President Barack Obama heads Sunday to India in the United States’ latest attempt to move closer with India. Though the relationship between the two powers has not been without its hiccups, President Obama’s upcoming meeting with Prime Minister Modi could presage great possibilities, both in the defensive sphere as well as the economic.
Historically, relations between the United States and India have been rocky at best. Despite an ostensible commitment to non-alignment during the Cold War, India associated more closely with the Soviet Union than the US. When the Soviet Union collapsed in 1991, India tried to foster a relationship with western powers such as the US, but this soured once India decided to test nuclear weapons in the late 1990’s.
The US was far from accepting in this matter, with the Clinton administration imposing strong sanctions against India and cutting off economic and military ties. It was not until India agreed to allow international monitoring of its nuclear weapons program that economic relations began to strengthen again between the two countries.
Since 2000, this new strength has seemed to grow with each interaction. In 2005, the two countries signed a ten-year defense framework agreement which expires this year; November 2010 saw President Barack Obama publicly endorsing India’s bid for a permanent seat on the US Security Council during an address to the Indian Parliament. Despite a hiccup in 2013 (when an Indian diplomat was arrested and charged for committing visa fraud), relations seem to be strong as Prime Minister Modi’s visited the US in late September of last year.
The President’s trip this weekend comes on the eve of India’s “Republic Day,” a national holiday that celebrates the implementation of a national constitution and the nation’s continued commitment to democracy. President Obama will be attending the Republic Day parade as Prime Minister Modi’s honored guest, a first for a United States President.
Politically speaking, the agenda this weekend will likely focus on the growing defensive partnership between the two countries, seen by many analysts as the centerpiece of US-India relations. Total sales of US military equipment to India have grown from non-existent in 2008 to approximately $9 billion in 2013.
With current Secretary of Defense nominee Ashton Carter an avid supporter of enhanced defense cooperation vis-à-vis the “defense trade and technology initiative,” the stage seems to be set to take the defense cooperation to the next level. Well, assuming India stays true to the current plan to spend $100 billion over the next 10 years to upgrade their aging Soviet-era military equipment.
Defensive Friends with Benefits?
Any increased defense trade relationship could also open the door to greater commercial trade between the two countries. The International Monetary Fund (IMF) has already projected India’s GDP growth to exceed China’s by the year 2016. If correct, this means India will be the fastest growing major economy in the world with a projected growth of 6.5% compared to China’s 6.3%.
But despite this projected growth, India’s GDP of $2 trillion is still minuscule compared to China’s $9 trillion and US’s $17 trillion. Given the massive disparity between economies, Prime Minister Modi’s legitimacy will largely hinge on his ability to deliver true sustained economic growth.
While Modi has made moves towards the needed infrastructure and structural reforms for his pro-growth agenda, he will have to depend on foreign investments as a supplement to keep pace with China, investments that could come from the US.
Luckily for him, Prime Minister Modi has already obtained a pledge for $35 billion in investments for infrastructure projects in India during his recent trip to Tokyo. He was also able to secure a $30.4 billion investment from President Xi Jingping’s during the Chinese visit to Delhi in early September of last year. This American trip comes at a perfect time for the United States to show similar interest in growing India’s growing.
All of these factors conspire to set the stage for a very stable future, not only for the security of the Asia-Pacific region, but also for the potential for opening of the Indian market. Assuming, of course, the trip this weekend goes well between the two heads of state.
