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Summer of Discontent in U.S. - India Relations?
Afro Asian Business Chronicle
July 1, 2011

NPCIL operates 20 reactors with an installed capacity of 4,780 MW and the sector, estimated at about $150 billion over the next 15 years, is tightly controlled by the government.

India could now face calls to go slow on nuclear power and push renewable sources.
"What could now happen is the government will have to go slow with focus now more on greater scrutiny, robust safeguards, site selection. So we are looking at longer gestation periods," said Robinder Sachdev, head of think tank ImagIndia Institute.

Over the past decade, as the overall pace of engagement in U.S. - India relations has picked up, the summer season in Washington, DC every year sees a flurry of meetings, dialogues, seminars, and conferences on bilateral relations. The summer season has now become informally institutionalised as a time of the year when the accumulated essence of the past year is discussed and debated, and strategic visions are mapped out on the road ahead. The annual structured dialogue between U.S. and Indian cabinet ministers, a practice started by the Obama administration, and the annual conference of the U.S.-India Business Council, are two of the main events which anchor this trend.

This past week, Finance Minister Pranab Mukherjee, was the top Indian official in Washington, DC, headlining a series of meetings on bilateral, regional, and global concerns, ranging across finance, trade, and security.

Whilst relations between the U.S. and India have seen a sea change which could not have been imagined a decade ago, yet there is no shying away from the fact that there also exist gaps in views on a slew of issues. Several of the gaps may be ascribed to the mutual image which one holds of the other, and which is often reinforced by some action of each.

President Barack Obama's visit to India last November came against the backdrop of a chorus of concerned voices which felt that the Obama administration was not investing sufficient bandwidth in its relations with India. Certainly a very successful visit in strategic terms, the past few months have again highlighted that tactical and business issues will routinely continue to challenge interlocutors on both sides.

Therein lies the nub of U.S. - India relations today. While the broad strategic contours of the relationship are moving very well, yet the expectations of rapid tactical gains -be it in business, or in alignment of India's stance in tandem with the U.S. on various global issues - are not manifesting fast enough for a range of interested parties in the U.S.

Setting and managing of expectations has become the most vital aspect of this important relationship. And this has been the underlying theme of Pranab Mukherjee's meetings and interactions in Washington, DC this past week.

There is a disappointment with India which is creeping up in some circles of policy making and elite opinions that want to see a vastly accelerated pace of geopolitical synchronisation and business opportunity in India.

Those seeking to mould as India as a strategic ally in the image of a Britain, or a Japan, are setting unrealistic goals for both countries. A deeply engaged friendship, with multiple overlaps in strategic interests, and acknowledgement of some diverse interests at times, would perhaps better serve the relationship, and avoid the disappointments.

The task for India is well cut out - to communicate clearly and to set the right expectations on Capitol Hill, U.S. administration, and among the media and think tank circles of the U.S.

The principal gap appears to be in the aftermath of the marathon long consummation of the U.S.-India civil nuclear deal. The strategic intent of the nuclear deal aside, there was an expectation by U.S. industry that the deal would have opened doors for substantial business by the nuclear and defense industries in the Indian market.

The nuclear liability bill passed by Indian parliament put a dampner on the hopes of U.S. nuclear industry. While India rebuts the disappointment and argues that the liability bill is consistent with the global regime, U.S. suppliers are clearly unhappy with the bill. As if this hiccup was not enough, and hopefully will be sorted out, now comes the development at the Nuclear Suppliers' Group wherein transfer of enrichment and reprocessing technologies will not be permitted to non-NPT members - virtually knocking a big hole in the "clean" waiver given to India. Herein, India is disappointed,and is questioning the U.S. on its commitment to the "clean" waiver. While the U.S. is pointing out that the NSG rules will have no impact on India, the jury is clearly out on this issue.

Combination of the above two factors - the liability bill, and the NSG denial of ENR - has clear potential to create hurdles for U.S. suppliers to India. In defense, the story is playing out better - notwithstanding the elimination of U.S. suppliers in the procurement of 126 fighter aircraft, India has been notching up defense procurement, slowly but steadily, with the U.S. on a range of equipment.

On security issues in the sub-continent, India is not very convinced of the effectiveness, and wary of the ramifications, of the U.S. AfPak policy. One can safely speculate that this issue will continue to demand oxygen from both the U.S. and Indian interlocutors for the next several summers.

Beyond the above three big picture topics, a plethora of other issues were on discussion during the visit of Pranab Mukherjee - including visas to IT companies, FDI in retail, opening of the insurance sectors, and G20 response to current financial woes of the global economy.

As said earlier, both countries will always have issues that need joint attention on which each will strive to further its own interest, with ups and downs, agreements and disagreements - on bilateral or global interests. But that is the nature of any mature relationship.

The summer of discontent should not bring a chill in relations.

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