Forging a New Balance: India at the Behest of Uncertainty

India is reevaluating its relationships with the United States and China amid evolving tensions over the trade war. America’s mismanagement of international economic policy perils the budding strategic partnership between the world’s two largest democracies – the lynchpin of liberal democracy in the 21st century. A fundamental recalculation of America’s India policy will alleviate India’s apprehension regarding U.S. intentions and reinforce bilateral integration.

The Trump Administration recently revoked India’s access to the Generalized System of Preferences (GSP), which streamlines trade via duty-free imports on certain products. They cited hurdles to market penetration, which has been prevalent in the e-commerce sector. Market giants, including Amazon and Walmart, were hit by a flurry of regulations which inhibited their competitiveness by giving preference to India’s domestic companies. Indian markets have traditionally been impervious to foreign companies and economic liberalization. While the U.S.-India rift here is readily apparent, the U.S. has long observed Indian anxiety on this matter. Instead of pursuing deeper negotiations, America hastily rescinded India from the GSP.

Additionally, the United States stopped its pursuit of obtaining a sanctions exemption for India over its purchases of Iranian oil. Much like its procurement for military armaments, India procures oil from a variety of sources, including Iran. American sanctions hit Iran and extended to other commercial partners of the country, catching India in the widely-casted net. Again without consideration for long-term bilateral ties, the U.S. gave up on the waiver process – against the demands of two dozen members of Congress – ultimately harming the Indian and American economies.

Throughout his first term in office, Prime Minister Modi made strides to strengthen ties with the U.S. on a whole range of issues. However, recent difficulties in the joint relationship is causing India’s leadership to recalculate its balancing act between the United States and China. PM Modi’s campaign rhetoric itself speaks volumes. On the campaign trail in 2014, PM Modi described China as “expansionist,” but most recently has spoken in distinctly measured tones on the Asian giant: “The India-China relationship is about mutual respect… we are working together, with the knowledge that we are both focusing on growth.”

His actions have come to resemble his rhetoric. Following the recently concluded Indian election, PM Modi and President Xi have been in contact to arrange an informal summit between the two leaders, likely taking place at the end of the year in Varanasi. This proposed meeting will be the second meeting between the leaders in 2019. Contrastingly, no ongoing discussion of a meeting between the U.S. and India is currently underway to start PM Modi’s second term. India is specifically eyeing Chinese investment in infrastructure development to jumpstart low economic growth of late, while increasingly turning away from the United States. Concerns over America’s reliability are to blame as India searches for other counterbalancing partners.

When contextualized within the ‘strategic partnership’ both countries espouse adherence to, there is a glaring omission of “strategic” in practice. To strengthen bilateral dynamism, both nations, especially the United States, must operate with a framework to comprehensively address and resolve disagreements. Spillovers into the international sphere are counterproductive to mutual trust and may embolden India to consider alternative security arrangements. For example, the U.S. should give India the space it needs to ameliorate its disposition against foreign direct investment. In return, India must demonstrate commitment and progress to opening its economy, spurring heightened growth. A similar groundwork should be charted by both nations to address matters concerning military interoperability, trade, and tactical discrepancies in regional affairs.

Failure to address India’s reservations could be damaging to relations in the short to medium term. As evidenced by its slight turning to China, India could be positioning itself for another era of strategic autonomy. The United States must be vigilant against this geopolitical possibility because it can have dire implications for America’s relevance in Asia. If India feels underserved by its arrangement with the U.S., little stands in its way for charting an independent, do-it-alone strategy. India possesses deep experience in striking a strategic balance between major powers – look no further than its 20th century non-alignment policy. Should India feel the need to revert back to a similar structure, it would be a massive blow to the U.S.

Together, India and the United States have achieved tremendous progress in their relationship over the past decade. But as the undercurrents of division are brewing to the surface, both countries have reached an inflection point. Leaders must be adept and decisive in restoring the partnership to an upward trajectory. Allowing small, pointed issues to continually fester derails the necessary trust-building that will sustain vibrant relations throughout this century.

By calibrating India in a strategic lens, it is evident that America's interests unambiguously align with that of the world’s largest democracy. The United States must forge greater consensus and certainty with India to assuage its doubts in the immediate to reap the fruits of the promising relationship ahead.

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