The 2013 U.S.-India Strategic Dialogue
By Persis Khambatta, Guruamrit Khalsa, Samir NairJun 21, 2013
This year’s U.S.-India Strategic Dialogue will be held in New Delhi on June 24, and will be led by Secretary of State John Kerry and External Affairs Minister Salman Khurshid of India. Secretary Kerry will be leading a “whole of government delegation” which will include Energy Secretary Ernest Moniz, acting Deputy Secretary of Homeland Security Rand Beers, Commander of U.S. Pacific Command Samuel Locklear, NASA Administrator Charles Bolden, and the White House’s Director of Science and Technology Policy John Holdren, among others.
Q1: What is the purpose of the U.S.-India Strategic Dialogue?
A1: The U.S.-India Strategic Dialogue (SD) was launched in 2010 by former Secretary of State Hillary Clinton and former Minister of External Affairs S.M. Krishna. It serves as the capstone dialogue between the two countries. It is the highest level regularly scheduled dialogue between the two governments, as evidenced by the leadership of both delegations. The United States and India have over 20 other ongoing dialogues between corresponding departments on subjects ranging from higher education to trade, agriculture and homeland security. The SD takes into account the progress being made within all of these more specific policy areas and directs their focus into the broader framework of U.S.-Indian relations. It reflects a commitment between both nations to capitalize on areas of strategic convergence, intensify their levels of cooperation, and to resolve issues that inevitably arise in the relationship.
Q2: What happened at the last U.S.-India Strategic Dialogue?
A2: The last Strategic Dialogue was held in Washington in June 2012. The delegations were led by Clinton and Krishna. The joint statement issued afterwards emphasized the broadly shared interests of the two nations, particularly in the fields of counterterrorism, regional security, energy, climate change and trade, among many others. However, since the last dialogue, there have been some troubling economic policy developments affecting tax policy, foreign investment, and local content requirements, which might be addressed at the June 24 meeting.
Q3: What are some of the key issues that will be discussed at this year’s Strategic Dialogue?
A3: This year’s SD is set against a backdrop of a rapidly changing strategic environment in the Indo-Pacific. India is particularly concerned about the scheduled U.S. troop withdrawal from Afghanistan in 2014. The United States and India will discuss their continued engagement with Afghanistan, both in terms of security and economic development, and recent developments including possible talks with the Taliban.
Both sides have also expressed a desire to move forward with the Defense Technology Initiative spearheaded by Deputy Secretary of Defense Ashton Carter. On a recent trip to India, Deputy Secretary of State Bill Burns remarked that “there’s a strong commitment on the U.S. side to taking the defense cooperation relationship to the next level, and we understand very well that that means moving ahead in co-production and co-development.”
One of Secretary Kerry’s priorities during his visit will be to revive the stalled civilian–nuclear agreement signed between the two countries in 2008. This agreement, once an example of a new era in post-Cold War ties, ran into implementation challenges due to disagreement surrounding India’s nuclear liability law, which the U.S. claims is out of step with international norms. Westinghouse Electric Company recently inked a preliminary early works agreement with the Nuclear Power Corporation of India to install a 1,000 megawatt nuclear reactor in Gujarat, but U.S. officials have indicated that further steps need to be taken. India has assured the United States that it will provide further clarification within the confines of its law, but its provisions on supplier liability remain a sticking point.
The meeting is also likely to bring up a number of issues relating to China and Pakistan. Deputy Secretary Burns recently remarked that the United States “support[s] the healthiest and strongest possible relationship between India and China.” However, China’s recent incursion into Indian territory, together with its claims over the South China Sea continue to raise concerns across the region about their ambitions. Significantly, Prime Minister Singh recently commented that India is willing to be a net provider of security in the Indo-Pacific region, which is a noteworthy departure from past statements.
Regarding Pakistan, cautious optimism about India–Pakistan relations has emerged with the recent election of Prime Minister Nawaz Sharif. Delhi has welcomed Prime Minister Sharif’s recent overtures. Both the United States and India remain hopeful that Prime Minister Sharif and Pakistan will be able to further expand India-Pakistan trade by granting India Most Favored Nation status.
