the merits of close relations with India, President Obama appears to be ending his second term on a high note. The Obama administration invited Prime Minister Modi to address a joint session of Congress, eager to portray the occasion as an opportunity to consolidate bilateral relations. Indeed, this dramatic shift in President Obama’s foreign-policy priorities stems from the assessment of three components of American national interests and India’s role in their achievement: build strong bilateral security and defense cooperation, make India an important export market for U.S. goods and services, and situate India in the strategic pivot to Asia. But a close analysis of American foreign policy toward India shows mixed results. President Obama has succeeded in substantially strengthening existing defense ties, but has had far less success in accelerating U.S. exports to India. This seriously undercuts his goal of advancing American economic interest. President Obama has failed to fully convince India of the American commitment to the Asia pivot strategy. India’s regional concerns over territorial defense from neighbors, coupled with America’s allocation of insufficient resources, contribute to its ambivalence about the pivot.
President Obama’s dramatic shift in foreign policy toward India—from a lukewarm attitude to a strong embrace—appears to have elevated the bilateral relationship to a high priority for the United States. These shifts are important because as a self-professed realist, President Obama focuses on securing America’s core national interests. He has not hesitated to question the relevance of U.S. friends and enemies in the pursuit of those interests. In fact, Obama did not support the U.S. strategic partnership with India under the George W. Bush administration. He has, however, dramatically shifted his policy priorities to build closer relations with India. President Obama describes the U.S.-India relationship as one of the defining partnerships of the twenty-first century, guided by convergent national interests.
THE FIRST element President Obama considers vital to American interests concerns building closer security and defense cooperation. Cooperation between the two countries has improved dramatically over the past decade. India conducts more annual military exercises with the United States than any other country. In 2015–16 alone, for example, Washington and Delhi conducted several bilateral and multilateral military exercises. In October 2015, both navies participated in Exercise Malabar. The United States and India also conducted army exercises in September 2015 known as “Yudh Abhyas.” In addition, the United States participated in the International Fleet Review of the Indian navy in February 2016. India joined “Red Flag” in Alaska, a multilateral air force exercise, in April–May 2016. In June–July 2016, India will participate in the Rim of the Pacific (RIMPAC) naval exercises, hosted by the U.S. Navy.
Of course, the U.S.-India defense relationship also depends on the sale of military equipment. India now constitutes the second-largest arms market for the U.S. defense industry, after Saudi Arabia. Sales have totaled nearly $17 billion in the past five years. Between 2011 and 2014, American arms sales to India exceeded $13.9 billion. India signed another contract in 2015 valued at $3 billion. The big-ticket items sold to India included the Boeing P-8I Neptune (a version of the U.S. Navy’s P-8 Poseidon antisubmarine aircraft), the Boeing C-17 Globemaster III transport aircraft and the Lockheed Martin C-130J Super Hercules medium cargo transport. Apache attack helicopters and Chinook cargo helicopters also made the list. In fact, the Indian market for U.S. defense products may expand considerably as India takes a second look at the Boeing F/A-18 Super Hornet. The deal has the potential of ushering in a qualitatively different relationship, one not of buyer and seller but of coproducers.
This defense engagement between the United States and India is also growing in complexity and sophistication. Both countries are actively exploring ways to jointly develop and produce joint military projects—for example, research and development of mobile electric hybrid power sources and next-generation protective body suits. These joint ventures have been admittedly of low value so far, but both countries are moving to develop more sensitive technologies. These technologies include jet engine and aircraft carrier design. The recent signing in principle of the Logistics Exchange Memorandum of Agreement (LEMOA) for sharing American and Indian facilities for refueling, supplies and spare parts is an important indicator of growing defense cooperation. The creation of the India Rapid Reaction Cell in the Pentagon is the first country-specific cell of its kind and simplifies defense collaboration.
