What's Next for the Trump Administration's India Policy?

By Trisha Ray

Secretary Tillerson Meets With Indian Prime Minister Modi in New Delhi

U.S. Secretary of State Rex Tillerson meets Indian Prime Minister Narendra Modi at the Prime Minister's House in New Delhi, India on October 25, 2017. [State Department Photo/ Public Domain]

During his speech to the Asia-Pacific Economic Cooperation (APEC) CEO Summit last week, U.S. President Donald Trump outlined his administration’s vision for a “free and open Indo-Pacific.” The Trump administration’s pivot to an Indo-Pacific concept reflects the degree to which India is playing an increasingly central role in U.S. strategy toward the region. Within the past two months, New Delhi has hosted two high-level U.S. officials, Secretary of Defense James Mattis and Secretary of State Rex Tillerson, both of whom have made notably bold statements on an anticipated role for India in U.S. policy for the region. Both visits also make clear that U.S.-India relations have come a long way since the 1990s, when the U.S. sanctioned India for its nuclear program.

U.S. recognition of the enhanced role India could play in shaping the development of a “free and open Indo-Pacific,” and India’s realization that the United States could help it take its perceived rightful place as a global power, suggest conditions are ripe for an upward swing in the bilateral relationship. Secretary Tillerson’s first major Asia address, offered at the Center for Strategic and International Studies (CSIS) in Washington, D.C. the week prior to his visit, further increased expectations, as he stated, “[T]he world, and the Indo-Pacific in particular, needs the United States and India to have a strong partnership….Our two countries can be the voice the world needs to be, standing firm in defense of a rules-based order.” The Secretary’s speech and subsequent New Delhi visit offer a few key takeaways about what may be next for U.S.-India relations.

Counterterrorism

Countering extremism will remain at the top of the agenda for both Washington and New Delhi. The top U.S. priority in South Asia is ending the protracted conflict in Afghanistan, with a strategy that envisions an enhanced role for India, much to Pakistan’s chagrin.

For the U.S., the 16-year long war is a drain on resources — the conflict has cost the U.S. roughly $2 trillion since 2001 — and President Trump’s new policy favors granting the military as much autonomy and budgetary leeway as needed to make a big push that will bring the war to an end. The new policy puts greater pressure on Pakistan to deal with domestic extremists, something that India is keen to highlight, as evidenced by India’s Minister of External Affairs Sushma Swaraj’s remarks:

[W]e will work closely to ensure that no country provides safe havens for terrorists, and those who provide support to terrorists or use terrorism are held accountable. We believe that effective action by Pakistan against all terrorist groups without distinction is critical to the success of the new strategy of President Trump.

Islamabad is already feeling the pressure from the recent statements: Pakistan’s Foreign Minister Khawaja Asif called India’s new role in Afghanistan “unacceptable,” and denied the existence of safe havens in Pakistan saying, “They do not need our territory any more. Almost 40% of Afghan territory is now under the direct control of the Taliban.”

Although India has historically played a developmental role in Afghanistan, it wishes to play a bigger role in security through training and capacity building. During his recent visit to New Delhi, Afghan President Ashraf Ghani expressed support for the U.S.-India partnership. India, the United States, and Afghanistan have stated they will hold a trilateral meeting to discuss India’s new role.

Managing China’s Rise

While little was said on the issue during Secretary Tillerson’s visit, the regional balance vis-à-vis China is nonetheless the unspoken strategic backdrop framing the bilateral relationship. In his speech at CSIS, the Secretary went as far as to call China’s actions in the region “provocative,” “subversive,” and “predatory,” while praising India’s commitment to international laws and norms.

One of the most notable efforts to date to build practical cooperation on a shared vision for the “free and open Indo-Pacific” was last week’s revival of the Quadrilateral Security Dialogue (QSD), led by senior officials from the United States, India, Australia, and Japan. The QSD was previously held for the first and only time in 2007, as an effort to link and coordinate ties between four large Asia-Pacific democracies. More recently, Prime Minister of Japan Shinzo Abe began pushing for a renewed quadrilateral discussion, raising the proposition during a meeting with President Trump on November 6. Although India — which until recently was hesitant to restart the QSD — participated in the initiative, it may prefer a slower, more careful approach than Tokyo might have in mind. Identifying mutually agreeable areas of practical cooperation will require some degree of tact and forbearance on Washington’s part.

Another issue that was notable by its absence during Secretary Tillerson’s visit was discussion of the South China Sea (SCS). Minister Swaraj’s comments were deliberately vague as well, not going beyond identifying “security challenges in the Indo-Pacific region” and the “importance of freedom of navigation.” It is possible that Secretary Tillerson’s assertive remarks at CSIS alarmed New Delhi, which prefers to remain firm but non-specific about its criticisms on the SCS. Formal policy documents like the Indian Ministry of Defense’s Annual Reports simply highlight the importance of peace and stability due to the trade routes that pass through the Indo-Pacific. For India, Chinese aggression in the SCS is a not an immediate concern, but Chinese incursions in the Indian Ocean Region are. New Delhi will therefore likely continue to collaborate with the United States on China’s challenges to the rules-based international order, but perhaps less aggressively than Washington hopes.

Trade and Investment

India is the United States’ ninth largest goods trading partner, with two-way trade at $67.7 billion and total trade in goods and services at $115 billion in 2016. Secretary Tillerson highlighted India’s investments in the United States, and the role Indian entrepreneurs play in the U.S. economy. The United States will receive a boost from energy trade with India, with the first shipment of U.S. crude oil hitting Indian shores in January 2018.

New Delhi,for its part, is engaged in continuous dialogue with the U.S. Congress to ensure Indians are not affected by legislation on the H-1B and L-1visas. Indians form the largest portion of H-1B holders, and a report by the Centre for Global Development estimated that the U.S. economy gained $14.7 billion from H-1B migrants.

U.S. firms have been keen on entering the Indian market, but face regulatory hurdles and protections that adversely affect the ease of doing business. In the long-term, Prime Minister Narendra Modi is making a big push on expanding domestic production assisted by foreign direct investment, with the Make in India initiative as the focal point. Although India has made some progress on simplifying the regulatory maze foreign businesses need to navigate, it has a ways to go. For instance, Lockheed Martin offered to shift all its production of F-16 fighter jets to India, but has concerns regarding the protection of proprietary technologies. Additionally, there is a high level of variation between Indian states in the pace and level of investment reforms. In 2016, a vast majority of states had made less than 30% progress toward their business reforms goals for the year. Therefore, India must sign agreements with the United States that set basic standards for intellectual property rights and lower non-tariff barriers on investment to ensure a truly fruitful economic relationship.

Conclusion

Looking forward, the United States and India will continue to converge on areas of mutual interest. On the broader policy level, the 2+2 dialogue mechanism will bring together the foreign and defense secretaries of the two countries for its first iteration next year and will serve to strengthen security and defense cooperation. The only other country the United States has this mechanism with is Japan, a treaty ally. Washington should thus be patient but firm in encouraging India to be proactive in the region, and India in turn should take advantage of this moment of confluence to advance U.S.-India ties.

 

Trisha Ray is an intern with the Asia Society Policy Institute in Washington D.C.

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