INDO-US RELATIONS

INTRODUCTION-

● The India US have seen hegemony in their relationship in the 21st century. Since
India's independence whereUS played a major role under president Mr. Truman for
exerting pressure on the UK to expedite independence of India, India US relationship
has weathered cold war, major distrust & estrangement over India's Nuclear program.
● Relations have warmed in recent years and competition has strengthened across a
range of economic and political areas.
● India and the US are not only natural allies but strategic partners as well.
● India's relationship with the US is governed by the exigencies of international
scenario as well as domestic demands of India because for India, US is not only a
source of financial assistance but also a source of technology.
● The beginning of this relationship was marred by distortion of facts and ignorance
about each other as the writings of Miss Mayo & Rudyard Kipling presented a
distorted image of India in the west.

HISTORY OF INDIA & US

1949- PM Nehru visited US but proclaimed non Alignment policy of India which US
considered appeasement of communist block.
- India's recognition of communist China which the US didn't approve of as the US was
close to the KMT Regime.
1950s- Korean Crises , India with North Korea and US with South Korea
1960s- India wanted $1Bn from US for est of Bokaro Steel Plant w US rejected
1961- India occupied Goa, US didn't approve as it considered Goa Portuguese territory
1962- India China war , US supported India and recognized Mc Mohan line and also
provided air assistance and arms.
- Kanpur Indo America Program - IIT Kanpur
1967- Green Revolution. Norman Borlaug + Dr. M.S. Swaminathan. India went from food
scarcity to food security
1970- Differences started on nuclear non Proliferation Treaty
1971- While US sided w Pak, India signed 20 years treaty of friendship and cooperation with
Russia
1974- POKHRAN- India declared nuclear capacities, US didn't approve and disrupted fuel
supply for Tarapur plant. Biggest mistrust. Resolved in 2008 by signing the Indo US civilian
nuclear deal.
- US est. military base @ Diego Garcia, Indian Ocean.
1984- Bhopal Gas Tragedy @ US based company.
1991- India ranked 1 on special 301 list
1994- ISRO banned by the US.

IRRITANTS b/w India and US

In the beginning there were many irritants-
 1. India's policy of Non Alignment which the US considered as the appeasement of the
communist block.
2. India's recognition of communist China in 1949 which was disapproved by US, as US
was very close the KMT Regime (Kuomintang)
3. During the Korean Crisis of 1950's , India's sympathy was with North Korea, on the
other hand, the US supported South Korea.
4. bitterness b/w the two sides prevailed in 1960 when India wanted $1 billion financial
assistance from US for the establishment of Bokaro Steel Plant which was rejected by
US (later est. with the help of Russia)
5. In the 1960s, during the Vietnam crises, India supported the communist bloc and the
US supported the French forces.
6. In 1961, when India occupied Goa, it was disapproved by the US , as according to the
US , Goa was a Portuguese territory.
7. After 1962 SINO- INDIAN WAR (India-China war), India wanted a long term
defence assistance from US which was rejected due to the pressure exerted by
Pakistan.
8. Throughout the cold war the US supported Pakistan's stand on Kashmir.
9. Difference between India and US also exist on the NPT , i.e., Nuclear Non
Proliferation Treaty

Nuclear Non Proliferation Treaty (NPT)

● This treaty was signed in 1968 at London, Moscow and Washington DC and came
into force in 1970. Article 1 of this treaty prohibits any transfer of technology which
can be either directly or indirectly used for making nuclear weapons.
● Under this treat nations have been divided into two categories:
1. The Nuclear Weapons state (NWS)
2. The Non Nuclear Weapon state (NNWS)

The obligation of both these categories differs.

NWS NNWS

1 Can test and stockpile nuclear weapons Cannot test and stockpile nuclear
weapons

2 Can indulge in enrichment to tune of Can only indulge in enrichment to the

weapon grade uranium 70-90% tune of 3 - 10 % which is Reactor
Grade Uranium

India was asked to sign this treaty as NNWS which India rejected
The basis of this rejection includes-
 1. India regards this treaty as discriminatory in nature, as only those states are NWS who
conducted nuclear experiments before 1968 when the treaty was signed.
2. India's policy of disarmament is for complete elimination of nuclear weapons. It
should not be confined to 5 countries.
3. If India signs this treaty as NNWS , what is the assurance that other de-facto nuclear
powers like Pakistan or Israel would do so?
4. India has suffered aggression at the hands of China, a nuclear weapon state.
5. India's nuclear arsenal is not in any way a threat to global security as India has the
nuclear doctrine of NO FIRST USE.
10. In 1974, US established its military base at Diego Garcia in the Indian Ocean which
was opposed by India. In the same year, India conducted its first nuclear experiment
and the US reacted by disrupting the fuel supply for the Tarapur plant. This became
the biggest mistrust in Indo-US relations which was removed in the year 2008 when
Indo US civilian nuclear deal was signed. According to this deal US companies will
be supplying nuclear fuel to civilian reactors of India, commensurate/suitable with
their requirements. If India further tests( conduct nuclear experiments) this deal would
be rejected.

