| Context: India-US bilateral relations have developed into a “global strategic partnership”, based on shared democratic values and increasing convergence of interests on bilateral, regional and global issues. Regular exchange of high-level political visits has provided sustained momentum to bilateral cooperation, while the wide-ranging and ever-expanding dialogue architecture has established a long-term framework for India-U.S. engagement. |
Model Answer:
Defence Cooperation and Modernization of India-US:
- F-35 Stealth Fighter Jet Sale: US to supply advanced F-35 jets to India, significantly boosting India’s air superiority.
- P-8I Maritime Surveillance Aircraft: Procurement of 6 additional aircraft to enhance naval surveillance capabilities.
- Ten-Year Defence Framework: A new roadmap to strengthen the US-India Major Defence Partnership.
- Joint Manufacturing & Tech Sharing: Collaboration in defence production and critical technologies.
- ITAR Review: Reforms in International Traffic in Arms Regulations to ease technology transfer.
- Autonomous Systems Industry Alliance (ASIA): Joint development in autonomous defence technologies.
Foundational Defence Agreements (Already Signed) by India-US:
- GSOMIA, LEMOA, COMCASA, and BECA: Enhance interoperability and secure military information sharing.
- Major Defense Partner Status & STA-1 Authorization: Facilitates high-end defence trade and technology access.
Trade and Investment between India-US:
‘Mission 500’:
- $500 Billion Trade Target by 2030: Ambitious goal to enhance bilateral trade.
- Bilateral Trade Agreement (BTA): To be signed by Fall 2025 to address trade barriers.
- Indian Investment in US: $7.35 billion invested, generating over 3,000 skilled jobs.
- Tariff Adjustments: Agreement to resolve reciprocal tariff issues.
Energy Security and Civil Nuclear Cooperation:
- Oil and LNG Imports: US among top suppliers of liquefied natural gas to India.
- 123 Civil Nuclear Agreement: To be fully implemented, including construction of US-designed nuclear reactors.
- Modular Reactors: Collaboration on next-gen nuclear energy solutions.
- IEA Membership Support: US backs India’s full membership in the International Energy Agency.
Technology and Innovation Partnerships between India-US:
- TRUST Initiative: Strategic tech collaboration across sectors like AI, quantum, semiconductors.
- INDUS Innovation Program: Promotes joint research in space, semiconductors, and emerging technologies.
- Quantum Computing & Biotech Projects: Joint R&D initiatives in frontier tech fields.
- Strategic Mineral Recovery Initiative: Ensures supply of critical minerals like lithium and cobalt.
- NSF–ANRF MoU: Research collaboration between US National Science Foundation and India’s Anusandhan NRF.
Space Cooperation:
- NISAR Mission: Joint NASA-ISRO earth observation satellite to monitor climate and disasters.
- Artemis Accords: India joined the US-led initiative for space exploration norms and cooperation.
Climate Change and Renewable Energy of India-US:
- International Solar Alliance: US joined India-led initiative for global solar development.
- RETAP: Launched Renewable Energy Technology Action Platform to accelerate clean energy innovation.
- Global Biofuels Alliance (GBA): Joint effort to promote sustainable biofuels globally.
Significance of the Strategic Partnership of India-US:
- Defence Modernization: Advanced arms, foundational agreements, and co-production initiatives.
- Energy Security: Long-term solutions via LNG imports, nuclear cooperation, and renewables.
- Trade & Economic Growth: ‘Mission 500’ to drive investment and economic collaboration.
- Tech Leadership: Collaboration in AI, space, semiconductors, and quantum computing.
- Global Strategic Influence: Enhanced role in Indo-Pacific and multilateral institutions.
- Countering China: Quad and IPEF strengthen India’s strategic positioning in the region.
Challenges in the relationship:
Protectionist Measures and Tariff Barriers:
- Reciprocal Tariffs: Both countries have imposed tariffs on each other’s goods, reducing the competitiveness of Indian products in the US market.
- Loss of GSP Benefits:
- In 2019, the US revoked India’s Generalized System of Preferences (GSP) status.
- This impacted duty-free access for several Indian export items, affecting small and medium enterprises.
Intellectual Property Rights (IPR) Issues:
- Special 301 Report (2024): India remains on the Priority Watch List due to concerns over IPR enforcement and policy.
- USTR’s Concerns:
- Opposition to India’s compulsory licensing laws for life-saving drugs.
- Objection to Section 3(d) of the Indian Patents Act, which restricts patents unless a product shows significant enhancement in efficacy.
- India’s Stand:
- IP laws are compliant with WTO’s TRIPS agreement.
- Opposes TRIPS-Plus provisions being pushed through bilateral trade deals.
Solar Energy Trade Dispute:
- WTO Dispute on Domestic Content Requirement (DCR):
- India lost the case filed by the US against DCR under the Jawaharlal Nehru National Solar Mission.
- WTO ruled DCR violates global trade norms.
- Implications:
- Could increase solar energy production costs.
- May slow down India’s target of achieving 100 GW solar capacity.
- Recent Development:
- WTO has set up a panel to determine India’s compliance after US sought further action.
Sanctions Under CAATSA:
- S-400 Missile System from Russia:
- US raised concerns citing Countering America’s Adversaries Through Sanctions Act (CAATSA).
Totalization Agreement:
- Issue:
- Indian professionals in the US contribute over $1 billion annually to the US Social Security system.
- Without a Totalization Agreement, these contributions are forfeited unless workers stay for 10+ years.
Risk of Trade War and Global Implications:
- Trade War Context:
- Rising protectionism globally, especially the US-China trade war, disrupts global supply chains and markets.
- India’s Dilemma:
- While India may benefit from supply chain diversification, trade wars erode the rules-based global trade system under the WTO.
Conclusion:
Despite growing strategic alignment, India-US economic relations face challenges such as protectionist trade practices, IP disagreements, visa restrictions, and unresolved bilateral agreements. Addressing these issues through dialogue, mutual understanding, and multilateral forums is crucial for realizing the full potential of the partnership.
‘+1’ value addition:
- In FY24, the bilateral trade between India and the US stood at a record US$ 118.2 billion as against US$ 128.78 billion in FY22.
- In FY24, India had a trade surplus of US$ 36.8 billion with the US.
- Of the total trade in FY24, Indian exports to the US stood at US$ 77.5 billion, while American exports to India stood at US$ 40.7 billion.
- USA is the 3rd largest investor in India with cumulative FDI inflows of US$ 67.76 billion from April 2000-September 2024.
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