India’s defining relationship with US

By N Chandra Mohan

Regardless of who wins the closely fought US presidential elections — Donald Trump or Kamala Harris — the outcome is unlikely to impact the upward trajectory of the US-India relationship. Trump delivered a strong message that “under my administration, we will strengthen our great partnership with India and my good friend PM Modi”. The popular impression is that a Trump presidency is preferred by India due to the strong personal chemistry between the two leaders. Nothing could be further from the truth as bilateral relations also flowered under the outgoing Biden presidency. Having served as vice-president in that administration, Harris will continue to bolster ties with India.

There is in fact a bipartisan consensus in Washington for closer ties between the two largest democracies in the world. This has been the case since the then President, Bill Clinton, visited India in 2000, the first US leader to do so in 22 years. To be sure, over the last 77 years, bilateral ties have passed through several twists and turns as independent India allied with the erstwhile Soviet Union. After several decades of being “estranged democracies”, the US and India later became “engaged democracies”, especially during the Bush administration between 2001 and 2009 and under whose watch a landmark agreement on civilian nuclear cooperation was signed.

Progress continued since then with successive US administrations, with Joseph Biden describing India-US relations as the “defining relationship of the 21st century”. India’s foreign policy is increasingly aligned with that of the West, especially the US, while it also nurtures strategic relationships with major powers like Russia in a multi-polar world. The US has become a leading supplier of defence equipment like Predator drones and has inked a deal to manufacture GE’s fighter jet engines in India. Furthering these outcomes is the path-breaking initiative last January for critical and emerging technologies like artificial intelligence, quantum computing, semiconductors, telecom, and space.

The transformation of US-India ties from estrangement to a defining relationship of the 21st century is unlikely to change regardless of whether the incoming administration is Republican or Democrat. An important factor that has elevated India’s importance in US’s strategic priorities is the rise of China with whom it has an increasingly adversarial relationship. Besides India’s capability to become a counterweight to Beijing, this process is also coterminous with the growing profile of the 5 million-strong Indian diaspora which is the wealthiest ethnic community in the US. Those of Indian origin have registered their political presence exemplified by the Harris candidacy.

Dealing with China’s challenge to the US’s global influence will preoccupy the incoming administration, irrespective of whether Trump or Harris wins the election. This in turn has major implications for the world economy, which India cannot be immune from. Trump, for instance, has pledged to impose a 60% tax on Chinese imports, besides an across-the-board tariff of 20% on everything else the US imports. He considers tariff the most beautiful word in the dictionary and will weaponise it to demand reciprocity from countries that have trade surpluses with the US. With China retaliating, these trade wars would hit global output by 0.8% in 2025 and 1.3% in 2026 according to the International Monetary Fund.

For all the perception of a strong chemistry between Trump and Modi, it bears mention that he revoked India’s preferential trade status when he was president. He has made statements that India is a “tariff king” and an “abuser of imports”. For such reasons, he is bound to be transactional in his dealings with India if he is re-elected. Trump is considered a preferred option to us due to his indifference to democracy and human rights. Harris, for her part, would no doubt continue to deepen ties, including trade, with India as happened during the Biden administration but will not hold back commenting on minority rights, religious freedoms, and protection of democratic institutions.

Nevertheless, there is an expectation that America’s deepening engagement with India ought to be reflected in expanding trade, investment, and technology flows. The foundation of the Indo-US relationship is obviously economics but there is a vast upside that must be tapped. Last year, cumulative US investments in India were $49.6 billion but this was a mere 0.7% of American investments worldwide in 2023. Although the US is India’s largest trading partner, two-way flows of goods and services remain at $195 billion or 2.8% of US’s global trade. Unless there is more ballast in the bilateral economic engagement, all this talk of a defining relationship is beside the point.

In the post-World War II world, countries like Japan, South Korea, and China prospered by exporting to America. India must go all in to ensure a similar outcome as it has ambitions to become a developed nation. There is much that the US as a tech superpower can do to facilitate this process by modernising India’s agriculture, addressing the imperatives of energy security and climate change. The upshot is that India must seize the opportunities of a bipartisan consensus for closer ties to vastly improve the economic component through a more business-friendly environment in various states in the country.

The writer is an economics and business commentator based in New Delhi.

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