Sealing the deal for India-US engagement

As Prime Minister Modi plans his latest visit to the US, a Washington D.C. based Indian industry expert lays out the groundwork for the next chapter in the India-US relationship. Since May 2014, Prime Minister Narendra Modi and President Obama have met six times. Three times in the US, once in India and twice at other multilateral dialogues like COP 21 and the 2015 UN General Assembly. June 2016 will witness another meeting between POTUS [President of the United States] and Prime Minister Modi. This time PM Modi will not only meet POTUS but will also tie in a queue of meetings on the Hill. Most significantly, he is addressing a Joint Session of Congress hosted by Speaker Paul Ryan. But how much of this would have an impact on the India-US trade relation That's the key question many would like answered, given the hyphenated status of India-US relations. There is reason to believe that the momentum to enhance trade ties would continue with little, if any, hurdles. Already the Senate and House have introduced some commendable bills in the Congress to push forward the trade relations between India and the US. The House Foreign Affairs Subcommittee on Asia introduced a bill on Indian membership in APEC [Asia-Pacific Economic Cooperation]. This will go a long way in deepening Indian participation in the global economic framework. Following which, the Senate India Caucus also introduced a similar version of the bill which has now mandated the US State Department to work on assisting India's membership at APEC. Then there was ample support in the House for the US-India Defence Technology and Partnership bill introduced by the House India Caucus. This amendment recognises India's status as a major defence partner of the United States and calls for a dedicated official in the executive branch and an official in the Department of Defence to focus on Indo-US defence cooperation, including the transfer of advanced defence technology. In reciprocity, India is exhibiting its commitment by opening up the defence procurement process and inviting American joint ventures with Indian private sector. A recent example is the collaboration between Tata Advanced Systems and Boeing on manufacturing AH-64 Apache helicopters in India. In the past one decade the India-US defence trade has grown from a few millions to almost $14 billion. During the April 2016 visit of US Defence Secretary Ash Carter to India, Secretary Carter and Indian defence minister Manohar Parrikar announced several steps to push forward Indo-US military collaboration even more. Within a matter of months, India and the US are to sign a Logistics Exchange Memorandum of Agreement (LEMA) to provide supplies and fuel to each other's armed forces from their bases. The two countries also agreed to increase maritime cooperation by setting up a new bilateral Maritime Security dialogue, finalising a White Shipping Agreement, and expanding ongoing Navy-to-Navy discussions to include submarine-related issues. India also intends to set up a special trade negotiating wing within the ministry of commerce to fasten the trade pacts that India is engaged in currently. This would probably help build a case for India's membership at APEC. In April this year, the commerce department announced that they are considering setting up a specialised team to negotiate international trade deals. The move follows concerns that India is not moving fast enough on its free-trade agreements and that it could have got a better deal on some of the pacts. A case in point here is the growing discontent at the RCEP [Regional Comprehensive Economic Partnership] negotiations between India and a few other members. India is concerned about the pressure from Japan and South Korea to accept the TPP version of the investor state dispute settlement (ISDS) and the intellectual property (IP) measure. For example on the IP measure, there are proposals for patent extensions and restrictive rules on exceptions to copyright which, if accepted, can curtail the flexibility under the Indian system to address key public policy issues concerning accessibility to affordable generic medicines. On the ISDS issue, India has already faced 17 cases which exposed its not-so-competent arbitration systems and has led the government to develop a new Model Bilateral Investment Treaty (BIT). But there is still a lot of disagreement on India's new model BIT as many RCEP member countries and US are unwilling to negotiate under India's new Model BIT, especially concerning the ISDS. Although RCEP presents a decisive platform to India which could influence its strategic and economic status in the Asia-Pacific region and bring to fruition its “Act East Policy”, the constant standoff between the member countries is discouraging India to keep a consistent focus on the RCEP negotiations and instead move to APEC, since it has greater promise due to its voluntary nature. Given that India is also inclined towards APEC more that RCEP, American support followed by Japan on India's membership at APEC is welcome news. American support will go a long way towards integrating India into the international economic framework. If this effort is successful, it may set a precedent for further international trade negotiations, both multi- and bilateral.

Ridhika Batra [@batraridhika] is Director USA at the Federation of Indian Chambers of Commerce and Industry (FICCI).

*This column reflects the writer′s personal views

(Research credit: Devin Chavira)