An IDC Analysis


New Delhi,  09 July 2005

On the eve of Prime Minister Manmohan Singh's official visit to Washington, two think tanks, the Pacific Council on International Policy (PCIP) of Los Angeles and the cash rich Anil Ambanii Observer Research Foundation (ORF) of New Delhi, with Gen V P Malik in USA seen on TV with Pranab Mukherjee, have jointly released a report on "India–US Relations: A Vision For The Future". This has been augmented by the Carnegie Institute report authored by Ashley Tellis and publicised in the Outlook magazine. There is a pull by NRIs in USA some 2.5 million with disposal income of over $100 billion to pull India to the American fold of ‘make money and enjoy life’. However there is confusion at home. Brinda Karat became a Communist MP in the Rajya Sabha and her first act was to ask the Government to bin the India–US Defence Framework.

The CPM are up in arms over BHEL disinvestments and the Shiv Sena rebels are hobnobbing with the NCP and some will meet Sharad Pawar in London. That’s the new India for you.

A great deal of work no doubt has gone into the preparation of the joint report, and India is back to basics in economics. Does it want to embrace capitalism all the way and also become the policeman in the Indian Ocean and take China head on as USA's ally in the years ahead, or try a middle path and settle its own backyard with Pakistan, Bangla Desh, Nepal and Sri Lanka? Only two people can answer this question and the first is Nehru's grandson's wife Sonia Gandhi the more powerful node in India and the economic node the Prime Minister of India Dr Manmohan Singh who went back to Oxford and recounted his old days in Nuffield College there. China is watching and Russia may be a spent force with less GDP than India’s but it is not yet down and out.

A quote from the preface of the report is given below as NRIs have gained a lot by interest investments in FCNRs in India and real estate dealings and now they are set to gain more by way of dual passports and may be that is the way to go –– forget the poor, forget the neighbourhood, forget health and nutrition of the masses but get rich and mighty and then attend to issues. However, the report does contain a few incorrect and/or outdated assertions, for example:


It would appear that India needs the United States more than the United States needs India. For the United States, good relations with India are desirable but not essential, whereas they remain essential for India.


India–US Relations: A Vision For The Future

Task Force Members include Ambassador Abid Hussain, RK Mishra, VP Malik, Amitabh Mattoo,  SD Muni, Amitav Malik and S Narayan.

The key members of PCIP task force were Ambassdor Richard F Celeste, Ashley Tellis, Rafiq Dossani, Mira Kamdar, Ian Lesser and Daniel Snieder.

Executive Summary

AFTER DECADES OF regarding each other with wary suspicion, India and the United States have moved rapidly from uneasy cooperation to incipient partnership. This welcome evolution has profound implications for the future.

What has brought about this shift? This is not a question for historians alone. The answer should guide not only the understanding of the past but policies for the future.

One source of this change is geopolitics. The end of the Cold War removed the issue of India’s relationship with the Soviet Union and lessened the US reliance on Pakistan as an anti-Soviet ally. Americans came to see India as a strong regional power that could help to maintain stability and balance in a turbulent world. The September 11 terrorist attacks created a sense of common threat that unites strategists in both India and the United States.

The progress towards partnership can be traced in the increasing frequency of high-level interaction between leaders of both countries. The visit of Prime Minister Atal Behari Vajpayee to the US in 1999, when he described the two countries as “natural allies” was followed the next year by President Bill Clinton’s trip to India, the first by a US president in 22 years. This was a watershed in the Indo-US relations and that pace has continued during the Bush administration, hopefully to include a visit by President Bush to India.

This does not mean that India and the United States will not continue to have differences in their strategic views. For example, US relationship with Pakistan remains a source of concern and divergence. But the dynamic of partnership, regardless of who holds power in either country, remains strong.

To focus exclusively on geopolitics and security, however, misses the underlying driving force behind this voyage of rediscovery—economic and cultural globalization. The shift began with the decision of India in 1991 to end its long policy of import substitution and industrial protection and to open its economy for global competition. This led India to jettison its economic policies and generate confidence in its ability to compete. It also encouraged American businessmen, who had largely ignored India, to view the world’s second most populous nation as a land of opportunity.

That profound redirection coincided with the Information Technology revolution in the 1990s. India, drawing upon its long-standing investment in higher education and science, created a globally competitive software industry. Breakthroughs in telecommunications and the digital transmission of data radically lessened the barrier of geographic distance for many facets of commercial transactions. That revolution diffused power away from governments, empowering individuals and civil society.

Meanwhile, the IT revolution underway in the United States was fueled in part by a

surge of immigration into the US by Indian engineers and entrepreneurs who became a key part of the economy and culture of Silicon Valley. These entrepreneurs in turn encouraged their American counterparts to seek new opportunities in India. An affluent and increasingly influential Indian diaspora emerged in the US, creating new bonds between the two countries.

Cultural exchange has grown alongside economic and technological interactions. As India’s youth become globalized, it has shown a growing appetite for popular culture, much of it from the United States. And Indian cultural exports, from food and fashion to cinema, are finding a growing reception in the American marketplace.

