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It has been 16 years since George W Bush fundamentally altered the way the United States looked at India. As the old Cold War with the Soviet Union receded into memory and a new one with China appeared imminent, at least to the Bush White House, India emerged as an important potential ally in the new world order. India’s economy had recently started down the road to liberalisation too, making the South Asian country attractive to US industry as well as the government.

Despite frequent kerfuffles in the media – and there have been plenty – India-US relations have moved from strength to strength over the past 16 years. From the Strategic Quartet – high technology trade, space cooperation, nuclear energy, and missile defence – through the Next Steps in Strategic Partnership to the historic Indo-US nuclear deal and the Defence Technology and Trade Initiative, Washington and Delhi appear poised on the brink of a century-defining partnership. If state visits are any indication of warmth, prime minister Narendra Modi is visiting the United States at this moment for the fourth time in just two years – something his predecessor required nine years to necessitate.

Defence ties are usually the most prominent measure of relations between nations for obvious reasons: not only do they declare how much skin each state has in the other’s security, but they are also a statement of how much states trust each other with their prized technology. No wonder, then, that India’s defence purchases from the United States have attracted so much attention. Between CH-47 Chinooks, AH-64 Apaches, C-17 Globemasters, and C-130J Super Hercules, India’s aggregate defence acquisitions from the United States has crossed $13 billion. The loss of India’s Multirole Medium Range Combat Aircraft contract disappointed Washington but under Modi’s Make in India programme, US defence firms are considering moving the production of the F-16 and F-18 to India.

The United States has moved beyond the role of being a mere supplier of weapons to India: officials have been engaged in talks that, if successful, would result in the co-production of systems. Under the DTTI, the next generation of Raven unmanned aerial vehicle will be jointly developed and produced. Other projects include intelligence gathering and reconnaissance pods for the C-130J, mobile electric hybrid power sources, helmet-mounted digital displays for aircraft and helicopter pilots, high energy lasers, and chemical and biological warfare protection gear for soldiers.

Washington has also been keen to assist India with core defence technologies such as the development of jet engines and the catapult launching system on board US aircraft carriers. India’s Kaveri programme has been a miserable failure and with Delhi’s increasing focus on maritime security, the US offer could provide a healthy boost to Indian capabilities.

India’s change of mind on what the Pentagon calls the foundational treaties – LSA, BECA, and CISMOA – has been a welcome surprise. These agreements formalise the sharing of logistical facilities and align communication protocols between the US military and their partners, greatly enhancing the range and capabilities of both forces in joint humanitarian or security missions. Although the agreements will remain unsigned during Modi’s visit this June, it is reported that they are close to conclusion.

The United States’ support for Indian admission to the permanent membership of the United Nations Security Council and technology export control groups such as the Missile Technology Control Regime, the Nuclear Suppliers Group, the Australia Group, and the Wassenaar Group gives some weight to Philip Zelikow’s statement in 2005 that the United States intends to help India become a major power.

Although both India and the United States have come a long way in defence cooperation, one cannot shake the feeling that both sides are still hedging from a complete commitment. India has lost no opportunity to stress that the signing of the foundational agreements with the United States will in no way erode its sovereignty, that it is happy to conduct numerous maritime joint exercises but will not be persuaded to conduct joint patrols, and that India sees itself as a friend and partner of the United States but not quite an ally. On the American side, senators questioned the wisdom of a bill that proposed elevating India to the status of a NATO ally in all but name given that the South Asian country did not see itself in that role. The US bill would have amended the Arms Export Control Act and made defence transfers to India quicker and smoother.

One hurdle in closer ties is Pakistan: India is displeased with the continued sale of US weapons to the Islamic republic despite ample evidence pointing to terrorist ties and an unhelpful disposition towards US goals in South and Central Asia. However, the dynamics of these ties have remained relatively unchanged since the 1950s: Pakistan provides services in the region that the United States cannot get elsewhere in return for White House forbearance on matters Islamabad sees as vital to its interests. In the 1950s and 1960s, it was basing privileges for US reconnaissance aircraft conducting missions over China and the Soviet Union; in the 1970s, Islamabad served as the channel to Beijing and a rapprochement with China; in the 1980s, it was the shipment of arms to the mujaheddin in Afghanistan. In the 2010s, Islamabad has become the conduit to the Taliban, with whom Washington hopes to negotiate a “decent interval.” Even now, though the United States has been urging India to play a greater role in Afghanistan, Delhi has declined, choosing to involve itself more in important but not critical facets of Afghanistan’s development.

