Prime Minister Narendra Modi’s speech to the Indian-Americans at Sunday’s event in Houston, his third such address in the United States, reflected his effort to solidify the India-US partnership. President Donald Trump addressed the ‘Howdy, Modi!’ event in the presence of over a dozen American congressmen and women, along with senior officials, governors and state legislators.
The symbolism of an American president walking hand in hand with an Indian Prime Minister at the end of a rally is a victory for Prime Minister Modi and his administration. At the end of the day, however, the strength of a relationship between any two countries is gauged by its underlying economic and strategic bonds.
At the heart of the India-US relationship has been ties between the two countries’ people, something that kept the relationship alive even when there was little to no strategic or military ties and limited economic bonds. This relationship between the oldest and the largest democracy has also been built on the American belief that India is a fellow secular, open and pluralist democracy. On the eve of the 150th birth anniversary of India’s founding father, Mahatma Gandhi, it is important to remember the number of American leaders and presidents who have been influenced by Gandhi.
On Sunday, both President Trump and Democratic House Majority Leader, Congressman Steny Hoyer, spoke of how Indians and Americans share common values, “similar principles,” about how both countries’ constitutions begin with the same three words “we the people”, and that India is a trusted partner and “most valued” friend of the US. In his speech, Modi too referred to India’s unity in diversity as being the country’s unique quality and emphasised the presence of a vibrant democracy as its core strength.
Support from Indians abroad
In the last five years, PM Modi has made Indian-origin people settled broad a key part of his foreign policy interactions: seek their support both within their country of residence as well as ask them to help with India’s economic growth through investment, tourism and trade. The Houston rally of 50,000 Indian Americans reflects the pull of Indian nationalism: it is rare for foreign leaders to go to another country and hold a rally with their own people there, but it appears natural for an Indian leader to do so.
In his speech, President Trump praised the four million-strong Indian-American community and referenced the deep economic and security partnership between the two countries. Trump also referred to himself as the ‘best friend’ India could ever have and referred to Modi as the “most devoted and loyal friend” of the US.
The economic angle
The primary emphasis of PM Modi’s speech was to emphasise the domestic reforms his government has accomplished to date — from welfare schemes to those on the economic front — and even a reference to the recent revocation of Article 370 of the Indian Constitution pertaining to Jammu and Kashmir. On the economic front, PM Modi projected India as an investment friendly destination, speaking of the lowering of corporate tax rates, easing of rules for the entry of foreign direct investment (FDI) into India including in single brand retail. He also mentioned that his government planned on investing $1.4 trillion in infrastructure reforms.
While there was no announcement of a trade deal – not even a ‘mini’ trade deal that had been referenced in the media – it appeared that there was a deliberate effort to avoid references to any areas of tension. Modi joked about President Trump referring to him as a tough negotiator and praised the latter as being a great one himself; Trump too did not once refer to the areas of friction between India and the US on the economic front.
The India-US bilateral trade has grown from $126 billion in 2017 to $142 billion in 2018. US exports to India in 2018 grew at nearly 30 per cent while Indian exports grew at about 12 per cent. Over the last two years, India has also increased purchase of oil and gas and civilian aircraft and defence equipment from the US.
However, India’s economic growth has slowed down in the last few years, with the country’s GDP currently at around 5 per cent (down from 7.5 per cent in 2015-16). India thus needs to boost exports, attract both investment and technology, and provide employment to its population, most of whom are under the age of 29 years. India needs labour-intensive economic growth and one potential avenue could be attracting the American – and Japanese – companies that are leaving the Chinese market. For that India needs to do more than simply lower corporate tax rate — it needs to provide incentives to these companies.
India in US’ scheme of things
India lies at the heart of the Trump administration’s Indo-Pacific strategy and India’s support is critical when it comes to confronting a Chinese-led global order. It was therefore interesting that while Trump spoke in detail about the India-US security partnership, the only aspect PM Modi spoke about was counter-terrorism.
Moreover, while Trump spoke about the upcoming India-US joint tri-service military exercise that will take place in November, there was no reference to both countries upholding the rules-based international liberal order, Indo Pacific or the Quad. Maybe those will be discussed next week when there are bilateral discussions between the two countries both on the sidelines at United Nations General Assembly (UNGA) as well as at meetings in Washington DC.
Indians and Indian leaders have always believed that India’s millennia-old civilisation, critical geostrategic location and population size guarantee it a place under the sun, which the American partnership and support completely reflects. What New Delhi needs to bear in mind is that it is India’s democratic and pluralist credentials, its rapid economic growth after the 1990s, large military base and potential, and the rise of China that have made countries around the globe, including the US, look at India with renewed interest.
While the India-US relationship benefits from personal chemistry between leaders and people-to-people ties, its long-term sustenance rests on economic and defence bonds. To ensure the American and global interest remain intact, India needs to sustain economic growth, its vibrant democracy and build its military capabilities.