Future of US-India relations: COVID-19, China and diaspora factor

September 25, 2020 4:26 PM

The Indian American community has become one of the most significant ethnic groups that is likely to witness high political turnout in the upcoming U.S. elections.

Data reveals that a significant growth in the population of this community - increasing from 1.9 million in 2000 to nearly 4 million in 2020 - has contributed to this.

By Carl Jaison and Mrinmoy Deori Borah

With the U.S. Presidential election just round the corner, The Bridge Project recently hosted a podcast on ‘Future of U.S.- India Relations’ that featured a panel comprising Arun M. Kumar, Chairman and CEO, KPMG India; Sanjeev Joshipura, Executive Director, Indiaspora and Rajesh Mehta, International Consultant and Columnist.

The burgeoning U.S.-India relations is certainly one to watch out for in the coming years. Over the past decade or so, the U.S.-India partnership has withstood the impact of contemporary geopolitical currents like the anti-globalisation wave and witnessed increased convergence of mutual interests primarily through the QUAD initiative as a bulwark against Chinese aggression. On the cultural front, the largely successful Indian-American diaspora has been acknowledged as being one of the driving forces behind the current bi-partisan support for India-U.S. ties in Washington D.C.

Given the strong India-U.S. alignment on many issues, Rajesh Mehta highlighted the framework of three T’s – “Technology, Trust and Talent” – of eminent scientist R.A. Maselkar and argued that the relations between the two countries is similarly rooted in these three pillars.

But, as with most promising partnerships, the proof of the pudding lies in eating it. Specifically, the trade pudding could help to sweeten the overall upswing in relations. In the context of the upcoming U.S. Presidential elections, it will be interesting to read the tea leaves with regard to the factors that are likely to feature prominently in the U.S.-India bilateral engagement.

The Indian- American Diaspora

The Indian American community has become one of the most significant ethnic groups that is likely to witness high political turnout in the upcoming U.S. elections. Data reveals that a significant growth in the population of this community – increasing from 1.9 million in 2000 to nearly 4 million in 2020 – has contributed to this.

Sanjeev Joshipura argued that the relatively high contribution of this community to American public life is one of the reasons behind their outsized political influence. “Even in the past, Indians in the U.S. have been very successful in areas such as science and technology, medicine, entrepreneurship, etc. but in the context of political power or clout, Indians had almost no say,” he said. In recent years, however there has been a sea change. In 2018, over 100 candidates of Indian origin ran for government office at all levels. In the current race, the most prominent example is the candidature of Kamala Harris as the presumptive Vice Presidential nominee for the Democratic Party. Several campaigns from both the camps included outreach activities like social media campaigns, video releases, engagement of Presidential candidates with the Indian diaspora, etc., all tailored to win the support of the Indian diaspora community that could prove crucial in some of the key battleground states.

According to their political preferences, Indian Americans have traditionally tended to vote for Democrats in large numbers but a recent shift towards the Republican party is likely underway in the upcoming election. This is clear in the context of the outbreak of the COVID-19 pandemic as during the Presidential election campaigns, Indian Americans from both camps have used it as a tool to either praise or criticise the Trump administration.

The China Factor

One of the Trump administration’s focus areas vis-a-vis New Delhi has been to keep the fire burning on the Quadrilateral Security Dialogue or ‘Quad’ initiative. “Arguably, the biggest success of the Trump administration has been its vocal support for India against China” which, according to Mehta, finds resonance in the recent elevation of the Quad. The grouping consisting of India, U.S., Australia and Japan was formed as a strategy to keep China in
check in the Indo-Pacific and is set to hold its first foreign minister-level meeting in Tokyo next month. This meeting assumes greater significance in the backdrop of the India-China border dispute. The China factor is likely to further boost India’s economic engagement with other like-minded countries. Mehta states that ‘the revival of the Quad offers great potential to become an economic bloc that facilitates investment, innovation, infrastructure development etc in the Indo-Pacific region’.

Trade Issues

While the strategic objectives of the Indo-U.S partnership have been evident for a while now, there is still a lot left to be desired on the trade front. Despite the two way trade between both countries standing at $150 billion (even as the U.S for the second year running has eclipsed China to become India’s largest trade partner), the failure to conclude the much touted trade deal had raised concerns among the business communities.

According to Mehta, ‘stalled negotiations have needlessly created bottlenecks for U.S companies in India’ while he
predicted that a Biden administration would be in a better position to finalise the deal. In recent weeks, there has been a renewed push for a ‘limited’ trade deal with India’s Commerce and Industry Minister Piyush Goyal expressing hope that a ‘very balanced offer is on the table’.

Despite the setbacks in terms of the withdrawal of export incentives by the US under GSP (Generalised System of Preferences), India continues to record high export figures to the U.S. As reported in the Financial Express, the hope is that the larger issues such as high duties and tariffs especially on steel and aluminium products, GSP privileges for certain products and market access are addressed to the mutual satisfaction of both sides. Arun Kumar argued that the palpable delay sometimes arises out of domestic political considerations. “If you want to take care of the indigenous agriculture sector and dairy practices, it is important to bring on board the concerns of the various domestic stakeholders”, said Kumar.

However, the contention on the U.S. side seems to be that Indian negotiators have been slow to factor in American domestic concerns even at a time when New Delhi is in need of reducing its reliance on China. Just like it represented the final nail in the coffin vis-a-vis India’s pull out from RCEP last year, India’s domestic political incentives continue to serve as a roadblock to market competitiveness. It is therefore in the interests of both sides to find room for concessions, regardless of who comes to power in the U.S., to tackle some of these long-standing issues. With the trade deal notwithstanding, it is still worth noting that the structural incentives for improved trade ties is increasingly becoming clear: the U.S. is India’s biggest export destination, accounting for about 17% of Indian exports while India is its eighth largest trading partner.

Shift of Supply chain from China to India

According to Mehta, as China modernises and its economy expands, the words of French military leader Napoleon ring true. ‘China is a sleeping giant. Let her sleep, for when she wakes she will shake the world!’ In the wake of COVID-19, U.S. President Donald Trump has been continuously putting the blame on China for the spread of the virus. This threatens to upend China’s long-held policy of “hide your strength and bide your time” with countries
having realised their overdependence on Beijing with regard to supply chains. Companies with their bases in China are exploring other regions in order to shift their units with one potential destination being India.

Joseph Semsar, Deputy Under Secretary of Commerce for International Trade, urged the Government of India to create an environment that will enhance India’s position in the global supply chain. Semsar while speaking at the third India- US Leadership summit, organised by USISPF, cautioned India that its Atmanirbhar Programme might bring isolationist policies that can cause a decrease in exchange between businesses and economies.

On the other hand, Mehta was of the view that India’s partnershipwith the U.S to realise its objective of self-reliance is very important. “This is because to build an Atmanirbhar Bharat India needs foreign investments in the areas of defence production, energy infrastructure, agriculture technology, etc., in which case the U.S can play
a prominent role”.

Exploring the pillars of politics, trade and diaspora, it is clear to see why the potential of the U.S.-India partnership is likely to remain. Regardless of the occasional turbulences in the relationship, the areas of cooperation and commonalities cannot be ignored. As the U.S. Presidential elections are just round the corner, it will be interesting to keep a close watch on developments in the U.S.- India relationship.

(The authors of this article are Co-founders, The Bridge Project. Views expressed are their own.)

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