India – U.S. Relations: A General Overview

The highly successful summit meetings March 1-2, 2006 in New Delhi and July 18, 2005 in Washington D.C. between Prime Minister Dr. Manmohan Singh and President George W. Bush indicate the level of transformation in India-U.S. relations and the establishment of a global, strategic partnership between our two countries. The leaders of the two largest democracies in the world, committed to the values of human freedom and rule of law, believe that this new relationship will promote stability, democracy, prosperity and peace throughout the world. They believe that this relationship will have a decisive and positive influence on the future international system as it evolves in this new century.

Developments in Bilateral Relations

2. Prime Minister Singh first met President Bush on September 21, 2004 at New York on the sidelines of the United Nations General Assembly session, where he remarked that the “best” in India-U.S. relations was “yet to come”.  

3. The tsunami that struck south and south-east Asia in December, 2004, while catastrophic in the victims it claimed, provided an opportunity for the Indian and U.S. navies to work closely together in search, rescue and reconstruction efforts. It underscored the interoperability of the navies of the two countries in a real life situation.  

4. Meanwhile, the Next Steps in Strategic Partnership (NSSP) process, first launched in January 2004 was moving forward rapidly, bringing along in its wake greater transparency and predictability in U.S. licensing arrangements for Indian imports of sensitive items and technology, leading to a significant rise in high-tech trade between the two countries. NSSP was successfully completed during the Prime Minister’s visit.

5. The conclusion of an Open Skies Agreement between India and the United States in April 2005, inked by Civil Aviation Minister Praful Patel and Transportation Secretary Norman Mineta added further ballast to the changing relationship. Enhanced connectivity between the two countries in terms of greater flights will provide a boost to trade, tourism and business. The decision by Air India to purchase 68 Boeing aircraft in a deal valued at US $ 8 billion is an important milestone in commercial relations. 

6. Visits to India by Defense Secretary Rumsfeld in December 2004 and Secretary of State Rice in March 2005 gave clear indications that the United States viewed its relationship with India from a strategic perspective thereby providing a framework for greater cooperation between the two countries on a wide range of issues. External Affairs Minister Natwar Singh and Defense Minister Pranab Mukherjee visited Washington in April and June, 2005 respectively raising the level of the dialogue to a higher plane and paving the way for the successful trip by Prime Minister Singh in July. The conclusion of a New Framework for the U.S. – India Defense Relationship by Defense Secretary Rumsfeld and Defence Minister Mukherjee imparts further momentum to bilateral ties. 

7. The impact of Hurricane Katrina on ordinary people in Louisiana and Mississippi evoked sympathy amongst the people of India. As a token of our support for the affected people, India contributed US $ 5 million to the American Red Cross and also sent in a planeload of relief supplies and material.

8. Prime Minister Singh and President Bush, along with UN Secretary General Kofi Annan, launched the United Nations Democracy Fund (UNDEF) at New York in September 2005 the two countries being the first to contribute to this initiative to the extent of US $ 10 million each. Both nations are positively inclined to a replenishment of the UNDEF.

9. India and the U.S. recently concluded a Science & Technology Agreement, after several years of negotiation, in October 2005, aimed at boosting cooperation between our scientists and institutions of higher learning. The Annex to the Agreement contains ways of handling IPR issues, which may arise in the course of such collaborative efforts.

10. President Bush’s enormously successful visit to India March 1-2, 2006 reaffirmed the commitment of the President and the Prime Minister to further expanding the growing ties between India and the United States. President Bush’s memorable public address from the ramparts of Purana Quila was a highlight of his trip to India. 

11. The successful passage through the United States Congress of the Henry J. Hyde United States-India Peaceful Atomic Energy Cooperation Act of 2006 was a landmark event in bilateral relations, which enabled President Bush to sign it into law on December 18, 2006. This Act successfully revises U.S. law so as to enable the United States to extend full civil nuclear cooperation to India. 

12. US Commerce Secretary Gutierrez visited India in February 2007 and USTR Susan Schwab in April 2007. The visits advanced the bilateral India-US commercial relationship and also expanded our interaction on multilateral issues including on the Doha Round of Multilateral Trade Negotiations. Export of Indian mangoes to the United States has commenced. A private sector advisory group has been established to provide inputs for strengthening and expanding commercial relations.

13. Important forthcoming events include a meeting of the India-US CEO’s Forum at New York this September and a possible visit by US Treasury Secretary Paulson to India. Secretary of State Dr. Rice may also visit India later this year.

