About the author: Brian P. Klein is the founder of RidgePoint Global, a strategic advisory firm, and a former U.S. diplomat.
Indian Prime Minister Narendra Modi’s visit to Washington this week marks the strongest sign in decades of a warming bilateral relationship driven by current geopolitical realities. The courtship, however, is fraught with limits that have historically kept these two countries at arms length.
Any notion that democracies can or should agree on everything needs to be tempered with a dose of pragmatic realism. The U.S. may believe that oil sales help prop up Russian President Vladimir Putin’s regime and by extension his war on Ukraine. But Modi’s India is buying cut-rate Russian oil anyway. Trying to force India to choose sides will backfire.
Where the U.S. can provide credible alternatives, New Delhi will likely choose them. That extends to the country’s historic dependence on cheap Russian military equipment, which is now severely compromised by supply chain problems and shortages. India is buying $3 billion worth of U.S. drones in one of many new initiatives to strengthen the military relationship. The U.S. Chamber of Commerce’s U.S.-India Business Council also launched its first INDUS X summit this week specifically to strengthen commercial-military start-up ties.
India’s economic development also has a strong socialist and sometimes anti-foreigner bias that has hampered private-sector development. Informal policies and excessively bureaucratic hurdles have in turn limited foreign-company participation in India’s growth. A coordinated, all-of-government U.S. approach will be needed to effectively lobby India to open up traditionally restricted areas of its economy. Success will come from showing that greater openness is the most effective way for New Delhi to realize its broader aspirations of becoming a regional growth hub.
Even some of the success stories of the economic relationship have a darker side. India’s rapid rise in generic pharmaceutical production has helped lower drug prices for American consumers. But severe quality problems in chemotherapy treatments and contaminated eye drops have led to shortages of medicines and threatened patients health.
India has been officially geopolitically nonaligned since independence from British rule in 1947. That also makes New Delhi bristle at any perceived treatment as an unequal partner or being “told” by Western countries what it should do. This is especially true concerning legitimate human rights issues, including mistreatment of Muslims, political repression, and attacks on free speech that have become more frequent under Modi’s rule.
Washington browbeating won’t improve any of those conditions. Soft power influence through increased exposure to U.S. society may do better than the widely perceived hypocrisy of Washington’s penchant for global moralizing. India is the fifth largest source of inbound tourists to the U.S., but still only accounted for 430,000 visits in 2021, just ahead of Ecuador and the Dominican Republic.
With all of these difficulties, mutual interests and a long, vibrant history of exchange can form the basis for this much-needed closer relationship.
Washington and New Delhi are already warming in ways rarely seen among non treaty partners. Reaction to China’s regional expansion is certainly one reason. India shares a long, hotly contested border with China. Beijing has also been actively courting India’s neighbors, including Afghanistan, Pakistan, Nepal, and Bangladesh, solidifying their sea access, expanding energy supply lines, and investing heavily in regional infrastructure.
Modi has no desire to be completely cut out by China’s strategic moves and is looking for assistance. The Biden administration is happy to help. That’s why, in an unusual step in regional relationship building, India is included in the Quad along with Japan and Australia. Cooperation in that framework includes “infrastructure, maritime security, public-private partnership, climate, health, critical and emerging technologies and space.”
India is sizing up to be a new global growth engine, minus much of the ideological differences seen in U.S.-China relations. The World Bank projects India’s growth to be 6.9% for 2023. U.S. exports to India have more than doubled from 2016 to 2022 reaching $47 billion last year and making India the tenth-largest market for U.S. goods.
Commercial opportunities abound, much as they did during China’s now defunct opening and reform period. Billions of dollars in investment are heading to India .GE will build aircraft engines for India’s military and Micron is planning a chip making factory. Apple has finally opened its first retail stores in Mumbai and New Delhi and analysts expect 25% of iPhones to be manufactured there by 2025. Tesla is planning to expand into India’s burgeoning electric vehicle market. U.S. companies are also actively seeking alternatives to using China as a manufacturing hub. The more they’re squeezed out of that domestic market, the greater the opportunity for India’s sustained growth.
And bilateral trade tensions, long a source of friction, are on the decline. The U.S. Trade Representative’s Office announced on Thursday that six World Trade Organization disputes are being terminated. India is also removing retaliatory tariffs on several U.S. products, including some agricultural goods. Issues can now be managed more proactively after the Senate finally confirmed Eric Garcetti as U.S. ambassador to India in March.
All of these readily apparent affinities don’t mask the significant hurdles that remain in this budding new diplomatic romance. For now it may be mostly a relationship of convenience. But the South Lawn reception, dinner at the White House, an address to the U.S. Congress, and even a rare press event for Modi all signify the importance of this newfound diplomatic partnership.
U.S. businesses will benefit by taking into consideration this backdrop and the immense cultural diversity of a rapidly growing India. Any difficulties that come up, and there will be many, are surmountable, as long as Washington policy makers take a measured and pragmatic approach to forging stronger ties.
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