Opportunistic manoeuvring

Narendra Modi — the Prime Minister of India — visited the USA during June 21-24, 2023, on an invitation from US President Joe Biden. This was PM Modi’s first state visit to the United States since he assumed office in 2014. Modi’s visit coincided with a shift in Washington’s relationship with China, from that of a strategic competitor to a rival or outright threat that must be deterred and contained. The bipartisan consensus is that India is a crucial geopolitical, and even economic, counterweight to China’s dominance in the Indo-Pacific region.

Since coming to power, Prime Minister Modi has visited the US on several occasions, engaging with three presidents: Barack Obama, Donald Trump, and Joe Biden. It may be recalled that in 2005, the United States denied Modi a visa because of his alleged role in anti-Muslim violence three years earlier in Gujarat state, where he was the Chief Minister when more than 1,000 people were killed, mostly Muslims. Nonetheless, a Supreme Court-ordered investigation in India absolved him of the blame in 2013.

* 2014

Narendra Modi went on a working visit at the invitation of then-President Barack Obama. PM Modi met Barack Obama for official talks and also received an ecstatic welcome from thousands of Indian Americans at New York’s Madison Square Garden.

* 2015

Prime Minister Modi addressed the United Nations General Assembly (UNGA) in New York at the UN Sustainable Development Summit.

* 2016

Narendra Modi again visited the US in 2016 for another official working visit, which was the third bilateral meeting between Obama and Modi. He was invited by then vice-president Joe Biden. PM Modi also addressed the US Congress for the first time that year.

* 2017

Prime Minister Modi went on a three-day US visit where he met the then President Donald Trump at the White House. Trump also hosted PM Modi for a ‘working dinner’, a first, at the White House. Modi also addressed the Indian diaspora at the Ritz Carlton in Tysons Corner, Virginia.

* 2019

Narendra Modi addressed the Indian-American community in Houston in September 2019 at an event named ‘Howdy Modi!’ during his visit to the US. The event was held in Houston, Texas, on September 22, and about 50,000 people of Indian origin from across the US attended it. Besides Modi, Trump also addressed the event.

It may be observed that in all his USA visits, the Indian Prime Minister has made it a point to address large gatherings of Indian diaspora. During his last visit also, in addition to his official programmes, in his farewell address to a gathering of the Indian-American diaspora, at the Ronald Reagan Centre in Washington DC, he said that meeting them all was like “having a sweet dish after a meal.” Stating that the India-US partnership will be beneficial in the 21st century, Prime Minister Modi said, “You all play a crucial role in this partnership,” reported Business Standard.

Outcome of the visit

Modi’s recent USA visit has attracted a mixed reaction — both at home and abroad. According to a CNN report, at the centre of this cementing of ties between India and the US is their “shared concerns” over China as a key priority. Furthermore, India has risen to be an “indispensable” force for the US in its effort to “assert itself in Asia and deter Chinese aggression”, The Economist noted.

On Modi’s visit, The Wire wrote: beyond optics, the substance was not much to crow about. According to the report, the joint statement of June 22, 2023, and of Prime Minister Modi’s address to the joint session of US Congress conveyed the message that India was not willing to deviate publicly from its path of friendship with Russia. On China, there were anomalies visible in the web of the joint statement, despite India’s otherwise conciliatory approach.

On global geopolitics, Modi chose the path of balance. Without mentioning Russia and China, he alluded to them in the context of the war in Ukraine, and in the context of developments in the Asia Pacific region. In an hour-long speech, the total time devoted to Ukraine was about one minute, and to the Indo-Pacific about two minutes.

While significant arms transfers were agreed to during the visit, the repeated references in the joint statement to technology cooperation and transfer were more in the domain of optics than substance.

Analysts reveal that though the deal with Micron during PM Modi’s visit has made headlines as a major technological breakthrough and a new dawn for India’s electronics chip-making industry, in reality, the Micron deal is only for packaging of the chips, their assembly and testing, a relatively low end of the electronics industry. It does not touch the core technologies of designing

and fabrication of chips. The total cost of setting up the plant is estimated to be USD 2.75 billion, with the central government providing a 50 per cent subsidy and the Gujarat state government throwing in another 20 per cent. Micron is investing only 30 per cent of the total capital! In other words, Micron will hold 100 per cent ownership in a plant costing USD 2.75 billion, in which they would invest only 0.825 billion!

Modi also suffered a setback in his attempts to calm US’ concerns over his government’s commitment to democracy and human rights. The Time magazine has described the Biden-Modi meeting a failure for democracy.

Commenting on the current Indo-US relation, Pravin Sawhney observed that as India’s strategic autonomy has made way for a tighter military embrace with Washington, India would find that its room for manoeuvre in the face of emerging challenges has narrowed. The US, having identified China as its sole geopolitical competitor in this century – with the capability to match it in economy, technology, diplomacy, and military – has failed to accept that its deterrence (military power) model of the Cold War was unsuitable against the Chinese geopolitical model, which is based more on global cooperation for prosperity than military power alone. Thus, Modi’s US visit might have increased India’s vulnerabilities, reports The Wire.

Post USA visit

Within a week after the United States and India declared themselves “among the closest partners in the world” during a state visit to Washington by Indian Prime Minister, a top US diplomat for East Asia asserted that the United States expected a greater partnership with India in the South China Sea, where China has been at the centre of numerous territorial disputes with regional countries, reports Reuters.

After Modi’s USA visit in September 2019, a radical change in India’s China policy was observed. India pulled out of China-led Regional Comprehensive Economic Partnership (RCEP) and President Xi Jinping had to return empty handed when he unofficially visited India, in October, to meet Prime Minister Modi at Malallapuram on his way to Nepal.

