India-U.S. Relations: Rich History And Optimistic Future

Editor: Overall, how did President Obama's visit to India accomplish the goal of consolidating warm India-U.S. relations?

Shankar: President Obama's visit is a significant milestone in our strategic partnership that will enhance the momentum of our engagement and help to take our partnership to the next level. We have decided to accelerate our bilateral cooperation across a very broad spectrum - political, strategic and economic. We will also work together as equal partners for security, stability and prosperity in the Asian region and the wider world.

Editor: What are the major reasons for India's supporting the U.S. Federal Reserve's quantitative easing action?

Shankar: Our key national priority is to sustain a growth rate of 8 to 10 percent in the coming years so that we can successfully address the development challenges that we face. For this, it is essential that the global economic outlook remains positive. We believe that a strong, robust and fast-growing U.S. is in the interest of the world economy. As our Prime Minister noted, any step that stimulates growth and entrepreneurship in the U.S. would help the cause of world prosperity.

Editor: How does President Obama's endorsing India for a permanent seat on the U.N. Security Council affect both India-U.S. relations and, possibly, the balance of power across Asia?

Shankar: We welcome President Obama's endorsement of India's candidature for permanent membership on the UN Security Council. It is recognition of the increasingly important role that India is playing in addressing global challenges. Be it in deliberations related to international finance and the global economy or in discussions on major challenges that confront our world today such as climate change, terrorism or the proliferation of weapons of mass destruction, India is playing a constructive role. There is growing realization that the institutions of global governance need to become more representative and that this would enhance both their legitimacy and their effectiveness.

Editor: What are some additional factors, such as our democratic traditions and trade relations, that point to shared interests between our nations? Did President Obama's visit produce a clear vision for the future course of the strategic partnership between India and the U.S.?

Shankar: We can characterize our shared interests in three broad categories. First are our shared values of democracy, pluralism, tolerance and respect for the rule of law. We have for instance during the visit of President Obama agreed to launch a new Open Government Dialogue, which reflects our commitment to open and responsive government and will promote the goal of democratizing access to information.

Second is our common objective of promoting prosperity in both our countries. India's economic growth and consequent demand for capital and technology creates opportunities for expanding trade and investment. Indeed, U.S. exports to India have trebled in recent years and have grown much faster than its exports to many other countries. The growth in bilateral trade and investment is broadly balanced. The U.S. is India's largest trading partner in goods and services, and India is now among the fastest growing sources of foreign direct investment entering the U.S. This is creating jobs, growth and higher living standards in both our countries. During the visit several deals were announced, totaling nearly $10 billion in U.S. exports and leading to more than 50,000 jobs in the U.S. The U.S. decision to realign its export control framework vis-à-vis India will facilitate high-technology cooperation between our two countries. The U.S. is also an important partner in our quest for socio-economic transformation. We are now cooperating in areas such as clean energy, agriculture, education and health.

Finally we have a shared interest in promoting peace and security, both in Asia and in the world at large. We have agreed to work together and with other countries in achieving this objective. For instance, we both want to see the emergence of a stable, democratic, prosperous and independent Afghanistan and have agreed to pursue joint development projects there in addition to our own ongoing efforts in areas such as capacity building, agriculture and women's empowerment. Similarly, we will be working together on countering other common security challenges such as terrorism and proliferation of weapons of mass destruction.

Editor: Looking at the past, would you describe some of the history of India-U.S. relations?

Shankar: The end of the Cold War and the opening up of the Indian economy in the '90s created the circumstances for the transformation of the India-U.S. relationship over the last decade or so. Today there is support across both sides of the political aisle in the U.S. for strengthening the India-U.S. partnership, just as there is broad political support in India. The nearly three-million-strong Indian-American community has also come of age and plays a vital role in expanding the numerous connections that make our relationship "people-centric." These factors are a source of strength in building our partnership for the future.

Editor: How are India and the U.S. cooperating to address global challenges facing our democratic societies?

Shankar: In our increasingly globalised and interconnected world, the global challenges to our common prosperity and security can only be met through collective action. Today, both India and the U.S. have an increasing convergence of views on global challenges such as stabilizing the international economic and financial situation, addressing issues related to climate change, or countering terrorism. As members of the G-20 we are working together for strong, sustainable and balanced growth in the global economy. At the meeting on climate change last year in Copenhagen, India worked with the U.S. as well as with other countries to reach a positive outcome. Terrorism is a common challenge to the security of both our countries. We agreed on a Counter-Terrorism Cooperation Initiative earlier this year, which would deepen our cooperation in information sharing and capacity building. Additionally, during President Obama's visit, we agreed to open a new dialogue between our Ministry of Home Affairs and the U.S. Department of Homeland Security to further this cooperation. In the regional context, we have a common interest in elimination of safe havens and the infrastructure for terrorism in Afghanistan and Pakistan. We have a shared interest in maintaining the safety of and access to the global commons - air, sea, space and cyber domains - and have decided to explore how we can work together and with other countries towards this objective.

Editor: What is India's stake in surrounding nations and in Asia as a whole?

