Pax Indica: India and the World of the Twenty-first Century

by Shashi Tharoor

  India undoubtedly preferred being considered a friend rather than an ally—a distinction that matters in New Delhi since alliance politics implies a logic of commitment that few Indian policy-makers would find acceptable. India’s preference to support or oppose American policies depending on India’s own assessment of the issues involved is one that successive administrations in Washington have found difficult to swallow, but Bush seems to have done so, provided India was supportive on the transcendent issue of Islamist terrorism, which it was.

  Ironically a key issue that cemented Washington’s new thinking about India in the Bush years was one in which the two countries did not in fact necessarily share the same perception. The Bush Administration saw India and the United States as kindred nations threatened by the inexorable rise of Chinese power, and assumed a shared interest in containing Beijing, a perception of which India did not fully partake. Washington was happy enough to promote China’s economic integration into the global order but less content to see it grow too large for its geopolitical breeches; a democratic state in Asia of comparable size, military strength and economic capacity would, many American policy-makers thought, help place some checks on Chinese assertiveness on the regional and world stage. India, while conscious of China’s potential to disrupt the geopolitical status quo, felt its relations with China should follow a strictly bilateral logic, independent of any American desire for an Asian counterweight to China. India’s chronic resistance to being seen to be doing anyone else’s bidding, or to any perception of encroachments on its strategic autonomy, made it, in any case, an implausible participant in any third country’s strategic logic, including America’s. This has become steadily apparent to Washington over the years, and may have helped diminish the ardour with which India is courted, though not the basic underpinnings of the relationship.

  At the same time, this thinking helped explain the Bush Administration’s enthusiasm for arranging an ‘Indian exemption’ on the nuclear deal, as well as its willingness to strengthen defence cooperation, agree to high-technology transfers and even to promote partnership in space exploration. The Obama Administration, in turn, built on these foundations, adding to it the largely symbolic declaration of support for India’s efforts to obtain a permanent seat on the UN Security Council, as well as welcoming and even promoting India’s membership in assorted non-proliferation arrangements.

  This kind of relationship, accepted in these terms across influential policy-making circles in both Washington and New Delhi, falls well short of a traditional alliance, something to which India is generally presumed to be allergic. But it justifies strong American support for India as a player on the global stage, as a sound investment for Washington that advances both countries’ strategic aims.

  This was broadly the approach of the Bush Administration, given its profound misgivings about the rise of Chinese power. A somewhat more benevolent view of China on the part of the Obama Administration might have diminished the intensity with which such an approach was advocated in Washington, leading some Indian analysts to write of a state of ‘drift’ in the relationship. But it was amply compensated for by the President’s own considerable regard for Indian Prime Minister Manmohan Singh, whom he even publicly described as the first of the three world leaders he most admired and had good relations with. In sum, each country could afford to take a benevolent view of the pursuit by the other of its own interests, secure in the belief that that pursuit would not fundamentally be incompatible with its own core national objectives on the world stage.

  But in fact there is more to the India–US relationship than that. As far back as 2005, Prime Minister Manmohan Singh had declared: ‘I believe we are at a juncture where we can embark on a partnership that can draw both on principle as well as pragmatism.’ That practical benefits are available to both sides in the relationship is readily apparent: as the Canadian diplomat David Malone observed, ‘US demand for information technology and other services has been extremely helpful to India, and India’s capacity to absorb American exports has greatly strengthened American commerce (at a time when much militates against continued unfettered global US economic dominance).’ The question is how to build on those basic trade-offs in order to accomplish a more substantial partnership. The two nations are busily working on this.

  So President Obama’s 2010 visit, with which we began this chapter, resulted in significant new agreements across a wide range of subjects, from civil nuclear cooperation to food security issues. The two governments have followed up by developing a collection of consultative mechanisms to improve and strengthen the trade and investment relationship. To take an illustrative list, there are meetings of the US– India Economic and Financial Partnership at finance minister level, the US Trade Representatives’ Trade Policy Forum, and the Department of Commerce’s Commercial Dialogue; perhaps most important to India, a High Technology Cooperation Group has been working to reduce barriers to trade in sensitive cutting-edge high technology.

  But governments do not determine every aspect of an economic relationship. US–India business ties have emerged as particularly crucial drivers of the relationship; despite the bureaucratic and domestic political impediments to faster growth, delays in upgrading India’s shoddy infrastructure and the unavoidable transaction costs of doing business in India (including the prevalence of corruption), American firms rightly see the country’s long-term potential as one worth being invested in. According to the McKinsey Global Institute, 80 per cent of the Indian infrastructure of 2030 has yet to be created, and US businesses will have the opportunity to provide the goods and services needed to build or upgrade India’s railways, airports, power plants and IT infrastructure (laying fibre optic cables, for instance). India projects a need to invest some $143 billion in health care, $392 billion in transportation infrastructure and $1.25 trillion in energy production by 2030 to support its rapidly expanding population; many of these contracts could come America’s way.