For signing of this deal the US enacted 123 Agreement which is also called as HYDE Act.
Section 123 of the Atomic Energy Act of the US, states that - If the US supplies nuclear fuel
to any country, it would have to accept international safeguards.
For reprocessing also, the recipient nation would have to seek US permission.
This deal is beneficial for US in many ways-

1. It removes the mistrust in Indo US relations, which existed since 1974.

2. The US can now utilise India to counterbalance China.
3. India is a big market for US nuclear fuel.
4. The US can now tell the entire world that it has pressurised India to accept the
international safeguards which India desisted by not signing the NPT.

The benefits to India include-

1. It can reduce the energy crises of India.

2. At no point of time, the security of India has been compromised, as India can separate
its military reactors from its civilian ones.
3. India can negotiate with other nations for the supply of nuclear fuel.

NUCLEAR LIABILITY BILL

● For the implementation of the Indo US civilian deal, the US earned a waiver from a
nuclear supplier group, so that nuclear fuel supply can be made to India.
 ● The 48 member NSG was formed in 1974, as a reaction to India's first nuclear
experiment.
● For the implementation of this agreement India had to pass the NUCLEAR
LIABILITY BILL and it was passed by the Indian parliament in the year 2010 by
virtue of which liability can be fixed for a nuclear accident.
● Acc. to this bill, liability will be fixed by two agencies-
1. The claims commissioner who would have the power of the civil court
2. Nuclear damage claims commission which would have 6 members including a
chairperson.
● Section 17 B of this bill stated that- For fixing liability on the manufacturer, the intent
of the supplier needs to be proved in the court of law.
● Since intention cannot be provided legally, this word provided a protection cover to
US companies.
● After debate in the parliament the word intent was expunged and it became a big
dispute b/w India and US.
● This issue was settled in the year 2015 when president Obama visited India.
● An agreement was reached b/w the two countries for establishment of Nuclear
Insurance Pool, in which contribution would be made by the operator (GOI) and state
owned insurance companies like LIC.
● Contribution would also come from the manufacturer but would be in the form of a
premium which easily can be offset in the cost of fuel supplied.
● This fund would be divided into 3 parts-
1. Tier 1
2. Tier 11
3. Tier 11

Tier 1 would be utilised by the operator and tier 11 and 111 by the manufacturer.

● For the implementation of this agreement both India and US have signed , CSC
Agreement which stands for convention on supplementary compensation for nuclear
damage.
● This agreement has been initiated by the International Atomic Energy Agency ,
Vienna and is for fixing liability as well as speedy compensation.

Current Irritants-

1. Outsourcing -
● Under this, jobs from the US and other parts of western world were transferred to
India, the leverage for India was a big population of English speaking, Computer
literate, middle class.
● But this caused dissatisfaction amongst native Americans.
● When President Obama came into power, a law was passed, which denied the
government. subsidies to those US companies transferring jobs to developing nations
like India.
● When president Trump came into power, he announced American First Policy
 2. Indian IT firms -
● There was an allegation towards Indian IT firms that it caused loss to US Govt.
● In the year 2013, US Immigration Reforms Legislation was formed.
● The Indian IT firms having Branches in the US would have to employ native
Americans.
● They cannot bring skilled professionals from India.
● In the year 2014, India became the 17th member of Washington Accord, which
provided for parity of engineering degree but this accord was not applicable to the IT
sector.
3. Visa issue -
● US is responsible for providing 185 types of VISAs, of which 3 types of visa are a
matter of concern for India:
1. H1B VISA
● Out of the 3 H1B VISA is one of the biggest disputes b/w India and US.
● H1B Visa is a non immigrant visa, meant for those skilled professionals who are
ready to work in the US in the speciality Sector.
● This visa is provided to those skilled professionals who can perform mental or
intellectual work.
● There is no time frame fixed for this visa.
● If the person fails to get a job, he would have to return to his/her native land.
2. L1 VISA
● L1 visa is meant for Intra company executives and managers.
● A time period of 5 years is fixed for this Visa after which they can be considered for a
green card for permanent stay in the US.
● Spouses of L1 visa holders would be entitled to L2 visa and can also seek
employment in the US.
3. EB-5 VISA
● The EB-5 visa is the easiest way to get a US green card.
● But the fee for an EB-5 Visa is very high.
● This visa is for work, play , live and settle in the US.
● In the year 2019, the EB-5 Visa fee was enhanced from $5 lakh to $9 lakh and it
became a dispute b/w India and US.