Shankar: Our primary task is to achieve socio-economic transformation in a manner that is inclusive and benefits all sections of our people. To achieve this objective, domestically we need to take measures to ensure continued economic growth. Externally, we seek a climate of peace both in our immediate neighbourhood and in the wider Asian region to better pursue our development objectives. We have agreed to work together with the U.S. as well as with other countries in the region for the evolution of an open, balanced and inclusive architecture of cooperation in Asia.

Editor: How are India and the U.S. cooperating on defense?

Shankar: Our defence cooperation has grown significantly since the signing of the New Framework for Defence Cooperation in 2005. We now have wide engagement covering interaction between our armed forces, regular joint military exercises, dialogue between our senior defence leadership as well as defence trade. This has led to better mutual understanding on regional peace and stability. We are cooperating in the field of maritime security, including anti-piracy efforts and humanitarian assistance. India has also started procuring U.S. defence equipment and has placed orders of about US$ 4 billion in the last few years while several more orders for a similar amount are in the pipeline. There is also an expanding private sector opportunity for defence partnerships as India seeks to build its defence production capabilities. In this context, the U.S. decision to remove Indian defence establishments such as the Defence Research and Development Organisation (DRDO) and Bharat Dynamics Ltd. (BDL) from the export control entities list would give a further fillip to our growing defence partnership.

Editor: Please summarize the astonishing growth of the Indian economy.

Shankar: For almost the whole of the current decade, the Indian economy has been on a strong growth path. After registering an average growth of about 9 percent for five continuous years, Indian GDP growth slowed down to 6.7 percent in 2008-09 and 7.4 percent in 2009-10 primarily on account of the international economic crisis and the resultant slowdown in global demand. The economy has regained momentum and is projected to expand at 8.5 percent this fiscal year and by 9 percent in 2011-2012. During the first half of 2010, growth has been higher than predicted at 8.9 percent.

An important element of the Indian growth story is its greater reliance on domestic demand driven by growing consumption and on domestic savings and investment. This is a factor of stability and has helped India to weather the global downturn relatively well.

Editor: What are some of the highlights of the economic partnership between India and the U.S.?

Shankar: The India-U.S. economic partnership is wide-ranging and not only focuses on stronger commercial links but also contributes to our national development goals. Our ties extend to bilateral trade in goods and services; growing investment linkages; technical collaboration; and expanding cooperation in several other areas of development, including agriculture, health, energy, education, sanitation and information technology. Our commercial ties are broadly balanced and growing in both directions.

Between 2004 and 2009, our trade in goods has more than doubled. During the first eight months of 2010, bilateral trade has grown at the rate of 30 percent with U.S. exports to India growing at the rate of 18 percent. Trade in the much- scrutinized services sector also has been broadly balanced.

Alongside trade, Indian companies are also increasing their presence in the U.S. Indian direct investment into the U.S. has grown rapidly and is now estimated to be the second-fastest-growing investor country in the U.S. According to a recent study, between 2004 and 2009, Indian companies invested US$ 5.5 billion in greenfield ventures in the U.S. and over US$20 billion in mergers and acquisitions, helping to generate wealth and create thousands of jobs in the U.S. During the visit of President Obama to India, U.S. companies clinched export orders of around $10 billion that would create an additional 53,000 jobs in the U.S. economy.

Editor: What opportunities for cooperation exist in the areas of technology and energy?

Shankar: The U.S. is the largest source of technical collaboration for Indian companies. As the world's largest economy, the U.S. will continue to be the leading centre for research, innovation and enterprise. India, too, is witnessing a burst of entrepreneurial energy and innovation, fueled by economic liberalization and the availability of skilled scientific and technical talent and inspired by the sheer magnitude of our challenges. There are exciting opportunities to forge partnerships in the areas of research and development, innovation and high technology. The U.S. decision to realign its export control framework for India would further boost our high-tech cooperation.

Energy is another emerging area of cooperation. Our countries face similar challenges of dependence on energy imports and fossil fuels, and we both recognize the importance of addressing climate change. We had launched a Clean Energy and Climate Change Initiative last year during the visit of Prime Minister Dr. Manmohan Singh to Washington. As a follow-up we have concluded an agreement to establish a Joint Clean Energy Research Centre. The goal is to improve the lives of the people of both countries by developing and improving access to technologies that make our energy cleaner, more affordable and more efficient. We are also promoting clean and energy-efficient technologies through the bilateral Partnership to Advance Clean Energy and expanded cooperation with the private sector. All these various initiatives are expected to enhance the ability of India and the U.S. to provide new economic opportunities for their people and create new clean energy jobs.

Cooperation in civil nuclear energy is an important component. In India we plan to enhance the share of nuclear energy in our overall energy mix. Our two governments have completed all the steps that were required and have laid the basis for commercial negotiations to commence between our companies.

Editor: What are your closing thoughts for our readers and viewers?

Shankar: I would repeat what Prime Minister Singh and President Obama said after their recent summit meeting in New Delhi that the India-U.S. strategic partnership is indispensable not only for their two countries but also for global stability and prosperity in the 21st century.

Published January 3, 2011.