All these breakthroughs have combined to drive a profound transformation of perceptions in both countries. Until the late 1990s, the average American thought of India rarely, if at all. For the vast majority of Americans, India was associated with poverty or by orientalized images of maharajahs, palaces and elephants, nostalgic pictures from the British Raj. Images of the United States as a set of Hollywood clichés—violent, wealthy and arrogant—were common in India.

These stereotypical images, particularly of India in the United States, are giving way. In the mind of the average American, India is now just as likely today to be associated with technological innovation as with grinding poverty, with hip fashion as with tigers and elephants, with the latest movie sensation as with sitar concerts.

The most telling sign of the shift in US perception is that India is now often referred to in American business conferences in the same breath with China. The two countries are paired as a common phenomenon, rising global economic powers that will dominate the future of this century.

This change is even more evident on the West Coast of the United States, in places such as Silicon Valley, Los Angeles and Seattle. The economy of this region is more tightly tied to Asia and the Pacific. The regional economy is more dependent on high technology, global culture such as the film industry and international trade. And in the Pacific West, the cultural impact of India and the growing presence of the Indian American community are more strongly felt than in much of the United States.

Globalization, of course, is not free from controversy in either country, controversy that plays out in the context of two vibrant democracies. In both cases, the interaction of the global economy brings not only benefits but also some painful changes. In the United States, the outsourcing of employment in the service sector to Indian software houses and call centers has triggered deep anxiety. There are growing concerns that the jobs that have been lost and will not, as has been true in the past, be replaced by new jobs. Outsourcing made India—for the first time in American history—an issue in the 2004 presidential election.

In India, the stunning results of the 2004 parliamentary elections also reflected the uneven results of India’s entry into the global economy. Rapid growth has

rewarded the urban middle class far more than the rural poor. The gleaming shopping malls outside Delhi have not changed the lives of pavement dwellers or farmers. Indian voters demonstrated a “revolution of rising expectations” caused by India’s entry into the global market. All classes in India want the government to move faster but also to do a better job of distributing the gains of economic


Despite these difficulties, there can be no retreat from the intertwining of India and the United States. Indeed, steps must be taken to accelerate the momentum of a transformation whose benefits flow both ways. Although the actions of governments are important, much of this change will necessarily remain in the hands of non-governmental actors, from the business community, to educators and cultural institutions.

Strategic differences will certainly occur. But strengthened economic and cultural ties will enable both nations to ride over those differences with lesser bumps. There are steps that both governments can take to ensure that the inherent dynamism of the relationship realizes its full potential.

On this basis, a bilateral task force convened by the Pacific Council on International Policy and India’s Observer Research Foundation met over the past year to consider how to strengthen ties between India and the United States. This is the first such policy study carried out on a bilateral basis, with experts from both countries joined in common deliberation. Reflecting its origins in the Western US, the Pacific Council brought both a clear orientation toward Asia and an emphasis on the economic and cultural dimension of the Indo-US relationship.

The recommendations of this task force are aimed at:

  • Removing barriers to strategic cooperation, particularly in the area of technology development.

  • Expanding commerce between India and the United States.

  • Promoting cooperation in science and technology.

  • Strengthening cooperation in healthcare and education.

  • Building new constituencies through culture and the Indian diaspora to deepen mutual understanding.

These reflect our understanding that progress in both countries rests on expanding the free flow of trade and ideas. We have to mobilize the energies of free people, ensuring a dynamic relationship between private initiative and the management of public affairs in both countries.


Since the Indian nuclear tests in 1998, the United States and India have worked to overcome the restrictions on scientific and technological cooperation imposed by non-proliferation concerns. The Clinton administration began that process. It has accelerated during the Bush administration beginning with the lifting of sanctions imposed after the nuclear tests.

The signing of the Next Steps in the Strategic Partnership (NSSP) in 2004 was a major move ahead. The NSSP aims at facilitating cooperation in civilian nuclear energy, space programs, high technology trade and a dialogue on missile defense. But while the aims are correct, the NSSP has failed to yield sufficient progress, particularly in areas such as nuclear energy cooperation. Restrictions on India’s access to advanced technology—creating potential new markets for American industry—still remain trapped in the past. India is treated more restrictively, for example, than China.

Ultimately, the joint task force believes that this cannot be fully resolved without accepting India’s status as a full-fledged nuclear power. With that end in mind, the task force recommends that both governments:

  • Support India’s bid to join the Security Council of the United Nations as a permanent member.

  • Provide India with access to civilian nuclear technology in exchange for putting newly built reactors under IAEA safeguards.

  • Invite India to join the Nuclear Suppliers Group and the Missile Technology Control Regime and take steps to modernize Indian export control enforcement.

  • Initiate a high level dialogue to remove India’s reservations in joining the core group of the Proliferation Security Initiative.

  • Remove India from the sensitive countries list governing the control of exports of strategic technology from the United States. What is permissible for China should not be denied to India.

  • Expand areas of technological cooperation under the Next Steps in Strategic Partnership between India and the United States.

  • Is a solid and comprehensive US-India strategic partnership inevitable?

For full text please log on to This was compressed into a shorter article published in THE WASHINGTON TIMES on February 9, 2005 -- see

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