Modi’s Visit to the United States: A Turning Point for the U.S.-India Relationship?
An Interview with Ambassador Thomas Pickering
By Clara Gillispie and Ved Singh
September 29, 2014
This week Indian prime minister Narendra Modi has embarked on a much anticipated five-day visit to the United States. During his visit, Modi has attended the opening session of the UN General Assembly in New York and is set to hold talks with President Barack Obama in Washington. When Obama visited India in 2010, he recognized the U.S.-India relationship as "one of the defining partnerships of the 21st century." However, as several leading experts have identified, the relationship has yet to achieve its full potential, in part due to obstacles on the economic front, which are likely to be a key topic of discussion during Modi’s visit.
To comment on these issues, NBR interviewed Ambassador Thomas Pickering (Vice Chairman at Hills & Company and advisor to NBR), who served as U.S. ambassador to India from 1991 to 1992. In this interview, Ambassador Pickering examines the strategic context of Modi’s visit, how both sides will seek to approach their objectives for the visit, and opportunities for moving forward. He argues that while the United States and India have disagreed on fundamental issues over the years, there is great potential for closer cooperation in the future.
What do you see as the significance of Prime Minister Modi’s visit to the United States?
I think that in some ways this particular visit could be a turning point in the India-U.S. relationship. We’ve had several turning points in the relationship. We had India’s economic reforms beginning in 1991–92, the Clinton visit in 2000, and the Bush efforts last decade to deal with the BJP (Bharatiya Janata Party) on high-tech, nuclear, and space issues.
Now we have a new Indian prime minister coming forward with a set of initiatives that are important for the long-term future of India, and there are ways in which the United States can make a major contribution to that vision. This visit can also open the door for the United States to become a greater part of cooperative arrangements on the Indian scene. This doesn’t mean invading Indian domestic political life, but it does mean becoming a partner with India on a number of activities and ideas that are primarily economic but not exclusively so. It also invites us to have a closer relationship and develop a strategic concept of how we deal with the region and the world.
What is the strategic context that framed the preparations for this visit?
The context is, of course, complicated and complex. On the Indian side, there is a deep concern that the U.S.-Pakistan relationship still remains a prominent determiner of the U.S.-Indian relationship, however exaggerated that might be. On the American side, the concern is that India hasn’t grown in the way that we had hoped and that there are still reservations about doing business in India, especially because of some of the uncertainties during the last Congress government. There are still “hangovers” on both sides: on Prime Minister Modi’s side because of the denial of an American visa for many years and concerns about that issue; on the U.S. side, due to India’s failure to deal with the question of nuclear liability, which would have opened up the advantages the United States thought it had created by starting down a new road with India on nuclear cooperation, but that have not materialized.
The challenge for developing a bilateral strategy will be whether this is a relationship that is characterized more by Modi’s serious interests in developing the Indian economy, or whether this will be a strategic relationship that attempts to deal with foreign policy and security questions as the preeminent interest. It is very clear that Modi will be coming with a very strong sense of carrying on the “Gujarat plan” for economic development and will seek to find ways to interest the American business community much more in working with India. To do that he will also have to convey to the American business community a very strong sense of commitment that India really is prepared to find ways to open the door.
How do you see the prime minister looking to approach these issues?
The sense I have is that his inclination will be to be practical and to work with a number of key firms as a start-up for the relationship. Then, he will take what works and pluralize it, rather than trying to create some kind of institutional construct or spell out some grand communiqué at the outset that can describe it all and see that as the way to move ahead. This is preeminently practical because it deals with some of the obstacles in a concrete and focused way, including some of the bureaucratic obstacles. That’s my sense of the strategy without knowing Modi but being aware of his interests from people I’ve talked to who are close to him and who have a sense of how he would proceed.
My feeling is that Modi will want to ratify with the United States a sense of strong cooperation in the area in which he is most interested: domestic economic development. The United States itself may, as a result, also be able to interest Modi in opening the door on some of the stuck questions that are still out there: whether it is the nuclear relationship or more cooperation in some of the broader multilateral trade arrangements where differences between the United States and India have led to a certain amount of “scratchiness” and lack of progress.