14. India and the United States have had some coordination of their respective policies and positions on developments in Nepal, Sri Lanka and Bangladesh. More recently, the first Quadrilateral dialogue between India, the U.S., Japan and Australia was held in May 2007. India continues to be pressed by the United States Administration and the U.S. Congress on its relations with Iran and Burma. In turn, we express our apprehensions of US policies including arms transfers to Pakistan.

Defense Cooperation

15. The new Defense Framework seeks to chart a course for the India – U.S. defense relationship for the next 10 years that will support the broader global partnership that our leaders seek to create. The new parameters of the defense relationship include cooperation in defense technology, continued joint and combined exercises and exchanges, expansion of defense trade, increased opportunities for technology transfer, collaboration, co-production and R&D.

16. The primary mechanism to guide defense ties is the Defense Policy Group (DPG) led by Defence Secretary on the Indian side and the Under Secretary of Defense for Policy on the U.S. side. The DPG held its 8th meeting November 2006 in New Delhi. Sub-groups such as the Defence Production and Procurement Group, the Military Cooperation Group, the Joint Technology Group and the Senior Technology Security Group report to and provide inputs to the DPG. A recently established Defense Joint Working Group met in India this April and discussed policy issues.

17. The armed forces of the two countries have held a number of joint exercises aimed at enhancing interoperability of all the services. Joint exercises involving the navies, armies and Special Forces of the two countries have been held. A new development this April was the holding of trilateral India-US-Japan naval exercises in the Sea of Japan.  

18. During Prime Minister Singh’s visit to the United States July 2005, the two countries had announced a U.S. – India Disaster Response Initiative to build on the successful experience during the tsunami operations of 2004 and to establish an ongoing effort to prepare for and conduct relief operations in the Indian Ocean region and beyond.

19.During President Bush’s visit to India March 2006, the two countries agreed to the conclusion of a Maritime Cooperation Framework to enhance security in the maritime domain, to prevent piracy and other transnational crimes at sea, carry out search and rescue operations, combat marine pollution, respond to natural disasters, address emergent threats and enhance cooperative capabilities including through logistics support. Both sides are working to finalize a Logistics Support Agreement.

20. The Hot-Transfer of USS Trenton, Landing Platform Dock (LPD) 14 to the Indian Navy (IN) on January 17, 2007 was a significant event. This is the first ship acquisition by India from USA. It will be the first of its type for the Indian Navy. With a displacement of approx. 17,000 tons, the LPD is set to be the second largest ship with the Indian Navy, after the aircraft carrier Viraat. The ship will add punch to India’s maritime forces with its capacity to participate in naval operations (ops), peacekeeping ops, tri-service ops and humanitarian relief. It has an unrivalled capacity to carry close to a battalion strength troops and sustain them over a long duration. Ambassador Sen commissioned the ship as the INS Jalashwa on June 22, 2007. The ship has now sailed out of Norfolk harbor and will reach India in a few days.

21. In May 2007 the US Administration notified the U.S. Congress of the possible sale of C 130-J transport aircraft to India. This deal is valued at a little over US $ 1 billion.

Economic Relations

22. India – U.S. bilateral trade grew from US $ 13.49 billion in 2001 to US $ 31.917 billion in 2006. India’s major export products include gems and jewelry, textiles, organic chemicals and engineering goods. Our main imports from the U.S. are machinery, precious stones and metals, organic chemicals, optical and medical instruments, aircraft and aviation machinery. US exports to India grew by 26.31% in 2006 to reach USD 10.091 billion, while Indian exports to the US increased by 16.07% to hit USD 21.826 billion.

23. The U.S. is one of the largest foreign direct investors in India. The stock of actual FDI increased from US $ 11.3 million in 1991 to US $ 5708 million as on January 2007. FDI inflows from the U.S. constitute about 11% of total actual FDI inflows into India.

24. The U.S. is the leading portfolio investor in India. As in December 2006 U.S. based Foreign Institutional Investors have made a net investment of US $ 17.8 billion of a total of US $ 51.021 billion in Indian capital markets accounting for 33% of the total. 

25. The U.S. is also the most important destination of Indian investment abroad. Between 1996 and July 2006, Indian companies invested US $ 2619.1 million in the U.S. largely in manufacturing and non-financial services. 

