Breakthroughs likely during Barack Obama's India visit
As far as the economic relations are concerned, the two countries haven't applied themselves with the kind of effort that has gone into untangling their strategic ties which were hit by the nuclear liability act.
Most observers are expecting US President Barack Obama's New Delhi visit to achieve little and be merely of symbolic importance. In their view, all that will happen is that the two countries will take decisions to push ahead some of the outstanding issues in the agenda.
However, sources in the government say that that could be an inaccurate reading of the situation. The sources say that Prime Minister Narendra Modi is determined to make the visit a landmark event. As for the Americans, they have been waiting for an Indian leader with whom they could do business.
Modi showed this by getting the Indian bureaucracy to move swiftly, after his first meeting with Obama, to resolve the dispute over food security issues to pave the way for the trade facilitation agreement under the WTO. The key breakthrough expected is in easing the deadlock arising from India's nuclear liability act which has prevented foreign companies from investing or providing technology for civil nuclear trade with India.
Insurance pool
The draconian provisions relating to suppliers' liability, well in excess of international norms, is likely to be taken care of by creating an insurance pool backed by the government of India. The sources say that there will be no change in the legislation, something which would have required the cooperation of the Opposition in the Upper House.
Another area where we could see forward movement is in the defence relationship between the two countries. New Delhi and Washington will renew the Framework Agreement and could move swiftly in several of what are termed "foundational agreements" that would allow US forces to access Indian facilities and build interoperability with the Indian armed forces.
WikiLeaks cables relating to the issue revealed a pattern of delaying tactics in relation to the Logistics Support Agreement (LSA) and the Communications Interoperability and Security Memorandum of Agreement (CISMOA) and the Basic Exchange for Geospatial Cooperation (BEGC). These have been laid at the door of former defence minister A.K. Antony who was dead against deepening cooperation with the US who was afraid that such agreements would imply that India had become an American ally. Having put the Congress era to an end, Modi also intends to give a final burial to its defence and foreign policies.
These foundational agreements are a logical outgrowth from the decision of India and the US to establish a strategic partnership. While some elements of the partnership such as easing of military sales as well as joint exercises have progressed, India has not been able to push the US into higher levels of technology transfer and joint technology development. Of course, there is another outstanding problem here - India is not a member of the four key western technology denial cartels, the Nuclear Suppliers Group, the Australia Group, the Wassenaar Arrangement and the Missile Technology Control Regime. But once the two countries clinch an agreement in the nuclear liability issue, the way will be open for the US to push for India to be made a member of these cartels.
Only when this happens will there be a qualitative movement in the Defence Trade and Technology Initiative where the Americans have identified 17 items for co-production and co-development. Progress in this area has been slow, but the Obama visit has given the opportunity for the two sides to accelerate the process of moving ahead.
As far as the economic relations are concerned, the two countries haven't applied themselves with the kind of effort that has gone into untangling their strategic ties which were hit by the nuclear liability act. But the one area where Obama is pushing hard is that of a bilateral treaty on controlling emissions as a prelude to Paris Climate Change Conference later this year. For Obama, getting a treaty is a legacy issue. The gap between US and Indian positions is wide, but perhaps the Modi magic may cover it.