Previewing Prime Minister Modi’s visit to the U.S.: Trade, Defense, and the Diaspora

18th September, 2014

Washington, D.C. — The Center for Strategic and International Studies (CSIS) organized a panel discussion to preview Indian Prime Minister Narendra Modi’s visit to the United States next week. The panel consisted of a trade-relations veteran, a defense industry expert, and a member of the Indian-American community who would provide the diaspora’s perspective on Mr. Modi’s visit.

Right off the bat, the hall was unusually full, as noted by the moderator Richard Rossow, and the audience very diverse (with a majority non-Indian crowd), an indicator of the interest in Washington D.C. about the new administration in New Delhi.

The following panelists came forward to make the following statements.

Ambassador Susan G. Esserman

  • Amb. Esserman marked that despite commonalities (shared capitalist and democratic structure, I’m assuming) the United States and India have not realized the full potential of their relationship.
  • For instance, trade between the U.S. and China is 30x more in agriculture, 6x more in imports to the U.S., 5x more in exports from the U.S., and 3x more in services than it is between the U.S. and India.
  • U.S.-India trade is lesser than U.S.-Netherlands trade (Netherlands has a population smaller than the 2013 estimates of Mumbai’s population.)
  • Last 2 years have been very difficult in U.S.-India relations. So far, there have been no signs of mutual trust, sustainable dialogue, and candor — all of this reflects in the poor trade numbers.
  • There is hope for a new era in the trade relations between the two countries with Narendra Modi’s Prime Ministership. He is one of the first leader’s of India to be absolutely pro-business, pro-FDI (foreign direct investment), and pro-growth. He is the first Indian Prime Minister to visit the United States with a majority business-oriented agenda.
  • Amb. Esserman is optimistic for U.S. businesses trade relationships with their Indian counterparts, especially with the Modi administration’s promise of “red carpet” over “red tape.”
  • However, the Ambassador is concerned about the Modi administration’s veto of the World Trade Organization’s (WTO) Bali Agreement that aimed to stymie trade barriers. It did not send a signal of translation of the Prime Minister’s campaign promises to action.
  • The new government, therefore, has not developed an architecture to integrate into global trade.
  • Amb. Esserman’s final point was that the PM Modi should focus on signing a bilateral trade treaty with the United States on his upcoming visit. This treaty should include clauses that would give confidence to businesses in the United States to invest capital and resources in the Indian market, something that is currently missing with the archaic and business-stifling laws of India.

Suresh V. Shenoy, Executive Vice President IMC

  • Mr. Shenoy is a leader of the Information Technology Industry in the Northern Virginia (Washington D.C.) area; he provided the diaspora’s perspective on India. First, thought he provided this very useful categorization of Indian immigrants in the U.S.Indian Diaspora
  • Per the 2010 census, 3.1 million people in America are Indian Americans.
  • Indian Americans are prominent in technology, policy, and now even beauty pageants. There is even an “Indian caucus” in the U.S. Congress.
  • Indian Americans are highly educated (71% have Bachelor’s level education compared to the 28% national average) and very wealthy (median household income is $88,000 compared to the near $50,000 national average.) Further, 7% of tech companies run by Indian Americans. The IITian community alone has created 200,000 American jobs and over $80 billion in economic value.
  • Yet, post 9/11, some ethnic challenges still exist (for instance, outcry over Indian Miss USA).
  • The Indian diaspora feels that it is difficult to work and conduct business in India with its unstable and unpredictable business and policy environment.
  • However, there is an increasing focus on providing support (capital, intellectual, technical, and through networks) to social entrepreneurship efforts in India. The diaspora hope that Mr. Modi shows support for such efforts.Social Entrepreneurship

Mr. Rahul Madhavan, Aerospace and Defense Expert, US-India Business Council

  • The new government represents, truly, a “fresh” start.
  • New defense model in India is “co-production” and “co-development” as opposed to direct import of technology and services.
  • India faces volatile threats:
    • Terrorist issues.
    • China-Pakistan axis implications.
  • Indian army faces “squadron” deficits in equipment and technology.
  • These two reasons make India a great defense market for American defense company; yet, defense relations up until today have been slow.
  • What’s changed with the new administration? Access — the ability of have a dialogue — to key government officials.
  • Narendra Modi’s visit next week will not culminate into direct results, in defense equipment sales or even a defense treaty; but it will open doors for a sustained defense dialogue.
  • What do Indians expect? Transfer of advanced defense technology.
  • What do Americans expect? Under the “co-production” and “co-development” model, they expect to have a quality manufacturing base in India. With India’s technology talent and engineering capability at reasonable costs, they can very well expect to have that. For instance, as part of a joint venture between Lockheed Martin and Tata in Hyderabad, India, Lockheed Martin asserted that the quality of the components manufactured in Hyderabad were of the highest quality in their entire supply chain.
  • Ministerial and bureaucratic level discussions between India and the U.S. has been surprisingly very strong since the onset of the new government. Secretary of Defense Chuck Hagel visited New Delhi as a precursor to the meeting between President Obama and PM Modi in Washington.

In general, then, the mood in Washington is not wholly optimistic about the immediate results that can be expected from the Prime Minister’s visit next week. But, on the whole, the look expectantly towards the new administration in New Delhi to usher a pragmatic, pro-business, era in the U.S.-India bilateral relations. Also, look forward to the Indian diaspora welcoming Prime Minister very warmly on his visit.

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