Despite significant progress, the United States faces two challenges in developing deeper defense relations with India. First, India continues to be suspicious of American motivations to draw Delhi into a broader, U.S.-dominated coalition. This suspicion is rooted in the moribund ideology of Non-Alignment as well as in its colonial experience, and drives India’s refusal to sign what the United States calls “foundational agreements” to further strengthen military cooperation. These include the Communications and Information Security Memorandum Agreement (CISMOA), Basic Exchange and Cooperation Agreement (BECA) and LEMOA. In fact, the United States has been urging India for over a decade to sign these agreements in order to improve ease of communication and better logistical support for each other’s military.
India decided in principle this April to sign one of the three foundational agreements. Although LEMOA is a watered down version of what the U.S. has been asking for, the agreement allows the two militaries to use each other’s land, air and naval bases for resupply and refueling. India was eager to point out that this agreement does not apply to troops stationed on Indian territory and that the logistical support would be considered on a case-by-case basis. This is precisely where defense cooperation has reached its limits.
Second, codevelopment and coproduction of military equipment with the United States certainly appeals to India, but hurdles remain. India has a history of signing ambitious defense cooperation agreements only to see them fall apart. Corruption scandals, bureaucratic inertia and missed deadlines are common spoilers. The recent deal to purchase the French Rafale multirole combat fighter is a case in point. Although the agreement was signed in 2011, India has been engaged in protracted negotiations to lower the cost of the deal and appears to be reducing the fighter count from 126 to thirty-six. More to the point, there is no reason to believe that codevelopment and coproduction with the United States will not face some of these challenges. India’s own attempts at developing indigenous military technology do not offer many examples of success. Take the example of the Light Combat Aircraft (LCA), thedevelopment of which was conceived in the mid-1980s and and is still incomplete. Rechristened now as the Tejas, India had to sign an agreementwith General Electric to manufacture and supply engines for the LCA.
PRESIDENT OBAMA’S second priority is economic growth. India is not only a potentially lucrative market for U.S. exports, but it is also a large and growing economy. The Indian economy grew at the second-fastest pace after China at an annual growth rate of 8.5 percent in 2009, 10.2 percent in 2010, 7.3 percent in 2014 and 7.6 percent in 2015. Moreover, the data available from the U.S. Bureau of Economic Analysis shows that bilateral trade in goods and private services has grown nearly 90 percent between 2009 and 2015. These flows between the two countries were $60, $74 and $87 billion for the years 2009, 2010 and 2011. This further climbed to $94, $97, $103 and $107 billion for the years 2012, 2013, 2014 and 2015. In this seven-year period, India’s ranking has also climbed up in the list of U.S. trade partners; it ranked twenty-first in 2009 and moved up to eleventh in 2015. These figures certainly paint a positive picture of future bilateral trade, but also reveal significant gaps.
Two challenges have hobbled President Obama’s pursuit of U.S. economic cooperation with India. First, although a large number of economic complementarities exist between the two, India’s potential as an important trading partner of the United States is undermined by significant political obstacles. Small but influential pockets of political groups are against forming closer ties with the United States. Although the influence of these groups has periodically waxed and waned, they oppose India’s entry into any U.S.-led formal trading arrangements, such as the Trans-Pacific Partnership. In fact, the Obama administration has devoted tremendous energy and time to expand economic and trade ties with Asian countries. India should not be left behind. Missing trade deals would perpetuate India’s middle-income trap.
Second, the trade deficit in goods and services between the two countries heavily favors India over than the United States. This trade deficit grew from $7 billion in 2009 to $25 billion in 2012 and stood at nearly $30 billion in 2015. This more than fourfold increase may not be much in absolute terms, particularly compared to China and Germany’s much higher deficits with the United States, but India has yet to make the list of top ten American export markets. Perhaps for this reason, President Obama announced plans to increase this trade volume over a five-year period from $107 to $500 billion. Undoubtedly, this is an ambitious target, but it also indicates the potential for American businesses in India.
Indeed, the biggest challenge for President Obama has been to create access for American goods and services in the Indian market. Unfortunately, India has not always been a willing and cooperative partner. Policy bottlenecks in starting and running a successful business are enormous; corruption and bureaucratic inertia are just a few. In 2015, Transparency International rankedIndia 76 out of 168 for ease of doing business. Despite concerted efforts of the current government, the general consensus is that the business environment is still unfriendly in India. And this is precisely what restricts access to the Indian market and limits economic cooperation between the United States and India.
