Rise of India in interests of US’: Sustaining transforming India-US ties

Since the president of the US has already decided to call the India-US relationship a defining one, I have decided to call my presentation more modestly, “A 21st Century India-US partnership for peace, prosperity and progress”.

Thank you, therefore, for this opportunity to share some thoughts with you on a theme that broadly takes up the conversation from where I left it last year. And as I did last year, let me say that it is remarkable how much has changed in our relationship since I was here a quarter of a century ago.

The theme is, therefore, timely: Are we on track so that one of the young diplomats in your embassy in Delhi or ours in Washington could find, a quarter century from now, that another positive paradigm shift has taken place? I wouldn’t assume any one can see up to 2038, but I hope to suggest some ideas to take stock of where the relationship is, and to consider the way forward as a new administration establishes itself in the United States so that we do keep on track.

In doing so I trust I will not be accused of plagiarism as your esteemed institution recently released a paper by my friend Ashley Tellis with the subheading that encapsulated the task at hand. The subtitle was “Sustaining the transformation in U.S.-India relations”. The headline was of course eye-catching: “Opportunities unbound”. But headlines often leave one wondering. Like the one in the newspaper which said “Squad helps dog bite victim”. Not all readers clearly saw dog bites as an adjective and not a suggestion of the squad’s assistance to the dog!

Anyway for me the subject is clear – I am part of the squad called upon to sustain the remarkable transformation that has brought the U.S. and India closer together than we have ever been in the past. And I deem this an extraordinary privilege.

To an audience such as this, I do not need to dwell on history — or the historical nature — of this transformation. But it is worth emphasizing that the nature of this change has been unprecedented. The centrepiece was the India-U.S. civil nuclear arrangement and all that went into it and has since emerged from it.

The problem, of course, is that everything since that definitive moment tends to be compared with the audacity of what we dared to do together in putting this arrangement in place. This places a somewhat unfair strain of expectation. But I think it is also misplaced. Because the truth of it is that much that has happened since is equally significant in the game of nations in which we have evolved a “new normal” in the relationship.

Let me cite a few instances of what I mean by the new normal, going beyond the regular exchanges between our Heads of State and Government, both bilaterally and at multilateral events, and the Strategic Dialogue which has unprecedented levels of ministerial participation on both sides.

It is now normal that we have over one hundred visits at the senior official and higher level exchanges per year.

It is normal that our dialogue architecture covers the gamut of governmental activity — from social sector measures to trade and global financial policy coordination; from energy to defence, counter-terrorism and homeland security. At our inter-departmental review meeting, which we held in the MEA in New Delhi in the beginning of January, we identified over 30 dialogue mechanisms, connecting almost all major departments of our government.

And it is now entirely normal that our foreign offices consult each other on a wide range of global and regional challenges. Already, we have held three rounds of a trilateral between the US, Japan and India, and several rounds of bilateral consultations on East Asia. Just two days ago, we hosted the second round of our trilateral dialogue with Afghanistan. We hold regular consultations on strategic security issues, covering non-proliferation, disarmament and export controls; we are working together closely on India’s membership of the four multilateral export control regimes.

We hope to expand these dialogues to cover many more areas of interest. And that is also now normal.

In short, in a few years, consultation has become a habit. We have created a comfortable space to exchange opinions as trusted partners, with both candour and often convergence. This is not just because we enjoy talking; that we do–or being connected! As India’s horizons expand with the growth of our strategic and economic interests, we will need to talk regularly about real-world concerns to the US, which continues to have both critical interests and a vital presence across the entire globe. This is as it should be in a partnership that is genuinely strategic. There is no hint here, however, of taking lessons from each other.

I do not suggest that the partnership is already at a stage of maturity or that we are in complete accord on all issues. If that were so, I and some of you would be looking for other avenues of gainful employment! I am aware that converting the civil nuclear agreement into the expected commercial arrangements is still a work in progress. In a more general sense, it needs recognition that it is probably not in the nature of either of our nations to be in complete agreement with any other on many issues.

Someone said we are perhaps not on the same page. To mix metaphors, even if we cannot be on the same line of the script on all occasions, both of us are increasingly willing to read from the same score even if we do not always play the notes the same way. I want to reiterate this point, because the mutuality of benefit in our partnership is measured in more than merely dollars and cents, important as those are.

It is also measured in a growing realization that the rise of a democratic, pluralistic and liberal India is in the fundamental interests of the United States. (It is not called the peaceful rise of India – because it is self-evidently peaceful). And that a strong, prosperous, innovative, globally engaged, United States is fundamentally in India’s interest. We in India have no evangelical tradition, but we share the conception that the spread of democracy, open societies, and rule-based multilateral frameworks, will shape a better world order. At the more mundane level of how we see India’s growing interests converging with US Strategic outlook, let me outline a few broad areas.

