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Founder, CEO & Editor-in-Chief, Fair Observer
Atul Singh

India, U.S. ties hinge on three key factors

Collaboration in geopolitics, economics and culture will help deepen India-US ties.

The United States and India have a tortured past. During World War II, Indian leaders like Mahatma Gandhi and Maulana Azad, were grateful to the US for supporting India’s independence. Maulana Azad was the president of the Indian National Congress from 19

The United States and India have a tortured past. During World War II, Indian leaders like Mahatma Gandhi and Maulana Azad, were grateful to the US for supporting India's independence. Maulana Azad was the president of the Indian National Congress from 1940 to 1945. He met Americans regularly when he was not in jail and most Indian leaders looked to the US as a moderating influence on British imperialism.

Soon after independence, the US-India bonhomie evaporated. Both sides made multiple mistakes. The US supported apartheid in South Africa and got rid of Mossadegh in Iran. This rattled a newly independent country that was opposed to racism and imperialism. Indian foreign policy was also unwise. Indian Prime Minister Jawaharlal Nehru came under the influence of V.K. Krishna Menon, an abrasive man distrusted by Gandhi and Azad, who did lasting damage to Indo-US ties.

As the Cold War intensified, Pakistan became a key ally for the US. Just as in Latin America, the US threw its weight behind Pakistan's military dictators. Multicultural India, a thriving democracy, was treated with active hostility. Relations reached the nadir in 1971 when President Richard Nixon and Henry Kissinger, his National Security Adviser, sent the US seventh fleet to the Indian Ocean. They supported "the killers and tormentors of a generation of Bangladeshis" because of blind allegiance to a Cold War ally. As a result, an entire generation of Indians grew up distrusting the US.

When the Soviets invaded Afghanistan, the US armed and trained the Mujahideen in Afghanistan through Pakistan's Inter-Services Intelligence (ISI). The ISI diverted much of US aid to promote insurgency in India. For President Ronald Reagan, General Zia-ul-Haq was a "front line" ally in the fight against communism and tacitly supported Zia's "bleed India through a thousand cuts" policy. Terrorism was a feature of daily life in India, but the US chose to disregard Indian concerns.

Two developments changed US relations with India. The first was the collapse of the Soviet Union. This led to the opening of the Indian economy in 1991. Now, India presented a potentially large market for US economic interests. Yet, the US continued to favour Pakistan throughout the 1990s. The second was the 11 September 2001 attacks. For the first time, the US realised that it had created a Frankenstein or, to use an Indian analogy, Bhasmasur. Given the fact that Pakistan had moved towards a toxic form of Islam and used terror as an instrument of its foreign policy, the US had no choice but to finally embrace India.

Under President George Bush Jr, the Indo-US nuclear deal marked the high watermark of a new relationship. Since then, the relationship lost momentum because the US was bogged down in Iraq and Afghanistan, while India was ruled by an ineffectual Prime Minister, who was merely a proxy for Congress leader Sonia Gandhi. The US did not help itself by treating the then Gujarat Chief Minister Narendra Modi like a leper because of his supposed involvement in the 2002 Gujarat riots. This meant that the most pro-market reformist Indian leader was systematically excluded from any conversation and US companies missed out to Japanese, European and even Chinese companies in setting up shop in Gujarat. The State Department misread the situation right until the historic elections of 2014 that made Modi Prime Minister. Since then, things have changed dramatically.

For the first time, the President of the US will be the chief guest on India's Republic Day and visiting India twice during his term. Modi's energetic diplomacy and Obama's receptiveness have been key reasons for deepening Indo-US ties which are underpinned by three key factors.

The first is geopolitics or, to put it bluntly, China. China has now become the biggest trading partner of many major countries such as Brazil and Australia. More importantly, China holds an estimated $3.9 trillion dollars as foreign exchange reserves. This means that it can potentially threaten the dollar's status as world currency. China's assertiveness in its near neighbourhood is worrying US allies such as Japan and Korea. Japan has just announced a record $42 billion defence budget. Similarly, India is worried about China's growing strength on its borders as well as its presence in neighbours like Sri Lanka and Myanmar. Indians still remember their 1962 war with China. It ended in defeat and disgrace. Unsurprisingly, US and India are trying to reach out to each other.

The second is economics. The US is seeking markets where it can export goods and invest capital. With cheap energy, it is making a strong comeback in a range of industries, from chemicals to automobiles. Boeing is still the leading manufacturer of planes and the US defence industry is probably stronger than ever. With the slashing of the Pentagon budget, foreign markets have become more important. India is opening its defence sector and the US does not want to lose out to the Russians or the French, who have been key players in the Indian market. Similarly, the US wants its nuclear power companies like GE and Westinghouse to have a slice of the Indian market, as India seeks to slake the thirst of its billion plus population for power.

Indo-US trade has grown from about $5 billion in 1991 to an estimated $65 billion for 2014. US investment in India has increased dramatically and now Indian companies have begun investing in the US as well. Modi faces great expectations and his primary task is to generate employment in a country of 1.21 billion, with over 65% of its population under 35. He has no choice but to phase out the Nehruvian socialist model that imposed anaemic Hindu rates of growth on India. Already, the Soviet inspired Planning Commission has gone. More reforms are in the pipeline to woo foreign investment in the country. The economic interests of US and India are increasingly aligned. Both Obama and Modi recognise this and are willing to cut deals that are in mutual interest.

A third trend that is often forgotten is culture. Both the US and India are diverse and fractious democracies. They increasingly understand how to deal with each other. Increasingly, the Indian elite send their children to study and the best Indian minds continue to flock to the US. Raghuram Rajan, Arvind Subramanian and Jayant Sinha, three key men deciding the future of India's economy, have worked extensively in the US. Indians in the US are becoming more influential and are finally becoming a bridge between the two countries. Indians watch American cinema, aspire to American style consumerism and dream of working for American institutions. Americans are turning to India as well. The growing popularity of yoga, meditation and Buddhism in places like MIT, New York and Silicon Valley is only going to deepen American fascination for India. The stage is now set for India and the US to tango.

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