  India’s demographic advantages are particularly attractive: with 65 per cent of its population under thirty-five, India should have a dynamic, productive and youthful workforce when the rest of the world, including China, is ageing. This would give India, according to one study, 25 per cent of the world’s working population by 2025 (provided India does enough to educate and train its young people to take advantage of this demographic opportunity). India is also a market of 1.2 billion actual and potential consumers, with McKinsey estimating that its middle class could number 525 million by 2025 (though not all would have the purchasing power of the American middle class). Given that the United States is India’s principal export market for its services (and has only just been overtaken by China as a trading partner in goods), the scope for collaboration is huge.

  The figures are impressive, and reveal a pattern of increasing economic interdependence. Between 2002 and 2009, US goods exports to India quadrupled, growing from $4.1 billion in 2002 to over $16.4 billion in 2009, while US services exports to India more than tripled, increasing from $3.2 billion in 2002 to over $9.9 billion in 2009. More striking than absolute numbers is the fact that US exports to India grew faster than exports to almost all other countries in the world. In 2010, US exports of goods to India shot up 17 per cent and US goods imports from India went up 40 per cent, making India, at $48.8 billion in goods trade, the United States’ twelfth largest goods trading partner. Preliminary figures for 2011 confirmed the positive trend. Nor is the traffic all one-way. The overall trade relationship is a balanced one, and there are some departures from the norm: while overall FDI into India declined over 2009–11, Indian companies continued to invest in the United States, growing at a compound annual growth rate of 35 per cent between 2004 and 2009. In addition to India’s role in providing services to US businesses and consumers, from medical transcriptions to call centres, India has also become a significant source of tourist revenue for the United States, with some 650,000 Indian visitors in 2010, making India the tenth largest sou
rce of tourism to America.

  India’s biggest asset in its economic relationship with America lies in its national penchant for innovation. Already, multinational giants like GE and Philips are employing more researchers in India than in the United States or Europe, and Indians are doing cutting-edge work designing aircraft parts for Boeing and doing biotech research for US and Indian pharmaceutical companies. The Indian IT revolution, its huge base of trained scientific manpower, entrepreneurial skill honed in adversity, and Indians’ special talent, amid scarcity, for improvising on a shoestring have helped create new, cheaper and more imaginative versions of products Americans first devised, from cardiograms to automobiles. A Google search for ‘frugal innovation’ returns mainly Indian results; the University of Toronto has established an India Innovation Centre to study the phenomenon; and ‘Indovation’ is becoming the new buzzword. As the high costs of manufacturing make the United States more and more a knowledge economy, India seems a natural partner, one that can complement America’s economy and help meet its needs.

  Where are things not quite so amicable? One sometimes fraught area has been cooperation on security issues of vital importance to India. The United States was understood to have been initially helpful in the aftermath of the 26/11 terrorist attacks in Mumbai, both with intelligence sharing and in placing pressure on the Pakistani military establishment to back off from the militants it had sponsored. But subsequent revelations that a US citizen of Pakistani descent, Daud Gilani, calling himself David Coleman Headley, had visited India several times to reconnoitre the terrain for the attacks, and that he may have been a US double agent, led to a great deal of recriminations in the Indian strategic community. Indian commentators alleged that, in effect, the United States had allowed the 26/11 attacks to happen, rather than revealing information in their possession to India, merely in order to protect Headley’s cover. Subsequent disagreements over the level of access to Headley required by Indian investigators of 26/11 became public in India, further poisoning the atmosphere and adding to the mistrust that often finds receptive ground in certain Indian circles.

  Indians are chronically suspicious that US dependence on Pakistan over the years—as a staging base for attacks on Soviet troops in Afghanistan earlier, now as an ally and logistical partner of US troops in Afghanistan—always vitiates its broader strategic interests in India. Differences have also emerged between Washington and New Delhi in recent years over a number of issues: the two nations’ different reactions to the Arab Spring, in particular the revolts in Libya and Syria; incompatible views about the implementation of one key follow-up provision to the nuclear deal, the Nuclear Liability Law, where American companies are seeking exemptions from liability in the event of accidents, which New Delhi judges politically impossible to push through the Indian Parliament (where memories of the Bhopal disaster caused by an American multinational have not faded); and significant disagreements about sanctions on Iran for its nuclear programme, one which India is also concerned about but disinclined to back, given its own dependence on Iranian oil supplies. While these are issues that have played out over months, even years, one specific issue that caused some heartburn between the two countries related to India’s rejection of a US bid to sell the country a large number of combat aircraft.

  American officials have been particularly alive to the opportunities afforded by the much-needed (and long-delayed) modernization of India’s ageing military and weapons systems, with estimates of some $35 billion of expenditure likely to be incurred in the next decade. US Assistant Secretary of State Robert Blake told an Indian audience in 2011 that ‘the [Indian] Cabinet Committee on Security’s approval of the purchase of C-17s from the U.S. is just a sample of the sales that we expect will occur over the next several years’.

