Friday, 30 January 2015

When POTUS meets LOTUS

"baahon ke darmiyaan, do pyaar mil rahe hain"

On this 66th Republic Day of India, a special friend and a prospective partner President Obama was the Chief Guest of the occasion. The whole ‘hullabaloo’ in the strategic relationship between India and US was vigorously circumscribed by this visit with breaking away of many old traditional protocols set up by the elitists of the two nations. The invitation scene was much more dramatic as it got sealed within 19 hours (literally) when the news broke out that the Russians have decided to sell Mi-35 helicopters to Pakistan (in November).

From all the ‘Twitter Bromance’ between Prime Minister Modi and President Obama - bro-hugs between them – ‘Chai Pe Charcha’ at Hyderabad House – Victory of Dress Designer of PM Modi over Michelle Obama’s designer – early departure of Prez Obama to a country where human rights are of supreme importance and where women are more loved and respected (Saudi Arabia), all clouded the ‘Breaking News’ column of the Indian as well as International Media (Barring Fox News for obvious reasons). But what were the substantial gains out of this high profile, orange candy visit?

If we go by media coverage (both Indian as well as International) the two leaders merely talked about Nuclear Deal only (for 3 full days) but that is something wrong in reality. Even though the logjams over the ‘Nuclear Liability Law’ have been cleared through the much needed political push from both the sides, but still it is commercially unviable for American companies to actually incorporate their nuclear plants in India. But the fact remains, that the bone has been ejected out of the throat, ironically by the surgeons who injected it earlier. Although full details of the deal are yet to come but precisely a pool of four insurance companies has been made that will indemnify Rs 750 crores in the case of an accident and the rest amount (said to be Rs 750 crores, total being Rs 1,500 crores) will be allocated by the Government of India. But it should not be forgotten that under the ‘Liability of Nuclear Damages Act, 2010’ (Section 7), there was a provision of creation of ‘Insurance Pool’ but that pool was of value of Rs 1,500 crores and any damage beyond that would be indemnified by the Government of India through another pool called ‘Nuclear Liability Fund’. There was a special ‘National Tracking Demand of Nuclear Material’ by the US officials that if they are providing us the nuclear material then they would like to keep a track on it ‘for lifetime’ to which India responded by saying that we are already following the provisions of IAEA so there is no particular need of this provision. Now, US seem to have agreed over this suggestion too. Skeptics say that it is immaterial if US has agreed over it because the Americans would keep tracking the same through their ‘own ways’, may be a reference to ‘software tracking’.

On the defence and strategic cooperation front, we managed to secure DTTI (Defence Technology and Trade Initiative). Actually it was the current Defence Secretary of US, Ashton Carter (pro-Israel and India) who prepared the framework of DTTI earlier, and as now he has been assigned to the high office, he would energetically push forward the same for its early implementation. Although in India, we have a perennial suspicion over assurance of defence supplies from US (as evident from the fact that we wasted the 10 year Defence Partnership Agreement from 2005-2015 without working on DTTI), but now the co-production model would overcome the reticence on India’s part. DTTI would help in enlarging our defence capacity, building our defence industry and will add up to the manufacturing sector of India.  Four modest projects have started, two aircraft carriers would be produced over the period of next 10-15 years in India and successively we would be helped in the manufacturing of jet engines for which India was eyeing towards a reliable partner since a long time. Still the fact remains that co-development of defence technology cannot have a sustained foundation unless there is a convergence of strategic and security perspectives because they build the much needed mutual trust. It doesn’t mean that we don’t have one with the US, as there are similar interests in Asia Pacific as well as in the Indian Ocean region.

On the issue of ‘Climate Change’ to which US is so much active these days that it points finger at ‘climate change’ for everything, even if it means a slight change in the skin colour of President Obama, the Prime Minister of India has rejected the notion that India would ever succumb to pressure from any country or a person over any issue (a reference to US-China bogus deal on climate change) but he didn’t forget to mention that climate change is a pressure itself for which India is doing enough at its own end by using renewable and clean sources of energy (nuclear energy, solar energy, wind energy etc). The onus also lies on America to give us IPR free ‘Green Technology’ to increase our proportion of clean energy in our total energy consumption.

When talks went on the ‘Totalization agreement’, US unambiguously said it only does ‘Totalization Agreements’ with OECD countries but India has pushed forward one on the pretext of having the same with Finland and Sweden because both these nations have recognized schemes like ULIP, PPF etc as ‘Social Security Schemes of India’ contrary to the belief of US which denies to recognize that India has social security schemes. Taxes for the ‘Social Security Schemes’ by Indians living in US (6-8.5%) contribute to about $ 3 billion (as per Chief Economic Advisor – Arvind Subramaniam) to US exchequer, even though most of the Indians do not take the benefits due to several reasons. Therefore, India was more willing to reach an agreement over this during this visit.

For the trade and business matters, there were usual assurances by India on ease of doing business, transparency and stability in policy, relaxation of taxation procedures as well as clamping down on retrospective taxation provisions but there was nothing US specific to which Prez Obama pledged $4 billion investment in renewable energy sector of India. He also didn’t forget to mention that India’s exports to US amount to merely 2% of total imports of US and imports by India amount to merely 1% of total US exports, which was certainly soothing for Chinese ears.

Chinese media (especially Global Times) started pinching Chinese Government over the ‘Special vision statement of strategic cooperation in Asia-Pacific and Indian Ocean region’ between India and US, clearly seen as a containment of China measure. It contains four major components – Freedom of navigation including in the South China Sea, building up of the trilateral dialogue along with Japan and identify trilateral projects (new component), avoiding the use of force in settling territorial disputes and a marriage of convenience between India’s Act East policy and the ‘Rebalancing policy’ of US towards whole Asia.

All in all, this was a successful visit as it cleared most of the broader issues except immigration reforms of US (but it is justified now because Democrats are in minority in Congress so it is not possible) and the transfer of technology in the field of science. But as the critics can never be satisfied, even if the two leaders would have smooched each other on live TV, so there is nothing wrong in moving at a prudent pace.

PS - That is how PM Modi actually welcomed Prez Obama. #SoSorry

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