But the biggest dispute is for H1B VISA

● The US wants to make H1B visa allocation, more stringent in nature , as there is a
perception in the US that H1B visa allocation is responsible for bringing loss of job
opportunities to native Americans- as the Indians grab jobs working on low wages.
This is Erroneous.
● In 2009, an agreement was reached, in which the US agreed to allocate 1, 30,000 H1B
VISA provided the visa holder works in a sector called STEM. (science, tech,
engineering, mathematics)
● In 2016, the US was responsible for enhancing the H1B VISA fee, in order to make it
more strict in nature.
 ● A relief given by the Obama administration to the spouses of H1B visa holders, to
seek job opportunities in the US, was removed by the Trump administration.
● The Trump administration also passed a law under which there won't be any kind of
insurance cover provided to the dependents of H1B visa holders.

India's stand on visa issues is reflected in the findings of Brooklyn Institute study.

● It's wrong to say that Indians work at low wages in the US , in fact the wages earned
by Indians is far more than the native Americans.
● It's wrong to say that h1b visa allocation brings job opportunities loss to native
Americans. In fact for 100 h1b visa allocation, 180 jobs are created for native
Americans.
● The number of skilled professionals passing from US universities is far less than the
requirement of US companies. So H1B visa allocation is justified.
● It's wrong to say that Indian IT firms are responsible for losses to the US, in fact from
2011 to 2013, Indian IT firms contributed more than $22 billion dollars in the US
treasuries.

TRADE WAR B/W INDIA AND US

● In the year 2018, the US imposed 25% tariffs on steel and 10% tariffs on aluminium
which hampered the interest of India as India is one of the biggest suppliers of these
commodities to the US.
● In June 2018, US withdrew GSP (generalised system of preferences), under which
export intensives were provided to other nations.
● India was the biggest beneficiary of GSP.
● India reacted by imposing tariffs on 29 commodities imported from the US which
triggered trade war b/w India and US.
● Already a trade war exists b/w US and China which has hampered the global supply
chain.
● There is a perception in the US that the liberal Policy that it followed benefited China.
● The same liberal policies are being pursued against India with which the US also has
Visa problems.
● Although the trade war b/w US & China, has benefitted India's Pharma, Steel , IT
industries.
● But India conveyed a message to the US that an economically well developed India
would always be in the interest of the US as India won't be responsible for any kind of
regional hegemony (dominance).

S-400 Deal

● US has warned India that it would invoke CAATSA ( countering America adversaries
through sanctions) , if India goes with S- 400 Air defence System Deal.
● India is purchasing this defence system from Russia.
 ● Section 235 of CAATSA, provides for 12 Punitive Actions which include cancellation
of loans, grants, disruption of trade, stringent visa regime or denial of visa, etc.
● But CAATSA would be invoked only when the supply is made in the year 2023.
● India has clearly stated that it can zero it on the crude oil imports from Iran under US
pressure but the S-400 deal is mainly concerned with the national interest of India
which India can hardly compromise.

Other irritants in India US relation-

- Special 301, double definition o terrorism, banning of ISRO.

● Special 301 is a list of....... of the US , which includes all those countries which are
violating US intellectual property rights.
● India was ranked 1 on this list in the year 1991 due to manufacturing of generic drugs
on a large scale .
● Although India is today not present in this list , due to proximity b/w India and US,
manufacturing of generic drugs continues to be an issue b/w India and US.
● In the year 1994, ISRO was banned by US, as Russian space agency- Glavkosmos
supplied cryogenic engines to ISRO, which was regarded by US as violation of
MTCR (missile tech control regime)
● MTCR was signed in the year 1987 and consists of 35 members. It prevents transfer
of technology which can be utilised for, making of drones (UAVs) or missiles, having
a range of more than 300 km and which can carry a payload of more than 500kg.
● Today with the help of the US , India has become a member of MTCR, which was
denied to china.
● India has a good track record in missile technology transfer.
● With the help of the US, India has also become part of the Australia group. (Chemical
and biological weapon) and also Wassenaar Group (Dual Use tech)
● Recently, a US naval Ship entered the exclusive economic zone of India near
Lakshadweep, conducting freedom of naval petrol, but India objected stating that it is
a violation of UN convention on laws of the sea.
● US naval ships have conducted many such naval patrols in the south China sea.