  In this context, India’s decision in 2011 not to purchase American planes for its $10-billion-plus fighter aircraft deal—the largest single defence tender in the country’s history—stirred considerable debate in strategic circles in both countries. The two US contenders, Boeing’s F/A-18 Superhornet and Lockheed’s F-16 Superviper, were deemed by the Indian Ministry of Defence not to fulfil the technical requirements New Delhi was looking for in a medium multirole combat aircraft (MMRCA). With the Russian MiG-30 and the Swedish Gripen also eliminated at the preliminary stage, two European planes, the Eurofighter Typhoon and the French Rafale, were the only aircraft still in the fray for an expected order of 126 planes (the Rafale finally got the nod, though at this writing that decision had been placed in suspense).

  The Indian decision was immediately denounced by pro-American commentators as a setback to bilateral relations. India had never previously purchased an American fighter plane, and Washington had hoped its doing so would signal India’s determination to cement an emerging strategic partnership with a hefty cheque. US officials from President Obama on down had lobbied for the deal, which would have pumped money and jobs into the ailing US economy. The ‘deeply disappointed’ American ambassador in India, Tim Roemer, promptly announced his resignation from his post in New Delhi. In a typical comment, Ashley Tellis observed trenchantly that India had chosen ‘to invest in a plane, not a relationship’. The implication was that India should have sold its technical requirements short out of a desire to reward the US politically for its goodwill.

  The notion that a major arms purchase should be based on broader strategic considerations—the importance of the United States in India’s emerging weltpolitik—rather than on the merits of the aircraft itself, has struck Indian officials as unfair. Sources in New Delhi are quick to deny that the decision reflects any political bias on the part of India’s taciturn but left-leaning defence minister, A.K. Antony. Instead the choice, they aver, is a purely professional one, made by the Indian Air Force, and only ratified by the ministry. The two European fighters are generally seen as aerodynamically superior, having outperformed both American aircraft in tests under the adverse climatic conditions in which they might have to be used, particularly in the high altitudes and low temperatures of northern Kashmir. Experts suggest the American planes are technologically ten years behind the European ones, and it doesn’t help that Pakistan, India’s likely adversary were the aircraft ever to be pressed into combat, has long been a regular client of the US warplane industry.

  In addition, Indian decision-makers could not help but be aware that the United States has not, over the years, proved to be a reliable supplier of military hardware to India or other countries. It has frequently cut off contracted supplies, imposed sanctions on friends and foes alike (including India), and reneged on the delivery of military goods and spare parts, as well as been notoriously unwilling to transfer its military technologies. The current Indian fleet of mainly Russian and French planes has suffered from no such problems, and the existing ground support and maintenance infrastructure, geared to service them, would have needed major changes to handle the US aircraft. (It is likely that the eventual winner of the bid will be required to enter into a joint production arrangement with India, which the US companies would not have done.)

  As if all this was not enough to drive the choice away from Boeing and Lockheed, the final clincher might well have been the Government of India’s desire to avoid any further procurement controversy at a time when allegations of corruption have beset it from all sides. A decision made unarguably on technical grounds, many felt, would be easier to defend than one skewed in a particular direction on political grounds. Defence Minister A.K. Antony even postponed a US–India strategic dialogue (scheduled originally for mid-April 2011) for which Secretaries Hillary Clinton and Robert Gates were planning to travel to New Delhi, in order not to come under pressure from his American visitors to weigh political factors in making his technical decision.

  Against this are the unarguable advantages of pleasing a major new ally for whom an Indian decision would have meant a great deal, and developing a pattern of mutual cooperation in supply, training and operations which has yet to
evolve between the two militaries. At a time when US nuclear reactor purchases—made possible by the historic deal negotiated by the Bush Administration and sold by Washington to the forty-eight other members of the Nuclear Suppliers’ Group—have been held up by US insistence on exemptions from supplier liability in the event of an accident, the rejection of US aircraft is seen by some as New Delhi gratuitously spurning an opportunity to demonstrate that friendship with India is in Americans’ interest too.

  Is India being its old prickly non-aligned self again? Is appeasement of India’s notoriously anti-American politicians more important to a beleaguered Indian government than winning Washington over? Is India’s traditional obsession with preserving its own strategic autonomy always going to limit its usefulness as a partner to the United States?

  The questions are unfair. Surely India–US relations are greater than any single arms purchase. Why should the financial value of one deal be the barometer of a strategic partnership? It is simply narrow-minded to reduce American policy towards India to the bottom lines of US defence salesmen.

  Nor is there any military estrangement between the two countries. Even if this deal didn’t work out for the United States, it is still a leading arms supplier to India, having won bids to provide ships, reconnaissance aircraft and advanced transport planes. The Indian Army, Navy and Air Force still conduct more exercises with US defence forces than with those of any other power. The two countries’ worldviews on the big issues confronting the planet are not incompatible.