Can Modi revive the India-US relationship?

It is just as well that Indian Prime Minister Narendra Modi’s visit to the United States comes after a dizzying round of diplomacy, including a difficult encounter with Chinese President Xi Jinping.

Modi has bonded with Japanese Prime Minister Shinzo Abe, getting a promise of $35bn in investments in Indian infrastructure, and has hosted Australian Prime Minister Tony Abbott, who finalised an agreement on the sale of uranium.

He has built new bridges with neighbouring countries such as Nepal, Bhutan, and Bangladesh. The Indian prime minister even tried to open the door to arch rival Pakistan but alternate power centres in Islamabad thought it better to shut it.

Washington is the last big stop in the current round where Modi must work his magic and realign his energies. His visit will be closely watched in Beijing, Islamabad, Moscow, and Tokyo. There will be an intensive reading of signals.

Modi’s US visit, September 26-30, has three broad aspects: Official meetings to build on existing and new pillars of the bilateral agenda; meetings with American CEOs to pitch a “reenergised” India; and connecting with the Indian American community.

He made a much-anticipated “thank you” speech to more than 18,000 Indian Americans at Madison Square Garden in New York for standing by him during the “pariah” phase when he was denied a US visa. He exhorted them to invest in India.

President Barack Obama will host a private dinner at the White House to spend some quality time with Modi. The two will likely discuss things uppermost on their minds – Obama’s plate is full with ISIL burning down his pledge of “no new war”, and Modi must guard India against the spreading contagion of Salafist Islam. Will they find a way to help each other?

Rebalance to Asia

Announcements on deeper cooperation on counterterrorism and defence are likely to be the big highlights of the visit. A new initiative on joint space exploration with an agreement between the Indian Space Research Organisation and the US National Aeronautics and Space Administration is also likely.

If Modi needs US investments and strategic support in Asia where China’s futuristic moves are narrowing India’s space, the US equally needs the world’s largest democracy for its market and for maintaining a fair balance of power in the region.

But there are also old differences not easy to bridge. US policy towards Pakistan is a big area of disagreement and will figure high on the agenda of official talks.

Obama, Modi and the ‘big bang’ theory

India, as a victim of armed groups linked to Pakistan’s intelligence agency, the ISI, doesn’t appreciate Washington repeatedly rewarding the Pakistan army-ISI combine with money and weapons.

The Obama administration chose the eve of Modi’s visit to announce the sale of 160 MRAPs or mine resistant ambush protected vehicles to Pakistan for $198m. This can’t go down well in New Delhi.

But there is no denying that the US intelligence apparatus has helped India with information, including about the most recent attack on India’s consulate in Herat, Afghanistan, on the eve of Modi’s swearing-in ceremony in May.

The two sides will also try to assess how the other reads China’s behaviour in Asia and beyond. The US “rebalance” to Asia has failed to reassure allies and friends as Beijing continues to establish facts on the ground and on the sea through slow and steady encroachments.

Friend with benefits

Modi himself was placed in a tough spot – while he welcomed Xi with fanfare, 500 Chinese border guards intruded four kilometres inside what India considers its territory.

Americans repeatedly stress they have made a long-term “strategic bet” on India. They support India’s rise. They want to strengthen its comprehensive national power and want it to become a permanent member of the UN Security Council.

India considers the US a “natural partner”, and wants to be a “friend with benefits” while maintaining a certain strategic distance and autonomy of thought. In short, India will travel in the same direction but on the other side of the road.

That said, India and the US have found it difficult to deliver on the full promise of the relationship. The question is whether Modi’s visit would be just one more in a series of India-US summits – the last two produced little except a lengthy joint statement – or will it take the great leap forward?

US officials say they want Modi to have “a very strong visit” and that’s good news. But Indo-US relations have faltered in the last four years because of missed opportunities, mixed signals, a mismatch in expectations and delivery, and a very decidedly transactional approach by the Obama administration towards India.

A litany of US complaints – from India’s intellectual property regime, to market access policies, to corporate taxation – dominated the discourse. The Obama administration became a clearinghouse for corporate whining.

Things turned completely icy late last year over the treatment of Devyani Khobragade, an Indian diplomat in New York, who was arrested and strip-searched by US Marshals for allegedly underpaying a nanny.

Unresolved issues

But a new government in India topped by Modi’s strong mandate and his can-do attitude has reignited interest and hope. The US sees the first 100 days of the Modi government as a net positive, if not a gung-ho on the opening up of India. Major American political players and prominent CEOs want to meet Modi and rejoin the game – a good sign for an India hungry for infrastructure investments.

The Indian prime minister’s New York and Washington legs both have a strong business flavour. More than half his waking time will be spent with CEOs in groups and in one-on-one meetings doing the hard work of convincing American business that he means business. The list of companies includes Boeing, Pepsi, IBM, Lockheed Martin, GE, and Goldman Sachs.

Modi and his advisers may do well to remember that scepticism about India and its business climate runs just below the surface despite the overt excitement about the visit. And there are some who have made it their business to rain on India’s parade even though many US companies are making enormous profits in India.

The ready-to-be-disappointed camp points to the many unresolved issues on the bilateral agenda, among them: India’s nuclear liability law, which has prevented US investment in India’s nuclear industry, and its decision to block direct foreign investment in the multi-brand retail trade.

The Modi government’s recent decision to block the Trade Facilitation Agreement at the World Trade Organization, landed like a brick in Washington. Americans notice a difference between rhetoric and reality and it is this gap that Modi will have to bridge.

But if Modi can energise India and convert its energies to create jobs, it stands to reason that he can energise Indo-US relations.