26. The institutional framework for bilateral economic cooperation comprises a U.S. – India Economic Dialogue co-chaired on the Indian side by Deputy Chairman Planning Commission Dr. Montek Singh Ahluwalia and on the U.S. side by Dr. Allan Hubbard, Assistant to the President for Economic Policy and Director of the National Economic Council. The sub-components of this dialogue are (a) a U.S. – India Financial and Economic Forum led by India’s Finance Minister and the U.S. Treasury Secretary (b) a U.S. – India Commercial Dialogue headed by our Commerce Minister and the US Commerce Secretary (c) a U.S. – India Working Group on Trade co-chaired by our Commerce Minister and the US Trade Representative. The Economic Dialogue has two crosscutting themes in biotechnology and information technology. The IT theme has been expanded to become the Information and Communications Technology Working Group (ICT Working Group) that held its most recent meeting in Washington in July 2007.

27. In November 2002 a Statement of Principles on high technology commerce was issued which established the High Technology Cooperation Group (HTCG) aimed at furthering hi-tech trade including trade in dual-use goods and technologies. This group led by the Foreign Secretary of India and the US Under Secretary of Commerce held its 5th meeting in Washington, DC. February 22-23, 2007. Comprising of two distinct parts, government-to-government meetings as well as a public-private forum, the HTCG meetings focus on four sectors -- IT, biotechnology, nanotechnology and defense technology.

28. Prime Minister Singh and President Bush established a CEO’s Forum prior to their meeting in Washington July 18, 2005. Envisaged as a brains trust of business leaders from the two countries, the CEO’s Forum presented a report to the two leaders during the visit to India of President Bush aimed at substantially broadening the levels of economic interaction between India and the U.S. The Chairs of the Indo-US Economic Dialogue have been directed to follow up expeditiously with the CEO’s Forum. In this effort they convened a meeting of the Forum in New York on October 25, 2006 with high level government participation from both sides. The next meeting of this Forum is scheduled for September 2007 at New York.

29. In July 2005, Prime Minister Singh and President Bush established a U.S. – India Agricultural Alliance to focus on promoting teaching, research, service and commercial linkages. In March 2006, during the visit to India by President Bush the two countries launched the bilateral Knowledge Initiative on Agriculture with a three-year financial commitment to link universities, technical institutions and businesses to support agriculture education, joint research and capacity building projects including in the area of biotechnology. A work plan has been finalized and is being implemented.

30.President Bush and Prime Minister Singh agreed that their two governments would organize a high-level public-private Investment Summit in 2006, with a view to advancing mutually beneficial bilateral trade and investment flows. This was held in New York on October 25, 2006.

31.The logjam in multilateral trade negotiations in the Doha Round of the WTO, has produced a strain among the major trading nations of the world. India-US relations are not completely free from these strains either.

32. The US Government has sanctioned a few Indian companies and individuals for exporting to and contacts with Iranian enterprises and scientific establishments. India has stated that no Indian company or individual has violated either Indian law or international obligations. 

Cooperation in Energy

33. India and the U.S. launched a new Energy Dialogue in May 2005 aimed at increased trade and investment in the energy sector. The co-Chairs of this mechanism are Dr. Montek Singh Ahluwalia, Deputy Chairman, Planning Commission on the Indian side and Mr. Samuel Bodman, Energy Secretary on the U.S. side. A Steering Committee has also been formed to supervise the work of the Group headed by India’s Foreign Secretary and the US Under Secretary for Energy Efficiency.

34. Five working groups have been formed covering the areas of : (a) oil and natural gas (b) electric power (c) coal (d)energy efficiency, renewable energy and new technologies (e) civil nuclear power. The working groups have finalized their terms of reference and are now moving to achieve their goals which include, strengthening mutual energy security and promoting stable energy markets; advancing understanding of efficient generation, transmission, distribution and use of electricity; developing and deploying clean energy technologies and energy conservation practices; dialogue and action on issues associated with civilian uses of nuclear energy.

35. Energy Secretary Bodman visited India in March 2007. He had meeting with PM and several of our Cabinet Ministers. 

36. During Prime Minister Singh’s visit to Washington D.C. July 2005, President Bush told the Prime Minister that he will work to achieve full civil nuclear energy cooperation with India as it realizes its goals of promoting nuclear power and achieving energy security. Appreciating India’s strong commitment to preventing WMD proliferation and as a responsible state with advanced nuclear technology, President Bush felt that India should acquire the same benefits and advantages as other such states. He said he would seek agreement from Congress to adjust U.S. laws and policies, and the U.S. would work with friends and allies to adjust international regimes to enable full civil nuclear energy cooperation and trade with India. Prime Minister Singh in turn conveyed that India would reciprocally agree that it would be ready to assume the same responsibilities and practices and acquire the same benefits and advantages as other leading countries with advanced nuclear technology, such as the United States.

