INDO-US TIES: ECONOMICS AND STRATEGY - UPSC Current Affairs

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Context: Upcoming state visit of Indian Prime Minister Narendra Modi to the United States.

Details

Narendra Modi's official state visit to the United States on the invitation of President Joe Biden.
Highlighting the bipartisan consensus in Washington on fostering the bilateral relationship.
Recognition of the visit's significance through the invitation to address a joint meeting of Congress for a second time.

Deepening Economic Engagement:

Economic engagement as a key aspect of the Indo-US strategic partnership.
Rapid growth in trade between the two countries, with the US becoming India's largest trading partner.
Favorable balance of trade position for India and significant investments from American companies in various sectors.
Importance of the historic Air India-Boeing deal and its impact on job creation.

Strategic Underpinnings:

The strategic context of the Indo-US relationship, with a focus on countering China's influence.
The role of the Quadrilateral Security Dialogue (Quad) in enhancing regional security and cooperation.
The I2U2 partnership between India, Israel, the US, and the United Arab Emirates, emphasizing joint investments and initiatives in key sectors.
Collaboration on critical and emerging technologies and efforts to diversify the semiconductor supply chain.

Potential Challenges and Areas of Concern:

Export controls and technology transfer restrictions affecting bilateral trade and technological cooperation.
Pending trade issues, including visa delays and the revoking of India's trade benefits under the GSP program.
The need to address the contradiction of India's increasing crude oil imports from Russia while strengthening ties with the US.
Discussions on India's participation in the trade pillar of the US-led Indo-Pacific Economic Framework (IPEF).

Future Prospects and Opportunities:

Potential pacts and agreements in the defense sector, with a focus on indigenous manufacturing and technology transfer.
Nudging India towards joining the trade pillar of the IPEF and exploring avenues for a comprehensive free trade agreement.
Concerns over India's exclusion from the Minerals Security Partnership (MSP) and potential collaboration in critical mineral supply chains.

About India-US Ties

Historical evolution of India-US relations from the Cold War era to present-day cooperation.
Significant milestones, including the establishment of diplomatic ties in 1947 and the signing of the India-US Civil Nuclear Agreement in 2008.

Shared Democratic Values and Interests

Strong foundation of shared democratic values, pluralism, and commitment to human rights.
Increasing convergence of interests on regional and global issues, such as counterterrorism, maritime security, and climate change.

Economic Engagement

Growing economic ties, with the US becoming India's largest trading partner.
Expansion of bilateral trade, reaching a record value of $191 billion.
Favorable balance of trade position for India and significant investments from American companies in key sectors, generating job opportunities.

Strategic Partnerships

Quadrilateral Security Dialogue (Quad):
- Collaborative partnership between India, the US, Australia, and Japan to enhance regional security and promote a free and open Indo-Pacific.
- Focus on countering China's influence and ensuring a rules-based order in the region.
Defense Cooperation:
- Strengthening defense ties through defense agreements, joint exercises, and technology transfer.
- Potential collaboration in areas such as armament manufacturing, ammunition, and air combat.
Critical and Emerging Technologies:
- Cooperation in critical and emerging technologies, including space, cybersecurity, and artificial intelligence.
- Efforts to diversify the semiconductor supply chain and reduce strategic dependencies.

Addressing Challenges

Export Controls and Technology Transfer:
- Resolving export control restrictions that inhibit the free transfer of technology and
- hinder bilateral trade.
- Promoting greater technological collaboration and cooperation in areas of mutual interest.
Trade Issues and Market Access:
- Addressing trade issues such as visa delays and revoking of trade benefits under the GSP program.
- Encouraging trade liberalization, removing barriers, and fostering a more open investment environment.

Future Prospects and Opportunities

Comprehensive Free Trade Agreement (FTA):

Exploring the possibility of a comprehensive FTA to further enhance trade and economic cooperation.
Nudging India towards joining the trade pillar of the US-led Indo-Pacific Economic Framework (IPEF).
Bilateral trade reached $113 billion in 2021, showing substantial growth.

Defense Collaboration and Indigenous Manufacturing:

Potential pacts and agreements in the defense sector, promoting indigenous manufacturing and technology transfer.
Strengthening defense capabilities and fostering defense industry collaboration.

Critical Minerals Partnership:

Addressing concerns over India's exclusion from the Minerals Security Partnership (MSP).
Potential collaboration in securing critical minerals supply chains and reducing dependency on China.

Technology Collaboration:

Cooperation in various technology domains, such as artificial intelligence, quantum computing, and 5G.
Establishment of joint research and development centers for collaborative technological advancements.

PRACTICE QUESTION

Q) Discuss the significance of India-US bilateral trade in fostering economic ties and its impact on the global economy. (150 words)