The new India policy
THERE is no question that the United States’ approach to India – the largest country in South Asia – has evolved considerably since the end of the Cold War. This transition involved several realizations on the part of U.S. policy-makers. The first was that India was a large and growing economy, presenting opportunities for U.S. investors, exporters and businesses. The second was that Indian-Americans were making valuable contributions to the United States – comprising by some measures the best educated and wealthiest immigrant group – and were becoming increasingly politically active. The third was that India could play a constructive role on two emerging strategic concerns for the United States: countering international terrorism and managing China’s rise. And the fourth was that India would be crucial, including as a potential spoiler, on matters of global governance: from trade and nuclear non-proliferation to cyber security and climate change.
To different degrees, these factors contributed to successive U.S. presidential administrations’ efforts at improving relations with India, beginning with Bill Clinton, accelerating under George W. Bush, and continuing in fits and starts under Barack Obama.
Yet whether this steady improvement in the U.S.-India partnership would continue after the 2016 election of President Donald Trump was an open question as his election injected many uncertainties in U.S. foreign and domestic policy. However, in his first two years in office, Trump oversaw an acceleration of strategic convergence with India, even if relations with New Delhi became increasingly driven by U.S. domestic policy imperatives (as did U.S. foreign policy more generally). At the same time, India was not a passive actor when it came to approaching the Trump administration. Indeed, not only did India find itself better placed in relative terms than most other countries during the Obama-Trump transition, but on several occasions it was able to actively achieve more favourable outcomes.
Along with their counterparts elsewhere in the world, Indian leaders and officials observed the 2016 U.S. presidential election campaign with considerable interest. That year, the United States was India’s second largest trade partner and largest export destination. Burgeoning investment, educational, energy, and research and development links made the United States India’s most important economic relationship. In addition to bilateral relations, the U.S. approach to the Asian balance of power, its role in the war in Afghanistan, and its assistance to Pakistan were among the issues that would have direct implications for India, and would be shaped by that year’s election outcome.
Hillary Clinton, who clinched the Democratic Party nomination for president after a tough contest, was a known quantity to India from her tenures as First Lady (when she visited India), as U.S. Senator (when she co-chaired the Senate India Caucus), and as Secretary of State (when one of her signature initiatives – the pivot or rebalance to Asia – featured India prominently). Indeed, Clinton’s political opponents, from Barack Obama in 2008 to Trump in 2016, were often critical of her seemingly warm relations with India and Indian-Americans. Her campaign managers and staff, such as John Podesta and Neera Tanden, were also well known to the Indian establishment.
Donald Trump’s attitude to India was far more uncertain, although his campaign rhetoric concerning several issues that mattered to India was consistent. He regularly articulated a deep scepticism of trade arrangements, a hostility to immigration, and an opposition to multilateralism, but also employed tough language on terrorism and on China. In Trump’s worldview, India did not feature prominently as a problem country, or at least not in the first tier of problem countries. India was not an adversary that carried strong political resonance with his electoral base, such as North Korea or Iran. Nor was it a peer competitor, like China, that threatened to contest U.S. primacy. India was also not in the top tier of a third category of countries that Trump considered problematic: allies and neighbours that he believed were taking advantage of the United States’ security umbrella and market openness.
Indian officials began to hedge against the possibility of Trump’s election to the presidency in early 2016, even before his securing the Republican Party nomination. During Prime Minister Narendra Modi’s last visit to the United States under Obama’s presidency in June 2016, he held a meeting with a select group that included individuals close to both the Clinton and Trump campaigns. Among those linked to Trump were Jon Huntsman, who had endorsed his candidacy and would become Trump’s Ambassador to Russia; members of the Trump campaign’s small foreign policy team; and heads of think tanks that were seen as favourable to Trump such as the Hudson Institute and the Center for the National Interest.
