Business Standard

Mr Modi in DC

Policy consistency in India's ties with US welcome

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Business Standard Editorial Comment New Delhi
Prime Minister Narendra Modi’s visit to the United States has proved to be productive. It underlines the renewed energy that Mr Modi’s government has given to the US-India relationship, which had begun to stagnate in the later years of the previous administration in New Delhi. While expectations that one of the “foundational agreements” on defence co-operation – the one which would allow some sharing of military bases – would be signed were belied, there was some progress on other counts. While Mr Modi was there, it was reported that India would become part of the Missile Technology Control Regime, or MTCR, which would improve the defence forces’ access to the latest missile systems; while this has been long on the cards, it was held up due to Italy, one of the MTCR members, objecting to India’s admission at the height of the Italian marines’ crisis. President Barack Obama also reiterated the US’ commitment to helping India join another major grouping, the Nuclear Suppliers Group or NSG. Unfortunately, China, which is a member of the NSG, also has to be on board for this to go through, and there is no sign of that happening yet.
 

Much was also decided on the climate change front. President Obama would like the Paris climate accord to go into force before he leaves office; that would likely require India to formally accede to it this year. Mr Modi has given his commitment to begin the process. The US promised also to be a larger part of the attempt by the current government to make the Indian economy more energy-efficient. A US-India clean energy financing initiative hopes to mobilise up to $400 million from various sources in order to provide renewables-based electricity to a million Indian households in the next three years. Another similar financing programme will focus on solar energy projects, especially in remote areas, and the declaration suggests that the worth of the projects could touch $1 billion. An associated but not insignificant benefit from Mr Modi’s US visit was the commitment he secured from American companies to invest an estimated $45 billion in different projects in India in the next two to three years. Foreign direct investment flows into India have risen significantly in the last couple of years, but maintaining the flow will be crucial as the global economy enters a relatively more volatile phase, which could create some avoidable stress for India’s current account balance. Higher flows of foreign direct investment would act as a welcome buffer against such volatility.

In some ways, this visit of Mr Modi’s demonstrates the power of continuity in Indian foreign policy. Major movement happened on the MTCR and NSG membership in the previous, Manmohan Singh-led administration, for example. It is a sign of the Indian polity’s maturity that many of the previous governments’ initiatives are being taken forward by the current one. Even the headline agreement, although related to climate change – a subject Mr Modi’s government has made its own – harks back to completing the Manmohan Singh agenda: the agreement that the Nuclear Power Corporation of India Limited and Westinghouse Electric Co. of the US will begin site design and engineering work for six nuclear reactors. This is the ultimate conclusion of the civil nuclear agreement — as the White House statement says, it is the “culmination of a decade of partnership on civil nuclear issues”. While there is much more to be done — the foundational agreements on defence have to be signed, financing mechanisms have to be nailed down for the reactors, and India has to formally ratify the Paris agreement — both the energy and the direction to bilateral ties are clear.

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First Published: Jun 08 2016 | 9:40 PM IST

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