I will start with our own continent, Asia. I think I should address a misconception that has secured the force of conviction through multiple reiteration. India does not harbour misgivings over your re-engaging—or rebalancing, or indeed, pivoting—towards Asia.

While I recognize that the policy is still evolving, enhanced American economic, diplomatic and maritime engagement in the development of the Indo-Pacific region takes forward what is a recognized part of independent Asia’s experience. Moreover, it synchronizes with India’s own enhanced engagement with our extended neighbourhood. The most recent example of this extended neighbourhood was the commemorative summit of ASEAN and India, marking 10 years of partnership, at which almost all ten ASEAN Heads of State were present in New Delhi. This is premised on our conviction that regional connectivity, economic integration, development and cooperative security are the surest guarantors of peace and stability across our region.

This is the spirit in which we have engaged in the East Asia Summit and the past discussions on Regional Comprehensive Economic Partnership. It was and with this in mind that we worked to bring the U.S. into the Indian Ocean Rim Association for Regional Cooperaiton (IOR-ARC) as an Observer.

Our engagement with partners in South-east Asia and beyond must contribute to the creation of a mutually-acceptable regional security and economic architecture. Such architecture must be based on commonly-accepted international rules. It should facilitate respect for international law, freedom of navigation, maritime commerce and communications. We are happy to work with all our partners towards evolving a larger regional architecture for the whole of Asia.

By virtue of our geography and historical connections, we have vital interests both in the heartland and in the rimlands of Asia. It is useful therefore that on our neighbourhood and beyond, we have an increasingly-improved dialogue with the U.S. We welcome the increased frequency of our consultation on most regional issues of mutual interest and the improved texture of these conversations.

Afghanistan is one of the key areas in which we need to continue to hold close and candid consultations. It is also an area in which there is greater need for us to be absolutely frank with each other.

To start with, we sincerely respect and honour the significant sacrifices made by our American and Afghan partners in securing and reconstructing Afghanistan. India too has given lives and has spent almost two billion dollars in reconstruction assistance. And we intend to remain engaged with Afghanistan and its other international partners. We continue to support efforts to bring Afghanistan into regional connectivity frameworks. We are also helping lead the effort to transform the economy of Afghanistan, including in its evolution to a trade and investment-based economy.

Why is India involved? Very simply, history has taught us that whatever happens in Afghanistan has and will continue to affect our security directly and materially. We have not forgotten the terrorist havens that targeted us, springing up as Afghanistan descended into chaos in the 1990s. And obviously, we do not want that to happen again.

It is for this reason that internationally-accepted red lines must be respected in whatever reconciliation models are being considered. So also, actions in support of the political transition should not undermine Afghan institutions of governance. We all need a credible government after 2014 as well. But most of all, we are yet to see any evidence that supports the notion of a dividing line separating Al Qaeda from other terrorist and extremist groups, or indeed, that these groups and those who support them have either had an epiphany or made a strategic reassessment of their objectives.

To us, it makes little sense to draw lines of distinction that most of these groups or their sponsors are themselves not prepared to do, either in word or deed.

In this context, I cannot overemphasize the point that terrorism is and will remain a pre-eminent security challenge for both our countries. Our convergence on the source and the nature of the threat in our region has never been greater. It is therefore a challenge that provides us an opportunity for enhanced cooperation in combating terror and protecting our people from it. This is even more of an imperative today, as we move into a period of significant uncertainty in the next few years. Behind this regional concern lies a general conviction which we have about combating terror, that led us to pledge support of about U.S.$ 1 million at the donor conferences even on the situation in Mali, which is quite distant from us.

Not surprisingly, counter-terrorism is a key dimension of our partnership. Quite obviously, it also has a strong public resonance. It is an area of our work which we must continue to strengthen, including in exchanging information and working to bring terrorists to justice. We are aware of the specificities of legal procedure and their requirements but we need to commit to the goal of assisting our authorities in the pursuit of justice.

Cyber-security, to which the President of the United States made a reference, and counter-piracy are also areas in which our two countries can work together, particularly since the terrorist threat folds into these areas of challenges. We already have working groups dealing with cyber security issues, and feel that there is much more we can achieve together, including in operational aspects of managing and mitigating these challenges.

