“My dream is that in 2020 the two closest nations in the world will be India and the United States.” – Joe Biden
On becoming the 46th President of the United States on January 20, Biden declared that “democracy has prevailed." He swore the oath of office to take the helm of a deeply divided nation and inheriting a confluence of crises arguably greater than any faced by his predecessors. But what does this new administration mean for India?
With this, the U.S.-India relationship is facing new tests. Biden, who deemed India a “natural partner” on the campaign trail, will have the task of upgrading a mature relationship at a time of new global dynamics and challenges. Much of this is focused on how India can be an effective counterbalance to Chinese hegemony, and why the US would benefit from such a balance.
But, even without the phantom of China-driven strategic considerations, the two countries share a wide range of interests, going beyond traditional defense-oriented and geopolitics. The convergence of their interests, comparative economic power, Biden’s view of China and India, and benefits of US-India military cooperation will define the US-India relationship during his presidency.
The Polarisation of India-US
The past four years have compounded and amplified long stewing issues, particularly deep political polarisation and structural inequalities in both India and the US. Additionally, the US’s reputation within the world is at a historical low and it will take a monumental effort to revamp its global stature. Meanwhile, India’s international image has been battered by internal suppression and the disintegration of democratic norms, neutralizing its efforts to build up its case for being seen as a global pioneer. Fortunately, 2021 and beyond provide opportunities for the two countries to work together on the world stage, subsequently providing recovery for both.
The Economic Ties
Trade has always been a dubious issue for the two countries; but, during the Obama-Biden years, the two countries made advances on various trade issues, including intellectual property, technology, defense, security, investment, and global issues. In contrast, Trump has promised a trade deal with India, but none has materialized.
India stands 9th among the US’s trade partners (in goods) for 2019, while the US overtook China as India’s leading partner in trade for 2018-19, and that continued for 2019-20. It is only in H1 2020-21 that the US has been pushed to second position as India’s trade partner at over $33 billion with Indo-China trade registering $38 billion. This can, however, be put down to an unusual pandemic year, and the faster opening of China’s economy when compared to other countries during the pandemic.
Largely, India has enjoyed a trade surplus with the United States over the past two decades, with the surplus widening in FY 2018 at a little over $21 billion in India’s favor. In 2019-2020, the trade surplus was slightly over $17 billion. The surplus is not just in the trade of goods but also in services, with India accounting for almost 5 percent of the USA’s services global imports.
With Biden-Harris, India may recover from the trade surplus dip since 2017-18. India has earlier received a first-hand experience of Trump’s ‘America First’ trade policies in March 2018, when the US imposed import duties on steel and aluminum at 25 percent and 10 percent, respectively.
Climate & Clean Energy
The Trump administration has squandered the work that the Obama-Biden administration did on clean energy and climate change cooperation with India. The Biden-Harris agenda has promised a renewed focus on clean energy, which should also boost cooperation between the two countries. For the Biden team, such initiatives are of top urgency – and India, with its own severe climate challenges, stands to gain from this shift. Both countries currently face significant domestic obstacles to pressing forward with clean energy initiatives; however, the imperative to do so has never been clearer. Collaborative action can both drive progress and neutralize skeptics who may resist such efforts. Focusing on climate cooperation should, therefore, be at the heart of US-India relations. For instance, the two countries can work on renewable energy investments, and the US could extend its support to the International Solar Alliance, which is an India-led platform for countries rich in solar resources. Such cooperation would reap international benefits beyond India and the United States.
Other Factors Impacting India
With the economic sanctions on Iran that the US imposed, India has not been able to import oil from Iran since 2019. Following Biden’s presidency, India may hope to resume crude oil imports.
Further, there is the question of H1B visas. Days before the end of the Trump administration, the US has brought in many rules that have posed challenges to the Indian IT industry. It needs to be seen if the new administration will relax or overturn some of the visa rules. So, India may benefit from liberal trade policies and relaxed visa rules, a move away from the Trump administration’s protectionism.
As Biden-Harris takes over the reins in the US, this can only bring good tidings for India and the rest of the world as well.