India’s reluctance to play a more significant role in its own interests may frustrate observers but this has, understandably, in large part to do with the country’s capabilities. Couched in the rhetoric of multipolarity and morality, India’s inaction misleads the casual observer. The ignored pachyderm in the room is that Delhi lacks the financial and industrial wherewithal to flex its military muscle in Central Asia or the South China Sea, and any attempt to persuade it to do so will fail. The remedy to this is economic growth, technological development, and strategic coalitions.

On the surface of it, economic relations seem to have grown substantially between India and the United States. Both countries are investing more in each other’s economies and trade between the two stands hovers around $70 billion. More and more US companies are setting up shop in India as Indian companies are expanding their business beyond the Atlantic. Washington is the lead partner for developing Allahabad, Ajmer, and Vishakapatnam as smart cities. There is still plenty of room to grow and Modi has ambitiously suggested aiming for $500 billion in trade in a few years. However, there are several issues that will plague relations. The first is subsidies: Washington recently won a case against India at the World Trade Organisation that prohibited the Indian government from giving preferential treatment to domestic solar panel manufacturers. US firms are also pushing Washington to act against subsidies the Indian Space Research Organisation gets from the government for its Polar Satellite Launch Vehicle programme.

A second hurdle is intellectual property. In several sectors, India has brought its laws into alignment with US and international norms yet there remain significant differences in philosophy. Pharmaceuticals is one such field, where Indian courts have been hostile to the US practice of evergreening patents, instead seeing a social dimension to the industry. India has also had disagreements with the United States on its agricultural subsidies and food security programme.

A sector-specific yet politically potent point of friction is nuclear energy. Although the Indo-US nuclear deal was announced in 2005 and came into force in 2008, there has been little movement on that front since. India’s nuclear liability laws were found to be at odds with international norms and it was only in 2015 when US president Barack Obama visited India during the Republic Day celebrations that some headway was made in easing the logjam. The Indian side came up with a convoluted mechanism to bypass its own law without losing face and satisfied Washington but private companies are still uncomfortable with the provisions. As a result, a number of nuclear energy projects have stalled across the country; GE has flatly refused to participate in the Indian nuclear energy market as long as the present law stands and Westinghouse has delayed the submission of its project proposals. The sins committed by the BJP while in Opposition have been visited upon the BJP while in power.

A probable future cause for concern is the US creation of large trading spheres via the Trans Pacific Partnership and the Transatlantic Trade and Investment Partnership. India is not party to either of these blocs and its efforts to forge free trade agreements with important partners such as the European Union and the Association of Southeast Asian Nations has proceeded at a snail’s pace. There is a danger that the implementation of the TPP and TPIP will take trade away from Indian shores to within the bloc, dampening much-needed Indian economic growth.

Many of these frictions arise from the fact that the US and Indian economies are at different points: certain Indian policies may not optimize on economic efficiency but are geared towards lifting more of its population out of poverty or establishing its own industries firmly in the international arena. Delhi and Washington have much work to do to negotiate through the clashing policies that will certainly arise in the future and early recognition and amelioration will insulate relations from harsh market realities.

After 16 years, India-US relations are on a firm footing. Much has been accomplished though a lot more remains to be done. It was feared that the warmth between the two would dissipate after the exit of Bush and the election of Obama but despite the lull due to an international economic slowdown and a paralysed UPA government, ties have started to blossom again in the past two years since Modi took office. India enjoys bipartisan support in the US and Washington a hesitant embrace in Delhi. Can relations be derailed? There will always be swings and roundabouts but it seems to have dawned on both countries that the geopolitics of this century are best navigated as friends than estranged democracies.

This post appeared on FirstPost on June 06, 2016.