Each side has an interest in a set of relationships that are primarily denominated by India’s very strong interest under Modi in rapid change based on economic growth. The United States should be in a very strong position to support that, because in fact doing business in India for the United States opens up new opportunities that can be very significant. Having worked for the Boeing Company for a number of years and continued my relationship there, I find that is a good example of how a large American firm can work in the vast Indian market. On a high-tech front, Boeing enjoys the benefits of increased sales, particularly of commercial aircraft but also of military equipment, and at the same time works with Indian suppliers on everything from software to aircraft parts. This produces a mutually beneficial relationship as well, not only in pure business terms but also in opening up opportunities for future cooperation and mutual confidence.
You have mentioned that on the U.S. side, there is great interest doing business in India, and Modi has made strengthening these ties an important part of his overall economic agenda. What are U.S. companies looking for when it comes to investing in India?
I think there are a wide variety of things, like the protection of proprietary interests related to patent or copyright questions. The opening up of sectors of the Indian economy, whether it is for investing in insurance or in “big box” stores, is very much part of the American interest, but not the end all and be all. My own feeling is that the strongest interests [in investing] are obviously tied to those sectors that can work out the best partnerships. I talked about Boeing, but there are other companies that are also interested in investing in India with Indian partners in everything from the IT sector to the construction sector.
It is also interesting to see how the really important primary question of agriculture, and rural agriculture in India, can be addressed. No Indian government stays in power without paying attention to the 700 million rural Indians who tend to be voters. How can small-unit agriculture and the future of agriculture be linked together in a prosperous way?
In the United States, less than half of one percent of the population produces most of the crops for domestic consumption and export. It is quite different in India, where two-thirds of the population is engaged in beneficial agriculture. How and in what ways can the state system and even the private sector move that ahead? Are there new ways of preventing post-harvest losses? Are there new possibilities for food processing? Are there new opportunities to help the single-family farm move itself from what is essentially a near-barter economy into a monetary economy? How can education in India particularly cater to the future long-term agricultural interests of the bulk of the population? Those are critical questions for how we talk about potential partnerships.
There are also broader questions about the infrastructure and systems needed for healthy investment environments. As Modi has identified, rural electrification is a key priority. Can he put all Indians in touch with electrical current 24 hours a day in a space of four years? Additionally, problems like corruption run fairly deep in India. How can the Indian bureaucracy be paid well enough and be strict enough in maintaining its own standards to be a true servant of the people rather of the rupee?
These are all tremendous challenges. The United States can help on some issues, but many of these questions will be answered by Indians themselves, and then we will need to find a way to be useful in the Indian context rather than try to convert India into an American context, which is unfortunately a big tendency on the part of the United States.
The prime minister’s office has said that it supports an effort to have a national intellectual property rights policy and strategy in place in the coming months. There will also be an effort to hire one thousand new patent examiners to deal with the backlog of cases and related types of initiatives. This suggests, on the one hand, that U.S. companies’ concerns with Indian policies on these particular issues have found some resonance within the prime minister’s office. On the other hand, the announcements were made just three weeks before Modi’s visit, perhaps suggesting a desire to cast a constructive atmosphere. To what extent are visits of this sort catalyzing events that can lead to productive policy changes?
The answer to this question really depends on how serious both sides are. I would think that Prime Minister Modi would be as much motivated by attracting U.S. investment as he is in protecting India’s growing capacity to do its own R&D and its own product development, which would put the whole relationship on a stronger footing.
If there are domestic motivations for some of these changes, beyond purely pleasing foreign investors, they carry with them the domestic controversy around whether Modi is interested only in promoting foreign business or in promoting domestic demand-driven investment in India’s own economy. As a good politician, Modi has to be interested in India, in India’s growth and capacity to move its economy ahead. So this is a potential win-win if the issue is handled well, and my hope is that it will be because a potential win-win has durability rather than merely the kind of Potemkin-like treatment that summits sometimes produce, as new agreements are announced but then discarded once the summit is over.