On the economic front, as Assistant Secretary Robert O. Blake said at a recent CSIS event, “economic issues like intellectual property protection, local content restrictions and a continued cap on FDI are likely to be on top of [the] agenda.”
For their part, Indian officials are tracking the immigration debate on Capitol Hill closely, and have expressed concern over its potential negative effects for Indian companies which employ a significant number of high-skill workers on temporary (H1B) visas—they have indicated that increasing the cap on H1B visas is high on their list of priorities.
Q4: Do we expect to see real movement on economic issues, which are central to U.S.-India relations?
A4: Both governments have remarked that strengthening economic ties is a top priority; however, progress on challenging trade and investment issues has not been forthcoming. Negotiations on a bilateral investment treaty remain stalled as India reviews its model BIT language. Investors hoping to see some movement toward a unified Indian market via a national goods and services tax will also have to likely wait until after India’s upcoming general election to see its implementation. Recent reports indicate that the Indian government may also open the defense and telecom sectors to greater foreign investment.
Both nations’ are also looking forward to reengaging on the commercial front with a meeting of the Trade Policy Forum, a meeting between the U.S. trade representative and India’s minister of commerce and industry. With Wednesday’s announcement that Michael Froman has been confirmed as the U.S. Trade Representative, both sides can now proceed to revitalize the Trade Policy Forum after a two year hiatus. The annual CEO Forum will take place in Washington this July, which might yield additional progress on the economic side.
Q5: Energy is taking on more importance in the relationship. What energy issues are likely to come up?
A5: U.S. liquid natural gas (LNG) exports to India will likely be a topic of discussion. India remains enthusiastic about receiving additional imports of U.S. LNG supplies. In 2011, the Energy Department granted the first authorization to export LNG to non-FTA countries to a terminal in Louisiana. And on May 17 the department backed further expansion of LNG exports by conditionally approving exports from another terminal in Texas.
Developing renewable energy sources remains vital to the United States and India in the context of climate change and continued economic growth. Deputy Secretary Burns has noted that clean energy cooperation is an area with much potential.
President Obama is planning to articulate and push a climate change strategy in coming weeks, recently calling it a global “moral imperative”. Experts often note the susceptibility of South Asia to the effects of global warming, and Secretary Kerry, well-known for his stance on the subject, will very likely include it in his discussions.
Q6: In light of the U.S. strategic rebalance to Asia and India’s revitalized “Look East” policy, how will the dialogue facilitate greater engagement with the broader region?
A6: Convergences in East Asia are increasing between the United States and India. Secretary Kerry will likely discuss with his Indian counterpart how to better connect India with East Asian markets through infrastructure development and a proposed Indo-Pacific Economic Corridor. India recently helped secure Dialogue Partner-status for the United States in the Indian Ocean Rim Association for Regional Cooperation (IOR-ARC). Both sides will likely discuss the possibility of India’s further integration into regional economic architecture, including Asia Pacific Economic Cooperation (APEC) and the Trans-Pacific Partnership (TPP), discussions that are currently underway.
Q7: On June 25, Secretary Kerry will open the U.S.-India Higher Education Dialogue—what is the importance of this?
A7: Education and job creation is probably the single biggest current challenge for India, and its own stated goal is to skill-up 500 million youth in the next 10 years. That is an enormous undertaking; working together with the United States on a vocational training system that fits the Indian environment would help bridge the current talent gap. Almost half of U.S. undergraduates are enrolled in community colleges and trained to work in local industry. If done right, it could be a game-changer for job creation in individual Indian states, much like mid-day meals were.
Persis Khambatta is a fellow with the Wadhwani Chair in U.S.-India Policy Studies at the Center for Strategic and International Studies (CSIS) in Washington, D.C. Guruamrit Khalsa and Samir Nair, intern scholars with the Wadhwani Chair at CSIS, also contributed to this report.
Critical Questions is produced by the Center for Strategic and International Studies (CSIS), a private, tax-exempt institution focusing on international public policy issues. Its research is nonpartisan and nonproprietary. CSIS does not take specific policy positions. Accordingly, all views, positions, and conclusions expressed in this publication should be understood to be solely those of the author(s).
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