Term Paper on "India Relationship With the United States"

Term Paper 10 pages (3329 words) Sources: 5 Style: APA

[EXCERPT] . . . .

India-U.S. Relations: A Look back and forward

With a booming capitalist society, a large population, a strategic location and an established democracy, India would be a natural ally in a region of the world where the United States has few. However, only within the past 5 years has a once-chilly relationship between India and the United States really begun to thaw. India was a fickle partner during the United States' half-century Cold War with the Soviet Union, as it was courted aggressively by both sides (Gujral, 1997). In fact, despite professing non-alignment with either party, India seemed to favor ties with the Soviet Union (Reassessment of Nehru, 2003).

The United States was frustrated by its inability to win influence in this strategic nation that serves as a jumping point to Asia and the Middle East. Even after the Cold War, the United States' relationship with India remained rocky over issues such as nuclear proliferation, India's conflict with Pakistan, and high trade tariffs. However, a new era seems to be dawning in U.S.-Indian relations. Both sides have begun to look past historically divisive issues and to focus on natural synergies between the nations, particularly in the area of economic cooperation. Despite growing economic ties between the nations and increased understanding over India's nuclear status, significant issues still remain in the development of a solid partnership between India and the United States.

A history of wariness

Although there has been some definite rockiness in the 20th century relationship between India and the United States, it would be inaccurate to label the relationship as overtly adversarial. It would be more appropriate to recognize that many of the frays in the link between India and the United States were caused by U.S. frustration in cases where India aggressively asserted its autonomy. As was discussed, the United States saw India as a must-have partner in its quest to stop the spread of Communism. India had a fledgling democracy, some history of stability that had been enforced by prior British rule, and was an important jumping point between Asia and Africa (Gujral, 1997). For the U.S., India was a perfect place to stop the spread of communism, while, to the Soviets, it was a perfect venue from which to launch communism throughout large swaths of the Third World (Hopkirk, 1995). Soviet revolutionary Vladimir Lenin planned to use India for his plan to "set the East ablaze" (Hopkirk, 1995).

India probably did the best thing for its national security when it professed non-alignment with either party, which was a brainchild of Indian leader Jawaharlal Nehru (Kapila, 2005). India never sided with the Soviet Union, but it did not become part of the American coalition to oppose it either. And, given the "with us or against us" mentality of the Cold War, India's refusal to openly side with the United States, to the American viewpoint, did not make it an ally. The situation was exacerbated by the fact that India traded heavily with the Soviet Union, and accepted loans and aid from it (Reassessment of Nehru, 2003). Some scholars have argued that, despite professing non-alignment, India's preference seemed to lean toward the Soviets, who were somewhat successful casting America in the same light as India's previous colonial masters, Great Britain (Reassessment of Nehru, 2003).

The U.S. may have struggled to make India a Cold War friend, but it had more success building a relationship with Pakistan, a Muslim nation that had been carved out of India in 1947. Pakistan became an important economic and military partner for the United States (particularly during the Soviet occupation of Afghanistan), and America, in turn, seemed to lend some small level of support to Pakistan's claim over the disputed Kashmir region in Northern India (Bloch, 2001). India and Pakistan were bitter enemies whose relationship is just now starting to heal. India, using the old logic that an enemy's friend is also your enemy, saw America's friendship with Pakistan as a major obstruction to better U.S.-Indian ties.

The end of the Cold War, marked by the 1991 disintegration of the Soviet Union, could have been an opportune time for the United States and India to bury the hatchet, but tensions again escalated. Trade between the countries was hindered by high tariffs set by the Indian government to drastically increase the price of foreign goods (Lavin, 2006). Further, India was lax in fighting illegal activities, such as the widespread cultivation of drugs (particularly opium and heroin), copyright and intellectual property piracy, and money laundering (India, 2006).

Arguably, the greatest tension between the U.S. And India was India's decision to become a nuclear power. India's first test explosion of a nuclear weapon occurred in 1974 and was condemned by the United States and other nations. Not only had India become a nuclear nation, but it was not a signatory of the international Nonproliferation Treaty, which meant it was not consenting to numerous safeguards to protect its nuclear technology from attack or being spread to rogue nations or organizations (Nuclear Weapons, 2002). This was more than the United States was prepared to accommodate, and it (along with a handful of other nations) slapped India with economic sanctions that lasted from 1998 to 2001, after India detonated a test nuclear weapon (Koppel, 2001). When Indian Prime Minister Manmohan Singh visited the White House in 2005, it was the firs time in five years that an Indian head of state had done so (Bowman, 2005).

Without question, U.S.-India relations in the 20th century have been marked by mistrust and conflict. These two nations, whose friendship would seem inevitable, have often had difficulty finding common ground. In the past 5 years, leaders have been able to work past these issues and, at the very least, establish a vibrant economic relationship and an understanding with regard to India's military security. However, if the relationship between these two nations is to continue to blossom, there are still economic and security issues that will need to be resolved.

Economic cooperation between the United States and India

In terms of international business, India is arguably one of the most attractive partners in the world today. With over a billion people, it has a sizable consumer base. Further, as a remnant of British colonialism, many educated Indians speak English and it is the common language of business, despite the national language being Hindi (India, 2006). This makes India a potential source of abundant, inexpensive labor without the language barriers other nations present for American businesses.

Naturally, business between the United States and India was hindered somewhat by the bad feelings created by lingering trade sanctions. During the late 1990s, talks began in the Clinton Administration about ending sanctions against India and fully opening the country for American business, and the feat was finally accomplished by George W. Bush in 2001 (Koppel, 2001). In explaining the economic justification for waiving the sanctions, Bush said, "Trade with India is going to be an important part of our growth in the future. India has got a fantastic ability to grow, because her greatest export is intelligence and brain power" (President meets, 2001). While many American companies had already begun outsourcing specific types of work to India, such as call center staffing, IT support and software design, before the sanctions were fully lifted, after the sanctions were waived the levy really broke.

India has become known as the "King of Outsourcing" and the Indian economy has been growing at a rate of 7% to 8% a year, largely fueled by service sector growth (Bokhari, 2004 and India, 2006). Its inexpensive, educated and abundant labor force (India produces 2.5 million English-speaking college graduates a year) has been a godsend and a major cost saver for American companies, and approximately 50% of Fortune 500 companies are currently outsourcing information technology services to India (Fortune 500, 2005 and Bhatnagar, 2005).

The influx of American jobs into India has created a booming middle class with more purchasing power than ever before. In 1985, less than 10% of the Indian population was considered middle class - by the turn of the century that figure had more than doubled, and more than half of India's population is expected to reach the middle class between 2020 and 2040 (Das, 2001). That would represent more than half a billion potential consumers of American products and services - enough to make any internationally-geared company salivate. In fact, in 2006 the United States sent a historic delegation of hundreds of business leaders to India to investigate outsourcing opportunities and ways to sell products to India's booming middle class (Lavin, 2006).

But the difficulty American companies face in reaching India's middle class presents one of the major areas of friction in U.S.-Indian relations. The United States government has called India's economy "one of the most closed in the world" (India, 2004). India has established double-digit tariffs on a variety of import products, with some tariffs exceeding 30% and with tariffs even on medical products, which makes them cost-prohibitive to… READ MORE

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