Digital services Tax issue-

● Last year India announced digital services tax, which implies that those foreign
companies which are responsible for providing, e- commerce services in India, and
whose annual revenue earning is more than 2 cr. rs. would have to pay 2% in the form
of digital services tax.
● The US conducted an investigative study for 1 year and as a retaliate reaction was
responsible for imposing 25% tariffs on goods imported from 6 countries including
India.
● Recently the US put this tariff on hold saying that it is time for buying time for
negotiations.

BETTER TIMES IN INDO US RELATIONS

 ● In 1962, with the help of the US , the Chinese Aggression was checked.
● In the year 1990, a big shift was noticed in India's foreign policy, as India provided
refueling facilities to US war planes involved in the Gulf War.
● In the same year, Pressler amendment was passed , Under which economic and
military assistance from US was denied to Pakistan(1990)
● In the year 2001, a military agreement was signed b/w the two, by virtue of which the
US supplied India jet engines , components of LCA (light combat aircraft),
surveillance radars , etc.
● In 2004, the ban on ISRO was lifted by the US.
● In the year 2005, both sides signed an agreement for the establishment of an oil based
zero emission power plant, called future generation.
● In the year 2008, not only the two sides signed a civilian nuclear deal, but also the US
payload M3 i.e., moon mineralogy mapper, was carried by India's first moon mission
Chandrayaan 1. This payload of the US was responsible for mapping 90% of the
moon surface and also finding the evidence of Water on the moon.
● In the year 2010, strategic partnership, b/w the two sides started. The two sides now
conduct joint military exercise called YUDDHABHYAS, joint naval exercise -
MALABAR SERIES and joint air force exercise- COPE INDIA.
● In 2013, India eased norms for investment in multi brand retail - a long pending
demand of the US.
● (with the help of US, India became MTCR and Washington accord)
● In 2015, the two sides signed an agreement on nuclear insurance pool and also
$4billion financial assistance was given by the US to India for renewable energy and
development of small and medium enterprises.
● The two sides also jointly manufactured mini UAVs called RAVENS and also
biological and chemical weapons protection gear.
● They would also manufacture components of C-130J aircraft.
● In the year 2016, LEMOA agreement was signed b/w the two sides

ECONOMIC RELATIONS

● The US has surpassed China to become India's top trading partner, showing greater
economic ties b/w the two countries.
● India's exports as well as imports are increasing with the US, while with China both
are decreasing.
● America is one of the few countries with which India has a trade surplus. On the other
hand, India has a huge trade deficit with china.
● Tariff problem
● Trump has time and again complained about high import tariffs levied by India on
American motorcycles.
● India is a major exporter of steel and aluminium from the US. In march 2018,
America imposed 25% import duty on steel and 10% on aluminium products.
● India has also dragged the US to the world trade organisation's (WTO) dispute
settlement mechanism over the imposition of duty on steel and aluminium.
 ● India had imposed higher import duties on 29 US products in retaliation to the US.

GSP- GENERALISED SYSTEM OF PREFERENCES

● The U.S GSP program with its origins in the Trade Act of 1974 is considered to be
one of the key exceptions providing non-reciprocal trade preferences to certain
products from designated beneficiary developing countries (BDCs).
● The preferences are mostly in the form of duty free tariffs or concessional tariffs
extended to 3500 products from about 121 developing countries, which enables entry
to U.S. markets.
● India being one of the largest beneficiaries of the GSP scheme, has enjoyed 0 tariffs
● status on around 2,000 products.

Impact of GSP withdrawal on India-

● Within the group of countries that provided GSP benefit to India, exports to Eu
nations were highest, followed by the US.
● India has been a beneficiary of the GSP program since November 1975. The move
can impact India's competitiveness in exports.
● These businesses will find it difficult to survive price based competition owing to the
supply of similar products from other developing countries to America at Cheaper
prices.