Separately, meetings were also arranged between Indian officials and Trump donors, campaign advisors, and allies in the U.S. Congress. While many senior Republican politicians stayed away from the 2016 Republican National Convention where Trump was formally anointed his party’s candidate for president, India’s Ambassador to the United States Arun Kumar Singh was in attendance.
On election day – 8 November 2016 – India found itself in an enviable position: well off if Hillary Clinton won, but relatively better placed than most other countries in the event of a shock upset by Donald Trump. The election result was undoubtedly a surprise: polls had generally indicated a Clinton victory. It was only after Trump’s win that the identity and profiles of his transition team and senior administration officials became evident. These included, at the cabinet level, retired and serving military officers and executives from the private sector. On Asia policy, Trump fell back on conventional hawks who were more likely to look favourably upon the partnership with New Delhi, while on trade his appointments – such as those of Robert Lighthizer and Peter Navarro – reflected more protectionist sentiments that were more critical of India. On social policies, staunch anti-immigration proponents such as Steve Bannon and Stephen Miller initially drove the White House’s agenda.
Within ten days of the election, Indian officials had met with Trump’s presidential transition team, including Vice President-elect Mike Pence. Contact was also made with members of Trump’s cabinet after they were named and confirmed, including Secretary of State Rex Tillerson, Secretary of Commerce Wilbur Ross, and Secretary of Homeland Security John Kelly. Eventually, other relations were forged, including with Trump’s daughter Ivanka, who would visit India in November 2017. But much of India’s engagement in the initial few weeks and months was away from the glare of the media.
The early months of the Trump administration were not without their difficulties for India. The racially motivated February 2017 shooting in Kansas of two Indian citizens, one of whom was killed, created a furore, one that partly subsided following Trump’s belated condemnation of the perpetrator during his first speech to Congress. Another awkward incident for India involved Trump’s remarks when pulling out of the Paris Climate Treaty, when he incorrectly stated that India had made its participation in the agreement contingent upon ‘billions and billions’ of dollars. In another early speech, Trump’s trade advisor Peter Navarro mentioned onerous tariffs on U.S. motorcycle manufacturer Harley-Davidson as an example of India’s extreme trade protectionism, an example that resonated with Trump himself. These incidents created the public impression of greater tensions in India-U.S. relations.
Two aspects of India-U.S. bilateral ties proved particularly contentious and would prove so for some time. The first concerned trade. The United States had complained regularly about high Indian tariffs, intransigence at the World Trade Organization, and lower standards on labour, safety and intellectual property. During the Obama administration, intellectual property in India’s pharmaceutical sector and trade facilitation negotiations had become particularly acrimonious. Trump had his own views on trade deficits and preparations began for the application of tariffs on certain countries and sectors. Within the Trump administration a debate arose as to whether to target only China with tariffs, or apply them more widely. A faction led by Director of the National Economic Council Gary Cohn advocated for targeted tariffs only against China, which was perceived as both the primary culprit and a strategic challenge. Eventually others such as Lighthizer and Navarro, who preferred a scattershot approach that would hit India and other U.S. partners, prevailed. The amount of Indian exports that were directly affected were negligible, a small fraction of the amount of Chinese exports that would be hit. To show attempts at creating a more equitable economic relationship, India highlighted major imports from the United States, with Trump himself singling out Indian airline Spice Jet’s $22 billion order for Boeing aircraft.
Immigration was to prove another challenge for India. Trump and his advisors reflected considerable dissatisfaction with liberal U.S. immigration policies, including the H-1B visa for non-immigrant professionals, of which Indians were the largest subscribers. These objections had also been raised by many Democrats in the U.S. Congress. While reform or revocation of that programme required Congressional approval, U.S. officials became stricter about implementing criteria. Spousal visas – H-4 – which had been extended by the Obama administration were considered for scaling back. However, the Trump administration’s proposals for immigration reform suggested a point-based system that prioritized younger applicants with English fluency and science-technology-engineering-mathematics (STEM) degrees, essentially favouring Indians. A 2017 bill introduced in Congress (H.R. 392) proposed eliminating country specific limitations on employment based immigration, also favouring Indians. Thus even on two major areas of structural disagreement – trade and immigration – India found itself less disadvantaged than many other countries.
