NEW DELHI — When U.S. Secretary of State John Kerry shook hands with Indian Prime Minister Narendra Modi at his residence on Race Course Road here Friday, it pushed strategic and business relations between the two countries toward a much-needed step ahead. The political interaction was the first at this level since the Indian elections in May, which gave the Bhartiya Janata Party a landslide victory.
Economic revitalization has been one of the key promises of the new government and business analysts said the meeting Friday was a key part of that. Trade between India and the U.S. has grown five-fold since the year 2000 to almost $100 billion annually, but the last few years have been disappointing as the Indian government appeared to have been caught up in what economists have repeatedly referred to as “policy paralysis.”
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The presence of Secretary of Commerce Penny Pritzker in the U.S. delegation underscored the vital role of the economic partnership in the 40-minute meeting with Modi. The meetings began in New Delhi on Wednesday and included the fifth Indo-U.S. Strategic Dialogue on Thursday. The delegation also had meetings with finance minister Arun Jaitley and external affairs minister Sushma Swaraj on Thursday.
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Analysts noted that this visit is a vital run-up to the meeting between President Obama and Modi in the U.S. in September.
A bit of prickly history is also being wiped clean with this visit — the U.S. had denied Modi a visa following riots in Gujarat in 2002, where he was chief minister. The shift in the U.S. stance towards Modi changed after the Indian election in May. In a television interview in New Delhi, Kerry said that “the visa was denied by a different government.
“We will welcome him,” he said.
After his swearing in as prime minister, Modi is being seen as a leader capable of transforming India. Foreign policy adviser Frank Wisner recently testified before a Senate panel and gave a sense of the scope of this change.
“Prime Minister Modi’s recent election is virtually unprecedented. He comes to office with great authority; the opposition is in disarray and will be so for sometime to come. We are wise to assume that the prime minister and his party may be in office for the next 10 years. It is a good time to define our political and security relationship,” he said.
Wisner also noted that the engagement of the American business community in India was the driving force in the relationship between the two countries in the Nineties and gave a sense of the dramatic change since then.
“In recent years, American business has lost confidence in the Indian market,” he said, citing the slowdown of rates of growth, the Indian government’s restriction on foreign ownership, its tax policies, approach to intellectual property rights, its insistence on localization and other hurdles as reasons. “These issues must be addressed if there is to be renewed American investor confidence in India,” he said.
Earlier this week, Pritzker visited precisely those issues as she met Indian business leaders in Mumbai. The focus on new avenues to reinvigorate economic ties between the two nations was key as she spoke at an event hosted by the Confederation of Indian Industry. She reiterated the U.S. commitment to partner with the newly elected Indian government, especially in areas of infrastructure, manufacturing and business investment.
Investor confidence was one of the issues that came up on Thursday at the fifth Strategic Dialogue, cochaired by Kerry and Swaraj.
“The moment has never been more ripe to deliver on the incredible possibilities in the relationship between our two nations,” Kerry said at a joint press conference after the dialogue, which brought up issues including barriers to trade, subsidies and protectionism, and U.S. surveillance.
Although both Kerry and Swaraj used somewhat similar language to indicate solidarity — Kerry said that “the United States and India can and should be indispensable partners in the 21st century” and Swaraj noted that there were “converging long-term strategic interests” — the important issues underlying the two countries’ differences, including India’s position at the World Trade Organization and issues of U.S. surveillance, were underlined.
The trade talks in Geneva, which came to a standstill late Thursday night because of India’s stand on higher concessions for agricultural stockpiling came up as Kerry met Modi on Friday.
Kerry reportedly told the prime minister that India’s refusal to sign a global trade deal sent the wrong signal and urged an early resolution to the situation.
Despite those differences, there appears to be an eagerness to better relations, mirroring an observation by Nisha Desai Biswal, assistant secretary of the Bureau of South and Central Asian Affairs in July before a House Affairs Committee as she talked about trade between the two countries.
“We can grow that five-fold again in the years to come. We are committed to addressing the inevitable frictions over trade through dialogue and engagement,” said Biswal.
Kerry echoed that in New Delhi. “We want a new relationship. We want to see things move in a very positive way,” he said.