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U.S.-India Insight Summary: Year Two – Moving from Shared Principles to Shared Progress

Core Content

The document outlines the progress and future goals of the U.S.-India relationship during the second year of the Modi government, emphasizing the transition from establishing shared principles to achieving tangible progress in both economic and strategic cooperation.

Main Goals for May 2016

The following are the key target goals set for May 2016 to deepen the U.S.-India partnership:

• DTTI Projects: Operationalize at least one of the four Defense Technology and Trade Initiative (DTTI) projects identified in January 2015.
• Civil Nuclear Trade: Finalize the insurance product to indemnify nuclear suppliers, though its adequacy remains uncertain.
• U.S. LNG: Deliver the first U.S. liquefied natural gas (LNG) shipment to India, which is expected to help balance the U.S.-India goods trade deficit.
• BIT Talks: Restart bilateral investment treaty (BIT) negotiations and conduct multiple rounds.
• FDI Caps: Consider liberalizing foreign direct investment (FDI) norms in sectors like e-commerce and retail, and possibly increase the FDI cap in defense.
• Defense Trade: Secure new defense deals with India, as the Modi government has not yet announced a major U.S.-India defense agreement since taking office.
• Defense Offsets: Address the challenges of fulfilling offset obligations due to India's weak defense industry, with a potential revision of the Defense Procurement Policy (DPP) later in the year to enhance flexibility.

Trilateral Cooperation

• U.S.-India-Japan Trilateral Upgrade: The first minister-level trilateral summit between the U.S., India, and Japan is planned, as outlined in the January 2015 Joint Statement.

Key Data Highlights

• U.S.-India Goods Trade: Increased by 5.5% in the 12-month rolling average, according to the U.S. Census.
• FDI Increase: Rose in the 12-month rolling average, as reported by the Department for Promotion of Industry and Internal Trade (DIPP).
• FDI Inflows (FII): Increased in the 12-month rolling average, as per the National Securities Depository Limited (NSDL).

Potential Challenges

The document highlights several possible flashpoints that could affect the U.S.-India relationship:

• BRICS Summit (July): Hosted by Russia, this summit may deepen India's ties with China and Russia, potentially raising concerns in the U.S.
• USITC Report (September): The U.S. International Trade Commission is expected to release a report on India's trade and investment barriers, which could lead to criticism from Delhi.
• WTO Ministerial (December): The WTO meeting in Nairobi may expose differences in multilateral trade approaches, risking bilateral cooperation.
• Totalization Talks: Although agreed upon in the January 2015 Joint Statement, the negotiations for a Social Security Totalization Agreement may face obstacles due to constraints.

Opportunities for Cooperation

The coming year presents significant opportunities for policymakers to turn the shared strategic vision into reality through:

• Defense Secretary Ashton Carter's Visit: His first trip to India in his new role.
• Revamped Strategic and Economic Dialogue (SED): A renewed framework for U.S.-India cooperation in the United States.

Additional Resources

• Recent CSIS India Reports:
  • India Steps up its Role across Asia by Samir Nair
  • Financing India's Smart Cities: The Case for Public-Private Partnerships by Simone Schenkel
  • Totalization: A Top Priority for India Reaches the Agenda by Owen Jollie
  • Corporate Social Responsibility in India: How the Companies Act May Augment Regional Disparities by Richard Rossow
  • A Strong Start to the Budget Session by Richard Rossow

Job Opportunities

• U.S. Consulate General Chennai: Seeking a Political/Economic Specialist with 5 years of experience.
• Hershey's: Looking for a Senior Director for Government Relations with a focus on emerging markets, requiring 10 years of experience.
• U.S. Chamber of Commerce: Seeking a Director for International IP with special focus on India, requiring 7 years of experience.

Conclusion

Year two of the Modi government aims to transform shared principles into actionable progress. While the first year laid the groundwork, the second year will focus on delivering concrete results through targeted initiatives, negotiations, and cooperation. Policymakers must remain vigilant to potential challenges and leverage key summits and dialogues to strengthen the bilateral relationship.