37. The leaders agreed to establish a working group to undertake on a phased basis the necessary actions to fulfill these commitments. The working group is co-chaired by the Foreign Secretary of India and the US Under Secretary of State for Political Affairs. The co-chairs are in regular, direct contact. 

38. When President Bush visited India in early March 2006, the two governments announced the successful completion of discussions on India’s plan to separate its civilian nuclear program from its military program. The passage of the Henry J. Hyde Act and its signature into law by President Bush on December 18, 2006 was another landmark in this process. The two sides have also completed negotiations on a bilateral civil nuclear cooperation agreement (the so-called 123 Agreement), which will be signed soon. Further steps include the conclusion of an India-specific safeguards agreement with the IAEA following which the 45-nation Nuclear Supplier’s Group (NSG) will be requested to change its guidelines to permit such cooperation with India. Thereafter the bilateral 123 Agreement will have to be presented to the U.S. Congress for an up-or-down vote. 

39. India has been invited to join the International Thermonuclear Experimental Reactor (ITER) project as a full partner. This decision was taken in December 2005 at the ITER negotiations meeting at Jeju, South Korea. The U.S. strongly supported India’s application. ITER is the experimental step between the latest studies in plasma physics and future electricity producing fusion power plants.

Cooperation in Science & Technology

40. The recently signed S&T Agreement between India and the United States is expected to provide a fillip to S&T cooperation and expand relations between the S&T communities of both countries. The Agreement visualized cooperation in areas such as basic sciences, space, energy, nanotechnology, health and IT. The Agreement also establishes IPR protocols and other provisions necessary to conduct active collaborative research.

41. India and the U.S. have also agreed to enhance joint activities in space cooperation including in-space navigation and in the commercial space arena. There is a U.S. – India Joint Working Group on Civil Space Cooperation that discusses joint activities. Its next meeting is scheduled in Washington D.C. end-February 2007. The Indian Chandrayaan – 1 mission to the moon in 2008 will launch two U.S. instruments.  

42.During the visit to India of President Bush, the leaders of the two countries announced the establishment of a Bi-National Science and Technology Commission that will be co-funded by the two governments. Its aim is to generate collaborative partnerships in S&T and promote industrial research and development. This initiative emphasizes the importance the two countries place on knowledge partnerships. 

43. Despite the bulk of the sanctions on Indian entities and organizations having been removed over the past few years, Indian scientists working in cutting edge technologies and areas continue to find it difficult to obtain visas to the United States. India has brought this to the attention of the U.S. authorities.

44.An interesting aspect of S&T cooperation between India and the United States is the expanding direct exchanges between U.S. and Indian Universities. Increasingly, the major U.S. Universities have been exploring direct contacts with India and several University Presidents have visited India. 

People-to-people Ties

45. The 2.5 million strong Indian American community in the United States has been growing in affluence and political strength and has developed into a force for closer and stronger ties between their adopted country and their nation of origin. Their active cooperation and interaction at different levels with the Government of India as well as with the U.S. Administration provides a bridge between the two countries. The passage of the Henry J. Hyde Act by the U.S. Congress saw the Indian-American community coming of age in the United States. Their efforts in support of this Act were magnificent.

46. Cultural ties between the two countries are largely driven by the private sector. Indian music, dance, art and literature is widely appreciated in the United States. Indian cuisine is a favorite with many Americans and Indian films are reaching out to wider audiences here. Efforts are currently underway to spread Indian culture to a more popular level as well as ensuring that Indian artists are able to perform at mainstream theatres and halls.

47. Students from India continue to flock to the U.S. especially for higher, University level education. India is now the number one country sending students to the U.S. with approximately 80,000 students each year, far surpassing China. US Under Secretary of State Karen Hughes visited India in April 2007 with a delegation of 5 US University Presidents and pledged that Indian students would find it easier to obtain visas to study in the US.

The Future

48. India and the United States are well on the way to the formation of a strong partnership based on shared common values including respect for individual liberty, rule of law and democracy.