Real push is to open markets to the US

The India-US engagement had improved dramatically when former Prime Minister Manmohan Singh cobbled a relationship with then US President George W. Bush which yielded the India-US civil nuclear agreement. This was an eye-popping moment for the world as India had not signed the nuclear Non-Proliferation Treaty (NPT). Then the relationship cooled. Under President Barack Obama, Washington’s focus moved elsewhere and India wasn’t quite connected with the US. World economy was receding and India was having its domestic problems in keeping industry revved.

Prime Minister Modi’s goal appears to be to re-model India-US relations in a fundamental manner. And his starting point seems to be his conviction that we must go the market way fully. He said so in the US during his recent six-day visit, observing that the government had no business being in business.

All this has taken America by storm, and US big business, at least for now, seems ready to give him reprieve, to overlook that his government has failed to deliver on earlier promises to move more rapidly in the direction of economic liberalisation (in part due to a political logjam which the Modi regime has done all too little to redress).

President Obama too is also evidently persuaded of the importance of economics. Mr Modi of course believes that the economic dimension will be the driver of the strategically re-shaped India-US relations. Here, of course, there is a word of caution from the famous free trader, Prof. Jagdish Bhagwati, the Columbia University éminence grise of trade theory.  Dr Bhagwati has warned that India would be remiss to sign on the dotted line when the US presents its preferential trade agreement model, for that could adversely affect the Indian pharmaceutical industry, for instance.  

However, the US President, in his two earlier interactions with the PM before last Monday, has also sought to rope India into a wider bracket security — defence-strategic tie-up, with America already shooting ahead of Russia to emerge as India’s biggest arms supplier. There is a broad political military dialogue on the international plane, although its regional benefits to India are still only hazy.

President Obama urged Mr Modi to sign in on the US side in the international climate negotiations whose next stop is Paris in December, and announce emission cuts. The Indian response is awaited. India for its part desires America to help it get the long-sought permanent membership of the UN Security Council. Both issues are old chestnuts. The real push for now is to throw open the Indian market to the US, and India’s apparent readiness to oblige.