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Order Code RL33529
India-U.S. Relations
Updated August 12, 2008
K. Alan KronstadtSpecialist in South Asian AffairsForeign Affairs, Defense, and Trade Division
 
India-U.S. Relations
Summary
Long considered a “strategic backwater” from Washington’s perspective, SouthAsia has emerged in the 21
st
century as increasingly vital to core U.S. foreign policyinterests. India, the region’s dominant actor with more than one billion citizens, isoften characterized as a nascent major power and “natural partner” of the UnitedStates, one that many analysts view as a potential counterweight to China’s growingclout. Washington and New Delhi have since 2004 been pursuing a “strategicpartnership” based on shared values such as democracy, pluralism, and rule of law.Numerous economic, security, and global initiatives, including plans for “full civiliannuclear energy cooperation,” are underway. This latter initiative, launched byPresident Bush in July 2005 and provisionally endorsed by the 109
th
Congress in2006 (P.L. 109-401, the “Hyde Act”), would reverse three decades of U.S.nonproliferation policy. It requires, among other steps, a Joint Resolution of Approval by Congress. Also in 2005, the United States and India signed a ten-yeardefense framework agreement that calls for expanding bilateral security cooperation.Since 2002, the two countries have engaged in numerous and unprecedentedcombined military exercises. Major U.S. arms sales to India are planned. Theinfluence of a growing and relatively wealthy Indian-American community of morethan two million is reflected in Congress’s largest country-specific caucus.Further U.S. interest in South Asia focuses on ongoing tensions between Indiaand Pakistan rooted in unfinished business from the 1947 Partition, competing claimsto the Kashmir region, and, in more recent years, “cross-border terrorism” in bothKashmir and major Indian cities. In the interests of regional stability, the UnitedStates strongly encourages an ongoing India-Pakistan peace initiative and remainsconcerned about the potential for conflict over Kashmiri sovereignty to cause openhostilities between these two nuclear-armed countries. The United States seeks tocurtail the proliferation of nuclear weapons and ballistic missiles in South Asia. BothIndia and Pakistan have resisted external pressure to sign the major nonproliferationtreaties. In 1998, the two countries conducted nuclear tests that evoked internationalcondemnation. Proliferation-related restrictions on U.S. aid were triggered, then laterlifted through congressional-executive cooperation from 1998 to 2000. Remainingsanctions on India (and Pakistan) were removed in late 2001.India is in the midst of major and rapid economic expansion. Many U.S.business interests view India as a lucrative market and candidate for foreigninvestment. The United States supports India’s efforts to transform its oncequasi-socialist economy through fiscal reform and market opening. Since 1991, Indiahas taken major steps in this direction and coalition governments have kept thecountry on a general path of reform, yet there is U.S. concern that such movement isslow and inconsistent. India is the world’s fourth-largest emitter of greenhousegases. Congress also continues to have concerns about abuses of human rights,including caste- and gender-based discrimination, and religious freedoms in India.Moreover, the spread of HIV/AIDS in India has been identified as a seriousdevelopment. See also CRS Report RL34161,
 India-U.S. Economic and Trade Relations
. This report will be updated regularly.
 
Contents
Introduction......................................................1Key Current Issues and Developments.................................2U.S.-India Civil Nuclear Cooperation..............................2Recent Background........................................3Current Status............................................6Domestic Political Realignment..................................8Economic Woes...............................................9Terrorism and Deteriorating Relations With Pakistan.................10Renewed Conflict in Kashmir...................................12Other Recent Developments....................................12Context of the U.S.-India Relationship................................13Background.................................................13India’s Regional Relations......................................16Pakistan................................................16China..................................................21Burma..................................................24Iran....................................................26The “IPI” Pipeline Project..................................28Other Countries..........................................29Political Setting..............................................32National Elections........................................32The Congress Party.......................................33The Bharatiya Janata Party (BJP)............................34Regional Parties..........................................34The Left Front...........................................35Bilateral Issues...................................................36“Next Steps in Strategic Partnership” and Beyond...................36Civil Nuclear Cooperation..................................36Civil Space Cooperation...................................43High-Technology Trade....................................44Security Issues...............................................45The Indian Military.......................................45U.S.-India Security Cooperation.............................46Nuclear Weapons and Missile Proliferation....................51U.S. Nonproliferation Efforts and Congressional Action..........51India’s Economy and U.S. Interests...............................52Overview...............................................52Trade and Investment......................................55Barriers to Trade and Investment.............................56Special Economic Zones (SEZs).............................58Multilateral Trade Negotiations..............................59The Energy Sector and Climate Change.......................60The Kashmir Issue............................................63Other Regional Dissidence......................................67The Northeast............................................67
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