India-US Relations: Pitfalls of Protectionism

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 Context: A team of Indian negotiators has left for the US for further negotiations on a proposed mini trade deal and a comprehensive bilateral investment treaty, highlighting the evolving relationship between both the countries.

Besides, the team will also seek clarity over following matters:

  • Latest US announcement of a 10% tariff on imports from BRICS countries.
  • Potential impact of this tariff on the proposed 'mini trade deal' between India and the US.
History of India-US Relations: From estranged democracies to strategic partners.
  • Phase I (1947-71):
  1. Despite India's policy of non-alignment, it moved closer to USSR, resulting into engagement in multiple fields, ranging from defence to space.
  2. Nixon administration's decision to support Pakistan during 1971 war strained the relationship between India and the US.
  3. At the same time, India also signed a Treaty of Peace and Friendship with the USSR in 1971.
  • Phase II (1971-91):
  1. Nuclear experiment at Pokhran in 1974 further deteriorated India-US relations.
  2. Indira Gandhi's visit to the US in 1982 seeking support for India's nuclear program failed to produce any positive outcome.
  3. Bhopal gas tragedy (1984) was followed by lack of cooperation from US authorities.
  • Phase III (1991-Present):
  1. Collapse of USSR in 1991 led to a unipolar world with the US being the only superpower.
  2. Meanwhile, India introduced economic reforms in 1991, moving from state-centric to market-led growth as prevalent in the US.
  3. Pokhran tests in 1998 led to US sanctions on India. India-US relations hit a new low.
  4. However, US President Bill Clinton's visit to India in 2000 signalled the beginning of a strategic partnership between the two countries.
  5. In 2008, India and the US signed the Civil Nuclear Agreement, allowing India to access civilian nuclear technology from the US.
  6. India was accorded the status of a major defence partner of the US in 2016.
Areas of Cooperation Between India and US:
  • Economic Cooperation:
  1. The US remains India's largest trade partner for the fourth straight year in FY 2025 with bilateral trade touching $131.84 billion.
  2. Mission 500: Doubling Bilateral Trade seeks to increase US-India bilateral trade to $ 500 billion by 2030.
  3. The US continues to remain the largest source of FDI in India, followed by Mauritius, Singapore and the UK.
  • Defence Cooperation:
  1. India has procured advanced defence equipments from the US including Apache and Chinook helicopters and MH-60R Seahawk helicopters.
  2. Defence exercises such as Malabar Exercise (Navy), Yudh Abhyas (Army) and Tigher Triumph seek to enhance interoperability between the forces of two countries.
  3. Signing of defence pacts between the two nations such as GSOMIA and LEMOA and 2+2 Dialogue between the Defense Ministers of two nations aim to achieve optimum coordination between the US and Indian military ecosystems.
  • Technological Cooperation:
  1. Scientific collaoration between NASA and ISRO on projects like NISAR (Earth observation satellite).
  2. US-India Initiative on Critical and Emerging Technologies (iCET) fosters engagement on emerging technologies such as AI, quantum computing and semiconductor industry.
  3. India is proposing amendments to the Atomic Energy Act and Civil Liability for Nuclear Damage Act (CLNDA) to enhance US-India nuclear partnership.
  • Health Cooperation:
  1. Fourth India-US Strategic Dialogue in 2013 sought to foster cooperation on prevention and control of HIV/AIDS, human and avian influenza, emergency medical care etc.
  2. The Quad vaccine partnership during COVID pandemic helped reduce active caseload and mortality.
  3. Transforming the Relationship Utilizing Strategic Technology (TRUST) includes pharmaceuticals as one of the focus areas.
  • Multilateral Cooperation:
  1. Revival of Quad format (India, US, Japna, Australia) to ensure a free, open and rules-based Indo-Pacific.
  2. Both countries are working on the India-Middle East-Europe Corridor and I2U2 Group (India, Israel, UAE, US) to enhance economic and security ties.
  3. US-India COMPACT seeks to counter Chinese influence in the Indo-Pacific and strengthen India's defence capabilities.
Rise of US Protectionism: 
  • The first Trump administration introduced an era of protectionism exemplified by the America First Policy.
  • Protectionist Measures by US:
  1. Withdrawal from Paris Agreement, World Health Organization (WHO), International Criminal Court (ICC), Trans-Pacific Partnership (TPP) etc.
  2. US's actions have rendered the dispute settlement mechanism of WTO practically dysfunctional. 
  3. Termination of North American Free Trade Agreement (NAFTA) and replacing it with United States-Mexico-Canada Agreement(USMCA).
  4. Strict visa control regime (H1B Visa) and tough immigration norms.
Impacts of US Protectionism:
  • On Multilateralism:
  1. Weakening of the rules-based global order that may benefit rogue states and non-state actors like terrorist organizaions.
  2. Withdrawal from climate pacts may slow down global collaboration on mitigating the adverse impacts of climate change.
  3. Fund crunch followed by US's exit from several multilateal institutions may hamper their effective functioning.
  4. US's tariff war threatens the post-Bretton Woods multilateral global economic framework.
  • On India-US Relations: 
  1. US-China trade war presents an opportunity to India to emerge as an alternative investment destination.
  2. Protectionist economic measures by the US harms India's exports and long-term economic interests.
  3. Strict H1B visa norms under the current US administration hinders movement of Indian labour and remittance flow from the US.
  4. US's withdrawal from global stage gives free run to China which presents a stark future for India in the context of its border dispute with China and the growing China-Pakistan relationship.
Way Forward:
  • Finalize the 'mini trade deal' that would enhance market access, boost investment and reduce tariffs.
  • A long-term waiver under CAATSA to take into account India's defence needs, especially in view of Pahalgam terror attack.
  • The US should consider easing visa restrictions to mitigate the concerns of Indian IT professionals, researchers and students.


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