Given the global trepidation over the ascendance of Donald Trump to the Presidency of the United States, his first significant interaction with Indian Prime Minister Narendra Modi earlier in the week gave hope of a stable and cooperative India-US relationship in the next few years.
Trump was business-like, spelling out his concerns precisely. A terse statement released by the White House said that Trump emphasised the importance of India “increasing its procurement of American-made security equipment and moving towards a fair bilateral trading relationship.” But Trump personally softened the impact when he told the media that Modi will visit Washington in February.
That laid to rest speculation that Indo-US ties have weakened because Trump did not invite Modi for his inauguration when he had invited the Chinese President Xi Jinping.
Strategic autonomy
However, Trump’s aggressive American nationalism could stymie plans of countries to exercise strategic autonomy in a multi-polar world. Unlike the mild Joe Biden, Trump is no believer in letting countries exercise strategic autonomy in a world dominated by the US. His effort will be to Make American Great Again by pursing its interest unilaterally. This was reflected in his aggressive pronouncements on the Panama Canal, Canada and Greenland.
Trump’s US is not going to be benign. He will unabashedly seek reciprocity in America’s relations with other countries irrespective of race, historical ties or the form of Government. He will not bemoan on partners not doing enough to reciprocate what they get from America as the former US Ambassador in India Eric Garcetti publicly did in Kolkata last year. The new administration will be blunt in demanding its due, or shall we say, its pound of flesh.
Trump’s coming did seem ominous to India as he was talking about countering high Indian tariffs with steep hikes in American tariffs. He might insist that India buy US oil or US products or facilitate US investments in return for getting advanced US defence technology and strategic intelligence.
Both Trump and Secretary of State Marco Rubio have highlighted the issue of illegal or undocumented immigration from various countries including India. The numbers relating to India vary from 18,000 in India’s estimation, to hundreds of thousands as per unofficial US estimates. There could disputes about numbers and the way of identifying illegal immigrants. Therefore, identification and deportation of the illegal immigrants could have a political fallout in India.
The H-1B visa is an issue which has bedevilled Indo-US relations for long. The H-1B is a non-immigrant visa that allows foreign workers to temporarily work in the US in specialty occupations. Indian-origin tech companies, such as Infosys, Tata Consultancy Services, and HCL America, account for about a fifth of the H-1B visas issued.
Therefore, the American right wing’s tirade against immigration has created fears among potential H-1B visa holders. Trump’s employment plan for Americans includes reduction of H-1B visas. This will certainly affect the Indian middle class which is Prime Minister Modi’s political base.
However, Trump is not totally opposed to the H-1B visa because he believes that the US needs foreign talent to boost local production, exports and give jobs to locals. And some of his top lieutenants like Elon Musk are strong supporters of quality immigration through the H-1B visa.
India could argue its case on strong grounds, former diplomat Jayant Prasad says. He suggests that India emphasise that the H-1B visas given to Indian workers trained in science, technology, engineering, and mathematics (STEM) are critical for US industry. In 2023, Indian professionals constituted over a fourth of the 3.5 million STEM workers in the US. The takeaways from a 2022 US government report of US Multinational Enterprises (USMNEs): Indians constituted 12 percent of the US worldwide workforce of 44.3 million. India accounted for eight percent of the $448.9-billion research and development expenditure of the USMNEs.
The 320,260 Indian students in US institutions contribute US$ 7.7 billion annually to the US economy. Indian tourist footfalls are increasing; in 2023, the US Embassy and consulates in India issued 1.4 million visas.
Tariffs issue
Tariffs are a core issue for Trump, who plans to slap high tariffs on “tariff kings” such as India and China. Any hike in US tariffs will adversely affect India as the US is India’s largest trading partner, accounting for over US$ 190 billion annually. Eighty percent of India’s IT exports go to the US.
Some Indian experts say that India should retaliate as the US too is a “tariff king”. The Hindu, quoting WTO’s World Tariff Profiles 2023, says that the US imposes more than 100 percent duty on many items third world countries export.
But others say that India should set its house to be able to invite American investments. India should make it easier to do business in it, make resources available at a lower cost and without hassles. Dispute settlement must be made easier and faster. In fact, Trump’s economic policies could make India improve and compete with China in exporting to competitive markets like the US.
The scope for Indo-US economic engagement is huge and this should be exploited to the full. Jayant Prasad says that US FDI stock in India was US$ 51.6 billion in 2022. The two countries cooperate in all-important areas of technology and innovation, including agriculture, block chain, clean energy, cyber sciences, future-generation telecommunications, health security, and space.
Through its 2018 elevation to the Strategic Trade Authorisation Tier 1 status, India gained licence-free access to a wide range of technologies regulated by the US Departments of Commerce and State. India has joined the Artemis Accords, which are a set of principles for civil space exploration and use, which are non-binding agreements between the US and other countries. India is in the Mineral Security Partnership and the initiative on Critical and Emerging Technologies. They have concluded a Memorandum of Understanding (MoU) on Semiconductor Supply Chain and Innovation Partnership.
India has benefited a lot through its defence ties with the US. But Americans feel that it has to do more to meet America’s needs, say in its confrontations with China. India has the challenge of working out ways of meeting America’s needs without going to war with China. At present, India is neither satisfactorily meeting America’s needs as former Ambassador Garcetti complained, not is it striving for a detente with China, though efforts are being made in this direction by Foreign Secretary Vikram Misri.
Indo-US Defence Bill
However, regardless of the state of its ties with China, India will have to have a strong defence relationship with the US given the political and ideological affinities. India is very keen that the US Congress passes the India-US Defence Bill presented by Senator Marco Rubio in July 2024. Rubio is now Secretary of State and can get it done. But the Americans have been silent on this matter preferring to mention only tariffs and illegal immigration in their talks with Foreign Minister Jaishankar.
If the India-US Defence Bill is passed, it will be a big plus for the Modi Government and India-US relations because it proposes to put India at the same level as US allies such as Japan, Israel, Korea and NATO; exempt India from the Countering America’s Adversaries Through Sanctions Act (CAASTA), and impose sanctions on Pakistan for promoting terrorism in India.
“Communist China continues to aggressively expand its domain in the Indo-Pacific region, all while it seeks to impede the sovereignty and autonomy of our regional partners. It’s crucial for the US to continue its support in countering these malicious tactics. India, along with other nations in the region, is not alone,” Rubio said introducing the Bill in the Senate last year.
Among other things, the Bill would set a “Statement of Policy” that the US will support India in its response to growing threats to its territorial integrity, provide security assistance to India to deter adversaries and cooperate with India for defence, civil space, technology, medicine and economic investments.
The Bill proposes a ban on Pakistan from receiving security assistance. It requires a report to Congress on Pakistan’s use of offensive force, including through terrorism and proxy groups, against India; and bar Pakistan from receiving security assistance if it is found to have sponsored terrorism against India.
However, the India-US Defence Trade and Technology Initiative has little to demonstrate a dozen years after its launch, Jayant Prasad said. As a “Major Defence Partner”, India is still not treated on par with US allies and NATO members, despite having signed the “foundational” agreements that are a prerequisite for a closer defence relationship, including the Logistics Exchange Memorandum of Agreement, and despite the unprecedented Indian commitment to provide help “for maintenance of forward-deployed US naval assets,” Prasad says.
Addressing the Raisina Dialogues in New Delhi in February 2024, Vice Adm. Girish Luthra said: “There is a need for a clearer enunciation of deliverables, and shared commitment to deliver the same. The two countries need to move from a series of frameworks and core groups to executing and translating promises into reality. The all-important phase of delivery must begin soon.”