PRESIDENT OBAMA’S third priority, to entangle India in America’s pivot to Asia, has largely been unsuccessful. President Obama strongly believes that “America’s economic future lies in Asia.” From the administration’s earliest days, the pivot to Asia has been a very high priority. America’s core foreign and economic policies, in his view, have shifted to Asia. As a large and growing power, Obama believes that India will play a critical role in this strategy. “I believe that if we’re going to be true global partners, then our two nations must do more around the world together,” Obama remarked on his visit to India in 2015.
India would welcome a stronger American presence in the region, and simultaneously a greater role for India, but only with a substantive military guarantee. Although the United States deploys over one hundred large surface ships, it is clear to India that America also has other strategic obligations, severely limiting its ability to commit those ships to the Asia-Pacific. Comparative trends in naval power have further added to India’s sense of ambivalence toward the pivot to Asia strategy. The U.S. naval fleet has shrunk by more than half since 1990, when it had 230 large surface ships. Given Washington’s continuous wrangling over its national budget, the fleet is likely to further shrink. In one of the few concrete decisions in 2012 to reallocate resources to the Asia-Pacific, the U.S. Navy will move nearly 60 percent of its fleet to the region by 2020.
India’s ambivalence toward the pivot to Asia strategy has two additional sources. First, India is wary of tying itself too closely to the United States because of its Cold War antipathy. Washington had imposed sanctions twice in 1974 and 1998 after India tested nuclear devices. Although a majority of the 1998 sanctions were quickly lifted, their effects lingered and hardened anti-American sentiments, particularly among sections of the Indian intelligentsia and bureaucracy. Consider the statement of a retired Indian ambassador: “We don’t want to be identified with U.S. policy in Asia, even if we secretly like it.”
Finally, India is skeptical of the United States’ dependability. From the Indian perspective, American policies change at the whims of leaders who spend little time to understand the pressures and compulsions of the region. Take for example President Obama, who first courted China to manage Asian affairs in a G2 alliance, but later seemed to move toward a policy of containment. In this initial supposed G2 partnership, President Obama suggested that China take an active role in the management of South Asian affairs, including India and its traditional rival Pakistan. This approach revealed total ignorance of Indian foreign policy. China formed an “all-weather friendship” with Pakistan and has supported its about claims over Kashmir. President Obama, in India’s view, neglected India’s territorial disputes. According to one account, between 2012 and 2015, there were about six hundred Chinese military incursions into Indian territory. Moreover, the Indian navy reported no less than twenty-two troubling encounters with the Chinese navy in the Indian Ocean over a twelve-month period in 2015. These Chinese incursions into Indian territory have become commonplace. Washington’s restrained response to Chinese aggression in the South China Sea does not inspire confidence in Delhi. Indiasees U.S. involvement in the region as fundamentally self-serving and as a transactional arrangement.
IN SPITE of his initial reservations about closer relations with India, President Obama appears to be ending his second term on a high note. This dramatic shift in his foreign-policy priorities stems from the assessment of three components of American interests and India’s role in them. In Obama’s view, strong security and defense relations with India benefit the United States. Despite apprehension over sharing sensitive defense technologies and India’s own domestic constraints, the United States has made the greatest headway with India in this regard. Bilateral trade flows have also significantly increased under the Obama presidency, but U.S. exports to India leave much to be desired. As a result, America runs a growing trade deficit with India that undercuts an important element of President Obama’s goal of advancing American economic interests. However, the U.S. pivot to Asia strategy faces an India’s attitude that is, at best, ambivalent. This skepticism stems from India’s conflicting perception of a greater American commitment to the region on the one hand, and the U.S. failure to devote sufficient military resources on the other. India’s concern over China’s budding relationship with Pakistan only compounds its insecurities. Although the results of President Obama’s India policy are mixed, bilateral relations have an overall positive trajectory.
Shivaji Kumar is assistant professor at the Centre for International Politics at Jawaharlal Nehru University’s School of International Studies.
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