Further afield on our west, we are faced with a complex situation in the Gulf region and Iran. Our relations with the GCC region are vital, self evidently so, with around 5 million of our people working there and a significant source of energy supply. We have very old ties with Iran, which emerged as a critical and reliable source of oil over many decades. We have a beneficial economic relationship covering trade in food, medicine and other everyday commodities. Yet we also recognize and emphasize the need for Iran to fulfil its international obligations and to address questions raised in the IAEA about its nuclear programme to restore confidence in the exclusively peaceful nature of its nuclear programme. We sincerely hope that the talks to be held in Kazakhstan—I believe on the 26th of this month–will make some progress in resolving this issue.

From where we are situated, Iran is an essential element in our access to Afghanistan and in the medium term to Central Asia; it affords us the access that we are prevented from having directly. Iran also, as I said, situated in that region where we have vital economic interests and where millions of our citizens work. For these reasons, it matters greatly that we can continue to have quiet bilateral conversations on this matter.

We also have shared interested in the democratic development and economic growth in the rest of South Asia—that’s a long theme and I will leave this to questions after this. We have opportunities ahead for building on these shared interests.

In the Middle East, we share concerns over the crisis in Syria and the instability in northern Africa. India has supported the democratic aspirations of the people of the region, but have been cautious about externally-enforced change. In general, we believe that external involvement only fuels instability. In effect, the search for military solutions to political challenges has created many humanitarian crises, and has pushed the region on a slippery slope towards civil strife and, as we now see, the spread of weaponry into dangerous hands.

Looking eastward of India, we are working to enhance the full range of our relationship with Myanmar, enhance our historic links with that neighbour and take forward our shared interests in the contemporary setting. We are encouraged by the changes in internal and external policies of that country. We continue our dialogue with the Government—we have had a number of interactions with the President and the Speaker–and also our engagement with Daw Aung San Suu Kyi, who paid us a visit in November. The historic visit of President Obama a few months ago, and the easing of sanctions should help Myanmar process of re-engagement with the world and restore its historic role in the region.

Even on global and extra-regional issues, ladies and gentlemen, we are developing the habit of broader cooperation. Our Prime Minister and President Obama agreed in 2010 that we would begin to work together in trilateral mode, in capacity-enhancement projects in Africa and also in Afghanistan.

We have now put in place the software for an IT-enabled Open Government Platform—using IT to bring open governance to the people—in joint partnership with the Government of Rwanda, and we intend to expand this soon in partnership with Ghana.

Similarly, we are working with USAID to offer agriculture training programmes at Indian institutes, for specialists from Kenya, Malawi and Liberia

One of India’s leading women’s self-help agencies, SEWA, is working with USAID and the Government of Afghanistan to offer “train-the-trainers” courses to Afghan women so that women can be empowered to earn livelihoods in their country.

What does all of this mean to our bilateral relationship? Well, quite a lot, actually. It feeds in to and binds on growing convergences around.

Defence is a key pillar of our bilateral cooperation. It bears mentioning that from a state where this trade was, to borrow Ambassador Blackwill’s inimitable phrase, flat as a chapati, there is today nearly $9 billion in bilateral defence trade. I dined out on this figure when I spoke in Washington last year also. But it will grow over time; it will assuredly not be stuck like the chapati jokes.

Our armed forces are developing the habit of closer cooperation through training together and through bilateral military exercises. Today, our armed forces conduct the maximum number of military exercises with U.S armed forces.

We are currently in the midst of an effort to find ways in which we resolve process-related rigidities in our respective systems. We do need to find ways of making procedures more compatible if the partnership is to develop to mutual benefit.

We also hope to find ways in which we can genuinely transform our defence partnership by significantly strengthening the technological dimension of the partnership, so that it has a mutually-beneficial impact on the development of India’s defence industry.

Trade and economic cooperation continue to increase. Both services and goods trade are up, and we are hopeful that in the near future, our bilateral Trade Policy Forum can be held; a meeting is overdue.

Just before I walked in here, I was reminded that there is a reference in Ashley’s book to cooperation in space, and I entirely commend this suggestion as there is significant compatibility between the capacities of our two countries in space.

It is essential that we re-engage in a more focused manner especially because of the changed policy environment in India. As you know, the Government has announced a range of reform measures to make India a more attractive investment destination. The effort has been to address a long-standing demand from our own businesses most of all, for second and third generation reforms, which have been pushed through with significant political will and which we hope will evoke a suitable response, not only from our own industry but also from our foreign partners.

These new measures offer significant openings in single and multi-brand retail, aviation and the financial sector. Some measures have already been rolled out—and companies have started opening stores. [Brooks Brothers, Fossil, Gant.] Ikea of Sweden has also obtained clearance to set up its own units in India. Government has also pushed forward on raising the ceiling on FDI in financial services as well, although this last item requires Parliamentary approval. The effort is in place, and we hope for a positive outcome.