Despite differences, Trump and his advisors soon adopted a new framework for engagement with India and its broader region: the Indo-Pacific. The term had been in circulation for some time in both academic and official circles, including in Japan, Australia, and India. But the Trump administration formally adopted it and elaborated upon what a ‘free and open Indo-Pacific’ might require. In the 27 June 2017 joint statement between Trump and Prime Minister Narendra Modi during the latter’s visit to Washington, the two sides described their countries as ‘democratic stalwarts’ and ‘responsible stewards in the Indo-Pacific region.’ The Indo-Pacific framework, with its focus on maritime cooperation, set a positive tone for the India-U.S. relationship, in contrast to many other bilateral summits involving Trump. It also provided the basis for a strategy outlined by the United States over the following year.
Tillerson elaborated upon the Indo-Pacific theme in a policy speech in Washington prior to his visit to India on October 18. Trump himself followed up in November at a speech in Da Nang in Vietnam, where he argued that for ‘the Indo-Pacific dream…to be realized, we must ensure that all play by the rules.’ In December of that year, the Indo-Pacific appeared as the first geographical priority in the U.S. National Security Strategy, which provided broad policy direction for U.S. diplomatic and defence officials.
While the rhetorical basis for the Indo-Pacific was being paved, the military and economic elements of the U.S. ‘Free and Open Indo-Pacific’ strategy also began to be implemented. The U.S. Pacific Command (renamed Indo-Pacific Command) was given greater licence to conduct freedom of navigation operations in the South China Sea. Military-to-military relations with Japan and Australia were also strengthened. The U.S. Congress passed the Better Utilization of Investment Leading to Development (or BUILD) Act, that created a new agency – the U.S. International Development Finance Corporation (USIDFC) – to channel private sector investment up to $60 billion, provide loan guarantees, acquire equity and financial interests, and provide technical assistance for large overseas projects.
India was among the prime beneficiaries of the new strategy. Not only did the Trump administration reaffirm the Major Defence Partner status for India that it had acquired under the Obama administration, but it sought to define that status. This resulted in the implementation of a military logistics agreement (LEMOA) and the signing of a secure communications agreement (COMCASA). A quadrilateral dialogue involving India, the United States, Japan and Australia was resurrected in November 2017 and the first 2+2 Dialogue between the United States and India, involving the ministers for defence and foreign affairs, was held in late 2018. Additionally, the U.S. Commerce Department raised India to Strategic Trade Authorization-1 status, ensuring that many categories of sensitive exports to India did not require licenses. This gave India an export control status on par with NATO allies and higher than the likes of Israel and Taiwan.
In addition to the Indo-Pacific, a second point of convergence between India and the United States initially related to Afghanistan and Pakistan: the South Asia Strategy in the parlance of Washington. Here, the primary architect was Trump’s second National Security Advisor H.R. McMaster. In a 21 August 2017 address, Trump publicly laid out the rationale for the United States’ continuing involvement in Afghanistan. He refused to divulge exact troop numbers and timetables for withdrawal, focused on Afghan ownership of any peace process, identified Pakistan as a central problem, and welcomed India’s growing economic contributions. However, McMaster’s dismissal raised the prospect of a reversal of U.S. policy, reinforced by Trump’s announcement of withdrawal plans from Afghanistan and preliminary talks with the Taliban in late 2018. Even then, U.S. security imperatives and local and regional political uncertainties still left open questions about the scope and timetable of a U.S. draw down.