Immediately after returning from the USA, Indian Prime Minister Narendra Modi hosted the Shanghai Cooperation Organisation (SCO) Summit. He gave a clarion call for China-led SCO member nations to stand against terrorism during his address at the SCO Summit on July 4. PM Modi also extended his wishes to Iran which is the newest member of the SCO. “I am happy that Iran is going to join the SCO family as a new member,” he added. China’s President Xi Jinping, Russian leader Vladimir Putin, Pakistan PM Shehbaz Sharif and other SCO leaders participated in the virtual summit. During this summit, an MOU was signed to initiate the inclusion of Belarus in SCO, reports Times of India.

A declaration issued on July 4, 2023, at the end of the virtual summit of the grouping, Russia, Pakistan, Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan reaffirmed their support to China’s ambitious Belt and Road Initiative (BRI). India once again refused to endorse (BRI), becoming the only country in the Shanghai Cooperation Organisation (SCO) not to support the project. Nevertheless, Indian refiners, including Indian Oil Corp, have begun paying for some oil imports from Russia in Chinese Yuan. Russia now accounts for 42 per cent of all the crude oil India imports. As per reports, this is the highest share for any individual country in recent years.

Indian diaspora: the major influencers

The US emerged as India’s biggest trading partner in 2022-23 on account of increasing economic ties between the two countries. According to the provisional data of the Commerce Ministry, the bilateral trade between India and the US increased by 7.65 per cent to USD 128.55 in 2022-23, as against USD 119.5 billion in 2021-22. It was USD 80.51 billion in 2020-21. Exports to the US rose by 2.81 per cent to USD 78.31 billion in 2022-23, as against USD 76.18 billion in 2021-22, while imports grew by about 16 per cent to USD 50.24 billion. Contrary to these figures, India’s two-way commerce with China during 2022-23 declined by about 1.5 per cent to USD 113.83 billion, as against USD 115.42 billion in 2021-22. Exports to China dipped by about 28 per cent to USD 15.32 billion in 2022-23, while imports rose by 4.16 per cent to USD 98.51 billion in the last fiscal. Trade gap widened to USD 83.2 billion in the last fiscal as against USD 72.91 billion in 2021-22. Experts believe that the trend of increasing bilateral trade with the US will continue in the coming years also, as New Delhi and Washington are engaged in further strengthening the economic ties, reports The Hindu.

It can be presumed that the existence of a huge Indian diaspora in the USA plays an important role in strengthening Indo-US ties. They actually act as a soft power for US negotiators when they formulate Indo-US policy. The near absence of the Indian diaspora in China deprived them of this very influential soft power that acts as a major influencing factor of Indian foreign policy – especially during the Modi regime.

The latest US census data (2021) reveal that there are more than 4 million Indian-Americans, which make up 1.3 per cent of the US population. Indian-Americans are one of America’s fastest-growing ethnic groups, with a population surge of more than 40 per cent since 2010. The Indian community contributes around 6 per cent of US tax revenue. The presence of a culturally rich, highly educated, and financially successful community serves as a connecting link between the largest and the oldest democracies of the world. It is observed that the Indian diaspora serves as one of the strongest pillars of diplomatic manoeuvring and positive change in US policy towards India. The Indian Caucus has always pushed for better diplomatic ties. When it comes to soft power and diplomatic efforts, the Indian diaspora has been a classic success story.

In addition to this, the Indian American CEOs of the top US multinational companies – most of which are in the new-age business of IT and ITES services — get an opportunity, by virtue of their Indian roots, to influence India’s IT and ITES policy. Chief Executives of the Silicon Valley firms play an important role. In his book ‘Dot. Compradors-power and Policy in the development of the Indian software industry’, Jyoti Saraswati (2012) described how US transnational software firms – the Global Giants IBM, EDS, Accenture and Capgemini — collaborated with the National Association of Software and Service Companies (NASSCOM) and marginalised Indian software majors like TCS, Infosys and Wipro. Between 2000 and 2010, India witnessed an unprecedented inflow of IT-related FDI. According to the author, by 2010, the Global Giants were firmly back in the driving seat in the global software service industry. Their control of NASSCOM had been crucial for this.

Politics of H1B visa

NASSCOM claimed that maintaining H1B visa (short-term work permit for highly skilled migrants working in the USA) was vital for the growth of the Indian IT industry. The Indian state, as expected, had prioritised visa access in all its economic negotiations. This led the Indian team to side with the developed world at WTO during negotiations on services under GATS. During the last two decades, H1B visas have dominated the Indo-US negotiation. Access to H1B visa is now being used by the US government as a key bargaining chip to gain better access to the Indian market in industrial and farm foods.

During Modi’s visit, India and the US decided that H1B visa renewals of Indians would be done in the USA without them having to return home to complete the process. It was a huge relief to lakhs of software professionals and their families. But this concession has been achieved by conceding to the US demand of removing 20 per cent retaliatory import duty on American apples. This single decision will devastate thousands of apple farmers of Himachal Pradesh and Kashmir, who will find it difficult to compete with cheap American apples. The sole gainers will be India’s largest monopsony apple buyer, Adani Agri Fresh.

Conclusion

Indo-US relation is greatly influenced by a large Indian diaspora that is more effectively used by American policymakers than their Indian counterpart. Students and H1B visa holders also play a constructive role in cementing the ties. Nonetheless, the cost–benefit analysis of the Indo-US relationship from the perspective of India’s overall development needs to be assessed objectively.

The Indian government missed an opportunity to use the SCO platform to address its long-standing disputes with its big neighbour China. Though economic and strategic logics suggest that India and China should engage in bilateral talks for a long-term cooperation, India’s growing bonhomie with USA is bound to make it isolated in its own neighbourhood during a period when the region is being projected as the next growth centre of the world economy.

Views expressed are personal