Meanwhile, however, we hear from our U.S. partners that there are still elements on which clarity is awaited, at least in terms of new policies in force. Ultimately, these are business decisions. However, these waters can only be tested by taking the plunge in what has consistently been proved to be a large and profitable market. I do recall a study in which the academic was hard-put to find a multi national company that had lost money in India.

I should also underline that the process of reform and policy change is most sustainable when it is recognized that the policy measures India is taking lie in its own interests. We will do what we need to do for our own sake; however, it should be recognized that what we do will naturally create benefit for our partners.

We also hear complaints on both sides on a number of matters. Procurement policies that are intended to promote industrial growth in India are raised with us. Just as the U.S. has also identified industry as the key driver of employment, we too need to do so. The simple fact is: we cannot harness the demographic dividend promised by our young population without developing industry. The Services sector alone cannot help us absorb millions of young people.

On our side too, we have concerns regarding non-immigrant visas and our inability to initiate even a conversation about a totalization agreement. This is necessary, we feel, as it would begin to address the concerns of the law-abiding, tax-paying expatriate Indians working in the U.S. It is this group of people who serve, at the same time, as the strongest and most committed advocates for our relationship in both countries. This is particularly difficult to explain when we have concluded such Agreements with other major G-8 economies including, recently, with Canada.

We note your deadline to conclude negotiations for a Trans-Pacific Partnership, and your plans to start discussing a comprehensive Transatlantic Partnership, and at the same time, we are moving forward with Comprehensive Economic Cooperation Agreements with ASEAN, Singapore, Japan and Korea. And we are also in dialogue with the EU.

We have been talking about a Bilateral Investment Treaty as well, but not necessarily with the due sense of urgency. Four meetings since negotiations started in 2007 does not suggest a great deal of haste. Much as it might surprise, we want this as much as you do because it is also of interest to us.

Important as they are, market access issues—in goods and services—can either be seen in perspective, or they can be made the defining narrative.

While we must work to sort out these challenges, it is not in our interest to let such issues define the relationship. This is why we have proposed to create an ad hoc clearing-house mechanism to discuss market access issues in the Trade Policy Forum.

I believe that we also need to find a new positive narrative that can bind our countries closer together. One such opportunity, I feel, is in the energy sector. Without assured access to energy inputs in sufficient quantities, we will not be able to sustain our economic development.

Therefore, an enduring India-U.S. partnership in energy should not only cover technological and regulatory aspects, but also establish commercial partnerships in energy. As the U.S. evolves from being an importer of energy to a net exporter of energy, we hope that we can develop mutually-beneficial partnerships in the hydrocarbons sector, in renewable energy, biofuels and in new energy-efficient technologies.

In each of these cases, there can be immediate benefits for both sides. Let me cite a few examples:

Your interest in exporting natural gas and intention to export to non-FTA countries, even if just agreed upon, would help stabilize internationally-traded LNG prices which are at historic highs.

Indian investment in the oil and gas sectors will not only help add to energy transportation linkages, but also to refining and shipment facilities here. Long-term partnerships between us in energy will also help us in India diversify our sources of supply much more globally.

Bio-fuels from non-food crops and energy efficiency are two areas identified in our energy dialogue. Grid management, self-healing and smart grid technologies, and the capacity to bring renewable energy on to grids could be mutually beneficial areas of exchange.

Our regulations and processes involving large projects are being re-examined by a Cabinet Committee on Investment. Among the first which the Cabinet Committee has taken up are those related to energy. Progress is being made on simplifying the approval process for oil and gas exploration blocks. US companies have world-recognized strengths in this industry, and we hope that as we move ahead, we will be able to draw in new players to India. I believe that the exciting new finds off the coast of East Africa, and north-west Australia, will lead to greater interest in other areas of the Indian Ocean basin.

The extraordinary transformation caused by the shale gas boom could also bring larger quantities of US coal into a global market facing supply constraints.

So as I see it, there is much that we can talk about.

Education is also, similarly, a strategic area for our partnership. In being part of the reform and upgradation of our higher learning infrastructure, you will help support modernization of the supply line of trained workers on the other. Think about it: millions of young Indians will be coming onto the job market in the next few decades. The U.S. can, through partnerships with new educational institutions in India, enable them to be productively and gainfully-employed.

