INDO-US TIES: ECONOMICS AND STRATEGY

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Context: Upcoming state visit of Indian Prime Minister Narendra Modi to the United States.

Details

• Narendra Modi's official state visit to the United States on the invitation of President Joe Biden.
• Highlighting the bipartisan consensus in Washington on fostering the bilateral relationship.
• Recognition of the visit's significance through the invitation to address a joint meeting of Congress for a second time.

Deepening Economic Engagement:

• Economic engagement as a key aspect of the Indo-US strategic partnership.
• Rapid growth in trade between the two countries, with the US becoming India's largest trading partner.
• Favorable balance of trade position for India and significant investments from American companies in various sectors.
• Importance of the historic Air India-Boeing deal and its impact on job creation.

Strategic Underpinnings:

• The strategic context of the Indo-US relationship, with a focus on countering China's influence.
• The role of the Quadrilateral Security Dialogue (Quad) in enhancing regional security and cooperation.
• The I2U2 partnership between India, Israel, the US, and the United Arab Emirates, emphasizing joint investments and initiatives in key sectors.
• Collaboration on critical and emerging technologies and efforts to diversify the semiconductor supply chain.

Potential Challenges and Areas of Concern:

• Export controls and technology transfer restrictions affecting bilateral trade and technological cooperation.
• Pending trade issues, including visa delays and the revoking of India's trade benefits under the GSP program.
• The need to address the contradiction of India's increasing crude oil imports from Russia while strengthening ties with the US.
• Discussions on India's participation in the trade pillar of the US-led Indo-Pacific Economic Framework (IPEF).

Future Prospects and Opportunities:

• Potential pacts and agreements in the defense sector, with a focus on indigenous manufacturing and technology transfer.
• Nudging India towards joining the trade pillar of the IPEF and exploring avenues for a comprehensive free trade agreement.
• Concerns over India's exclusion from the Minerals Security Partnership (MSP) and potential collaboration in critical mineral supply chains.

About India-US Ties

• Historical evolution of India-US relations from the Cold War era to present-day cooperation.
• Significant milestones, including the establishment of diplomatic ties in 1947 and the signing of the India-US Civil Nuclear Agreement in 2008.

Shared Democratic Values and Interests

• Strong foundation of shared democratic values, pluralism, and commitment to human rights.
• Increasing convergence of interests on regional and global issues, such as counterterrorism, maritime security, and climate change.

Economic Engagement

• Growing economic ties, with the US becoming India's largest trading partner.
• Expansion of bilateral trade, reaching a record value of $191 billion.
• Favorable balance of trade position for India and significant investments from American companies in key sectors, generating job opportunities.

Strategic Partnerships

• Quadrilateral Security Dialogue (Quad):
  • Collaborative partnership between India, the US, Australia, and Japan to enhance regional security and promote a free and open Indo-Pacific.
  • Focus on countering China's influence and ensuring a rules-based order in the region.
• Defense Cooperation:
  • Strengthening defense ties through defense agreements, joint exercises, and technology transfer.
  • Potential collaboration in areas such as armament manufacturing, ammunition, and air combat.
• Critical and Emerging Technologies:
  • Cooperation in critical and emerging technologies, including space, cybersecurity, and artificial intelligence.
  • Efforts to diversify the semiconductor supply chain and reduce strategic dependencies.

Addressing Challenges

• Export Controls and Technology Transfer:
  • Resolving export control restrictions that inhibit the free transfer of technology and
  • hinder bilateral trade.
  • Promoting greater technological collaboration and cooperation in areas of mutual interest.
• Trade Issues and Market Access:
  • Addressing trade issues such as visa delays and revoking of trade benefits under the GSP program.
  • Encouraging trade liberalization, removing barriers, and fostering a more open investment environment.

Future Prospects and Opportunities

Comprehensive Free Trade Agreement (FTA):

• Exploring the possibility of a comprehensive FTA to further enhance trade and economic cooperation.
• Nudging India towards joining the trade pillar of the US-led Indo-Pacific Economic Framework (IPEF).
• Bilateral trade reached $113 billion in 2021, showing substantial growth.

Defense Collaboration and Indigenous Manufacturing:

• Potential pacts and agreements in the defense sector, promoting indigenous manufacturing and technology transfer.
• Strengthening defense capabilities and fostering defense industry collaboration.

Critical Minerals Partnership:

• Addressing concerns over India's exclusion from the Minerals Security Partnership (MSP).
• Potential collaboration in securing critical minerals supply chains and reducing dependency on China.

Technology Collaboration:

• Cooperation in various technology domains, such as artificial intelligence, quantum computing, and 5G.
• Establishment of joint research and development centers for collaborative technological advancements.

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