Are there any obstacles that the United States should be mindful of as it moves forward with the partnership?
Well I think we can begin in the trade area, with the problem that vexes all of South Asia: textiles. If it’s important in Pakistan and Bangladesh, it’s going to be important in India as well. These textiles can find a market in the United States in the form of finished goods or otherwise, which is a sector that has seen a declining American competitive position. Textiles can also be a “gap filler” as India moves up the economic development chain. I think that outcome is very significant and very useful.
The rest of the Indian concerns, I think, center on the general promotion of mutual trade, to the extent we can do so in a manner that is consistent with domestic economic aspirations. I think that on both sides we want to make sure that Indian investment in the United States, in places like Silicon Valley, is the kind of productive, value-added enterprise we would like to see coming over here.
Many of the large-scale Indian firms, and we all know the names, are in themselves major operators in one way or another on the world scene, but are they active enough in the United States? Is the United States welcoming enough? Are there partnerships that are available for those firms to proceed inside our economy, and is that a useful way to begin to look at how and in what way we can promote this greater mutual prosperity? These are all important questions.
Looking at Modi’s visit in a regional context, a number of commentators have highlighted how this trip fits into the prime minister’s larger outreach. Modi recently met with Japanese prime minister Shinzo Abe during a successful visit to Japan and also met with Chinese president Xi Jinping during the latter’s visit to India. Both meetings are expected to result in major new investments and projects. Should we anticipate any differences in tone or overall expectations for Modi’s visit to the United States?
I think Prime Minister Modi is sending signals. One signal he has sent is the emphasis on domestic economic development. The other signal he has sent is that he is an Asian, and he is beginning to look at South Asia as part of Asia. Traditionally, South Asia, for colonial reasons alone, was never looked at as part of general Asia. Thirdly, he obviously has strategic issues and interests in the region, particularly in China. The balance between China and Japan is an interesting one in part because Modi has developed close personal relationships with Japanese leaders, particularly with Prime Minister Abe. Modi is not neglecting a Chinese interest, which India has carefully nurtured, but it has found it very hard to move the India-China relationship from dead center. Nurturing is basically a process that ought to lead somewhere, and it should lead away from the fact that the status quo is a perpetual albatross around India’s neck. So there are obviously new opportunities with a new prime minister who is prepared to take risks and produce new concepts for how India should work. We in the United States should be happy that Modi’s emphasis is on two of the areas that are very important to us as well—that is, improved Indian relationships with both Japan and China.
A newer and stronger emphasis on Asia, including India, ought to be part of an American foreign policy preoccupation because of the size and strength of Asia, as well as the growing importance of Asia in geography, in economics, in demography, in production, and in competition. The United States should not nitpick India’s relationships with Asia but welcome them and try to understand what India’s priorities and focal points are and where the United States can be supportive.
Is there anything else that you would like to add?
At rock bottom, the United States and India share more common interests than they have divergences. Since the late 1990s, this has been a common theme in successive American administrations; while the importance accorded to India has varied, no administration has left India behind. When I was ambassador in India in 1991–92, it was very clear to me, and I used to say publicly, that for Americans India was an ideal relationship. But India always appeared on the backside of all American globes so that it had a very low standing, yet that standing is going up and will continue to go up.
We’ve had our differences over the years, and a lot of these are normal because they come out of historical differences and different development paths. Our ability to come together more closely in the last decade has set the groundwork for perhaps another push in the direction of closer cooperation. I think it has been important in the military dimension, but the relationship cannot and should not be all military in focus. Closer cooperation should include, I think, a shared interest in the Middle East, which is also off India’s west coast. It should include a shared interest in Southeast Asia. It should include a shared interest in Indian Ocean security and geography, all issues that are close to India. Closer cooperation should clearly include, in my view, India’s historic relationship with Africa as a complement to its strong and growing relationship with Southeast Asia. Together those are four or five areas where we have a natural possibility to understand each other and work together.
This interview was conducted by Clara Gillispie, Assistant Director, and Ved Singh, an intern at NBR.