LEMOA- logistic exchange memorandum of agreement

OBJECTIVE- By virtue of this agreement the two sides would utilise each other's military
base for repair and replenishment of supplies.
BENEFITS- This agreement can be used by both sides in humanitarian crises, for providing
relief measures, like disaster relief.
- The reservation on this agreement was expressed by Russia that if India signs further
agreements like this with the US, the 1971 friendship agreement would be disrupted.
- The main reasons for signing this agreement was the growing assertiveness of China,
control over Indian Ocean and it also reflected the proximity b/w India and US.
Sidelining the reservation expressed by Russia, India went ahead and signed more such
agreements with the US. There are 4 such agreements under which LEMOA was one.
2002- the General Security of Military Information Agreement which is for providing
security to military exchanges b/w the two sides.
2016- LEMOA
2018-COMCASA (Communications Compatibility and Security Agreement) by virtue of this
agreement India would be provided encrypted devices by the US, which can be utilised
by Indian military commanders to have communication with Aircrafts and naval ships.
2020- BECA (Basic Exchange Cooperation Agreement) this is for exchange of topographical
and aeronautical data which can be used for better targeting and navigation.
OTHER AGREEMENTS-
1. QUAD-
 ● India , US, Australia and Japan- are also members of the QUAD initiative.
● These four nations came together in the aftermath of the 2004 , Asian Tsunami and In
the year 2007 QUAD was formed- but it was a loose organisation.
● But due to the growing assertiveness of China gained strength and was Established in
a more formal manner in the year 2017.
● The cooperation b/w the 4 big maritime democracies of the Indo Pacific region, is not
only for regional harmony but also for free and open Indo- Pacific.
● Intelligence sharing takes place b/w the 4 nations and the Chinese concern is that the
quad is directed against its interest.
● Recently the virtual summit of QUAD was organised (March 2021), where 3 working
groups were formed-
1. for vaccine
2. for climate change
3. for emerging technologies.

2. STA-1

● In the year 20, India was given STA-1 status by the US, i.e. strategic trade
authorisation.
● India became the 37th state to gain this status and the 3rd in Asia after Japan and
South Korea
● India is the only country which has not signed all 4 export control regimes, but has
this status.
● With the help of this status, India would gain access to the high end technology, in the
field of defence and security.

3. ISA

● In the year 2019, India and US signed an agreement called Industrial Security Annex,
by virtue of which defense companies of both India and US can bag multi billion
dollar deals in other countries.
● In the limelight of COVID pandemic , India was responsible for helping the US
supply hydro chloroquine and paracetamol.
● India is negotiating with the US for Vaccine Supply for Covid pandemic.

ASIA PIVOT POLICY

● The supremacy of the US can hardly be challenged by Russia today, as it is

undergoing a sluggish economic phase. Neither can it be challenged by the Islamic
world which is highly fragmented in nature.
● The wherewithal to challenge US supremacy is only with China in both economic and
military terms. SO, the Indo- US strategic partnership is deliberately based on
geographical enlargement to include the region Asia- Pacific.
● The US today is hardly interested in West Asia. Neither is it interested in the western
world, where the nations themselves suffer from economic crises.
 ● The US wants to concentrate on South East Asia and East Asia.
● And these were the main reasons for starting the Asia pivot policy.
● Although this policy was formally announced in the year 2012 under the Obama
administration. But reflections of this policy can be seen much earlier during the days
of the Clinton and Bush administration.
● The US upgraded the Changi naval base at Singapore and diploid a large number of
weapons in Guam.
● Roughly 60% of US troops abroad are present in Asia.
● Under this policy the US would be developing cultural and trade ties with the
countries of this nation which would be upgraded to strategic partnership.
● The US would support democracy and human rights in this area. China feels that this
policy is for its containment/limiting.
● In 2012, when initial impetus/momentum was given to this policy but following was a
lackluster approach. As such in 2016, US wanted to do a re balance to this policy
when president Obama, visited Vietnam and Japan.
● These are two countries with which the US has a troubled past, but they are very
important in pursuance of this policy.
● Vietnam is an emerging Economy and Japan is a technological giant.
● The project MAUSAM, necklace of diamonds, QUAD initiative are in tune with this
policy.

CONCLUSION-
The two great democracies are bound to create a new world order and with balanced positive
cooperation, both will be successful in establishing promising peace and tranquility especially
in all volatile south China Sea and Asia Pacific Region.