The education partnership can span the entire range of options: at one level, we would like to create mutually-beneficial partnerships in state-of-the-art institutions of learning. These could include engineering institutes, management institutes, pure science research facilities and social science colleges. This would also provide a base upon which we develop our growing partnership in science, technology and innovation, and in fulfilment of the vision of our Prime Minister and President Obama, in what is called the “Singh-Obama Knowledge Initiative”.

We also need to develop specific immediately-employable skills. We need better community colleges in India. Earlier this month, we made a good beginning with a special event focusing on creating community colleges and how they would work in India. As many as 12 American community colleges were represented, for which Under Secretary Sonnenshine visited India.

Let me endeavour to draw my presentation to a few clear conclusions and recommendations on the way forward.

First, from our perspective, closer and more effective cooperation between us on terrorism is critical. There is strong public support in India for this aspect of our partnership. Obviously, this has an impact on our bilateral and trilateral consultations on Afghanistan and the region. We recognize and welcome your enduring commitment to the security and stability of Afghanistan. We hope that our concerns will also factor into your calculations.

Second, the relationship between us must now stand squarely on its own merits. It has taken decades for us to stop viewing each other from the prism of each others’ relationships with third countries. As you re-calibrate your presence in Afghanistan, we hope that the transformation of our relationship can accelerate, based on the unique merits of what each side brings to the table.

Third, we need to do more to make defence cooperation part of the new normal. We can do so by finding simple process solutions to enable your defence companies to make value-for-money bids to meet our defence requirements. It would also help for us to evolve our relationship towards co-design and joint production of defence material. In short, let’s actually move to make this happen, rather than inviting each other to move first.

Fourth, let us recognize that trade and economic cooperation must be about more than finding fault with each others’ policies. Both of us need significant investment in industry and manufacture and the jobs that they create. We must find ways to work more closely together in this context. There will be value for U.S. companies to engage in our efforts to build several industrial ecosystems in India in a manner that is compatible with each other’s market or employment interests. We believe the US industrial and manufacturing sector could witness a significant revival led by your energy and chemical industries. We ourselves expect to return to a high GDP growth trajectory—and by high, we mean over 7.5%–in over a year’s time. And we expect that the policy emphasis on manufacturing will start showing tangible results. As India industrialises, the scope for beneficial cooperation will only increase, whether in terms of R&D, technology agreements, integration of manufacturing processes, or trade.

Fifth, we cannot allow the differences we have in trade in goods or movement of services to dominate the discourse. At the same time, we have to create forums to discuss these issues openly and with a forward-looking approach.

Sixth, energy and education are strategic openings for the US to invest in the future of India. As many of our American friends remind us, enabling the rise of India is, or should be, a strategic end in itself for the US. These are sectors in which the US would be part of such a strategy.

Seventh, we have begun to work together well in a number of multilateral fora—the G-20 is a case in point. We appreciate the support of the U.S. for our membership in various multilateral export control regimes. There is also room for us to do more together as our interests coincide with yours in the maintenance of a strong and stable global and regional architecture. However, to keep this process on the rails, it is important that the signalling remains positive. We have been told that the U.S. has placed a strategic bet on India’s rise; therefore it makes little sense to accept strategic arguments from those working to make you lose that bet.

And finally, we need to display towards each other more of that rare commodity: patience. You have demonstrated that in abundant measure – listening to me for half an hour of talk without a single slogan or catchy phrase to explain how much progress we feel we have made. But the evolution of our relationship cannot be conducted in fitful leaps, from one transformative moment to another. Instead, we must recognize that the process of drawing us closer together will need consistent attention, regular consultation, regular cooperation, and continued high level engagement.

It is essential that we continue to invest in our engagement at the highest levels, ladies and gentlemen—and this is my final point here—because this partnership is really in our respective national interests. Just this morning, I read with great interest the outstanding case made yesterday by Secretary Kerry at the University of Virginia, on why the resources spent on foreign policy are in the fundamental interests of your great country. And he then referred specifically to the middle class Indians creating jobs here. And it not only struck me that the case he made could quite easily have been made by my own Minister, but equally, that our mutual investment in the India-US partnership is actually all about making our people safer and more prosperous. It is also about jointly addressing the growing complexities of a world in which the people of India and their American partners face many of the same global challenges. And it is in working towards addressing this strategic reality that our partnership will be defined in the decades ahead.

We look forward to keeping our leadership engaged in this vital relationship, both at the level of the two governments, but also with the support of friends of this remarkable partnership, which is all of you here today.

(This is the text of the speech delivered by India’s Foreign Secretary Ranjan Mathai at the Carnegie Endowment for International Peace February 21 in Washington. The speech was entitled “A 21st century India-US partnership for peace, prosperity and progress.”