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US President Barack Obama's India Visit Rekindles Bilateral Ties

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 Published : Monday, 02 January, 2015 12:15 PM
  
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US President Barack Obama’s India Visit Rekindles Bilateral Ties
 
On January 27, 2015, US President Barack Obama wrapped up his three-day India visit here during which both the countries broke a seven-year logjam to operationalize a landmark civil nuclear deal, besides enhancing defense and trade ties. In fact, the visit of no other head of state in recent times has exuded such warmth and no other foreign leader received such public attention and adulation. Modi broke protocol to greet Obama and US First Lady Michelle Obama soon after Air Force One touched down. 
 
The ‘warm hug’ gesture, if anything, underlined the personal chemistry between the two leaders setting the tone for bilateral ties. Modi calling the US president as Barack and Obama speaking Hindi, including dialogues of a Bollywood movie struck an instant chord. Even White House’s tweets were in Hindi while delivering a ‘Dhanyavad’ (meaning ‘thank you’) to India for inviting and hosting U.S. president on Republic day. 
 
Apart from the usual pomp and symbolism that marked the visit and garnered extraordinary media attention, there is lot of substance in the visit with both U.S. and India making serious efforts to bolster ties. A tectonic shift is taking place in Indo-U.S. ties with both leaders communicating the need to become strategic partners for world stability.
 
The progress on civil nuclear cooperation deal, which was signed in July 2005, is arguably the biggest outcome of the trip against the fact that the ruling Bharatiya Janata Party had anti-stance when it was sitting in the opposition. The significance of the completion of the India-US nuclear deal cannot be overstated. 
 
Signed in 2005, with a Nuclear Suppliers Group waiver in 2008, the deal has been in limbo for few years. The stage had been set for the nuclear deal in three rounds of dialogue by the bilateral contact group. The last such meeting reportedly took place in London a week before the visit. India will reportedly be setting up an insurance pool led by General Insurance Co. and four other insurance companies of a total amount of INR 7.5 billion (USD 121 million) to indemnify companies that build reactors in the country against liabilities in case of a nuclear accident. 
 
The remaining INR 7.5 billion (USD 121 million) of the total INR 15 billion (USD 242 million) to offset liabilities will be provided by the government of India. This will address U.S. concerns over clause 17 of the Indian Liability Act (ILA). India’s Attorney-General will address US concerns over clause 46 of the Act that allows for unlimited liabilities in case of a nuclear accident. 
 
The U.S., on its part, has agreed not to track the uranium used in American supplied reactors. With that said, U.S. companies will still take their time to assess whether India’s proposal for an insurance pool will be sufficient to mitigate investment risks in light of the ILA that holds suppliers liable for damages in the event of a nuclear accident. 
 
President Obama announced USD 4 billion (INR 248.4 billion) of new initiatives aimed at boosting trade and investment ties as well as jobs in India, and opened up a whole new source of financing for social development ventures in the country through a new Indian Diaspora Investment Initiative. 
 
The USD 4-billion deals include USD 2 billion (INR 125 billion) of leveraged financing for renewable energy investments in India through the US Trade and Development Agency (USTDA) and USD 1 billion (INR 63 billion) in loans for small and medium businesses across India through the Overseas Private Investment Corporation (OPIC). In a separate move, the US Export Import Bank would finance a billion dollars to support 'Made in America' exports to India over the next two years. Obama also announced that two US trade missions will be in India this year with a specific focus on infrastructure development in rail, roads, ports, and airports. 
 
The U.S. president also announced the creation of a High-Level US India Strategic and Commercial Dialogue to monitor progress on the pacts and vision statements laid out by the two leaders. The mechanism would hold the bureaucracies of the two countries accountable for translating the vision of the two leaders into reality. The two leaders also pledged their resolve for giving push to cleaner energy technologies and help India diversify its energy mix, which at present is hugely tilted towards coal. Modi, on his part, promised U.S. businesses an open environment, predictable tax regime and to remove uncertainties as President Obama raised issues of trade barriers and intellectual property.
 
Both countries renewed the 10-year framework for the U.S.-India Defence Relationship. India and the US also decided to kick off joint manufacturing of four relatively modest military products and explore the development of two more high-end technologies. The two nations agreed to step up joint combat exercises, maritime security endeavors, intelligence-sharing mechanisms, military exchanges and the like through the framework, which has the key new element of Defence Trade and Technology Initiative (DTTI) to bolster India's fledgling defense-industrial base. The establishment of a hotline between the two leaders and their national security advisers are also an indicator of the two countries taking ties to a deeper, strategic level.
 

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