While strategic convergence appeared to accelerate on the Indo-Pacific and initially on Afghanistan, strategic differences persisted with Washington in other areas. The most important concerned Russia. While Trump himself had made only positive signals towards Russia, concerns about Russian interference in U.S. politics and broad anti-Russian sentiments in Washington limited potential cooperation. The U.S. Congress passed legislation (Countering America’s Adversaries Through Sanctions Act or CAATSA) to sanction countries that had large commercial dealings with Russia. This risked being triggered against India after New Delhi’s announcement of the purchase of the S-400 anti-aircraft system from Russia for over $5 billion.
Realising that these punitive sanctions could come at the cost of the partnership with India, among others, Congress created some wiggle room in the National Defense Authorization Act 2019 that allowed Trump to grant a waiver to India under certain conditions. ‘The Pentagon has made a very strong case that we need India, we want to build a relationship there and not cut it off,’ the top Democrat on the House Armed Services Committee Adam Smith told the press. While some of Trump’s advisors suggested this waiver would be granted by Trump, other officials warned that it was not a foregone conclusion. Assistant Secretary of Defense Randy Schriver cautioned in August 2018 that the ‘impression that we are going to completely protect the India relationship’ was ‘misleading’.
A comparatively minor difficulty related to Iran. The U.S. unilateral withdrawal from the Joint Comprehensive Plan of Action (JCPOA) – or Iran nuclear deal – and the re-application of U.S. sanctions on Iran had several direct implications for India. The first related to energy prices, the sudden rise of which risked increasing India’s current account and fiscal deficits. However, energy markets had largely planned for this eventuality and began to stabilize after a spike. A second challenge related to private Indian actors, but many cut their losses following rising secondary costs, including insurance. A third risk related to Indian state owned energy companies. Here, India anticipated Trump’s withdrawal by increasing imports from Iran, and then decreasing gradually in order to show a diversification away from Iran.
The final bone of contention related to Indian investments in the strategically important port of Chabahar, for which the United States eventually granted a waiver to India. While differences on Iran are bound to persist between Washington and New Delhi, the episode also enabled the two to better understand each other’s equities and concerns.
The relative consistency of the American policy towards India during the transition from Obama to Trump was reflected in the consolidation of the Free and Open Indo-Pacific strategy and, at least initially, the South Asia strategy. The differences over trade, immigration, Russia and Iran proved not as severe as worst case scenarios had implied. To some degree, the overriding strategic logic of the India-U.S. relationship meant that the Trump administration and members of the U.S. Congress looked more favourably on India than it did others, resulting in exemptions on Russia related sanctions and on investments in Chabahar.
In other respects, India made considerable efforts to mitigate adverse outcomes, including to some degree on trade and on oil imports from Iran. Indian efforts at engagement with key stakeholders around Trump – including in the White House, Republican Party, cabinet, and Congress – facilitated the management of the relationship in otherwise rocky political terrain. Highlighting India’s contributions also helped bridge differences: Trump himself cited India’s contributions to U.S. job creation. Secretary of Defence James Mattis generously detailed India’s leadership in state-building efforts in Afghanistan while speaking in Singapore in June 2018.
India’s management of the Trump transition was not seamless, but New Delhi did fare well relative to others, such as China or even U.S. allies such as Israel, Canada, Saudi Arabia and Japan, all of whom experienced different degrees of policy whiplash. The first two years of the Trump administration resulted in an accelerated convergence of strategic relations between the United States and India. Cooperation in the maritime domain and on counter-terrorism broadly increased, although differences in perspectives, priorities, and capabilities remained. Bilateral relations offered a more mixed picture. In some areas, notably energy cooperation and defence technology, India managed to build upon gains made under the Obama administration.
On immigration and especially bilateral trade, relations proved more complicated, even if India was never a very high priority for the Trump administration. Yet even optimists and supporters of the relationship identify trade and Russia as two areas of long-term difference between New Delhi and Washington, regardless of Trump’s political future. The management of these issues, as well as future political transitions in the United States, will continue to offer tests for leaders and officials in New Delhi during the remainder of Trump’s presidency and beyond.