Cautious optimism, Modi's US visit to rejuvenate India-US relations: Ronen Sen

It promises to be a diplomatic blockbuster. India’s Prime Minister Narendra Modi’s maiden visit to the US is bristling with new possibilities for rejuvenating and revitalising what US President Barack Obama has famously called “the defining partnership of the 21^st century.” Prime Minister Modi’s visit is being closely tracked by hundreds of adrenalin-charged journalists and will be monitored the world over, with speculation swirling about possible outcomes which could impact not just bilateral ties, but the shifting international order. Amid all this feverish chatter and inspired guesswork, Ronen Sen, India’s former ambassador to the US, clears a lot of clutter and provides insights into the significance of the forthcoming prime ministerial trip to New York and Washington. In this free-wheeling conversation with Mr Manish Chand, Editor-in-Chief, India Writes Network, Sen, who played an important role in the success of the nuclear deal negotiations, speaks about the singular importance of India-US relationship, his sense of cautious optimism about Prime Minister Modi’s trip to the US and how this visit, while being devoid of ceremonial trappings, could well me an important landmark that could open new vistas of cooperation between the world’s oldest and largest democracies.

(Excerpts from the interview)

Q) India’s Prime Minister Narendra Modi is going on his maiden visit to the United States. There is a lot of hype riding on Mr Modi’s visit. What are your expectations from the first summit meeting between Prime Minister Narendra Modi and US President Barack Obama?

A) In terms of timing, the meeting is good because it is early in the tenure of Prime Minister Modi. In fact, this was one of the first decisions that he took, he accepted the invitation for the visit immediately when invited by President Obama. That is a positive signal. He has not allowed personal considerations to trump the larger national interest. It is the most important relationship we have and it is very special. In many ways, it’s a relations of the type which we don’t have with any other strategic partner in terms of its uniqueness.

In terms of atmospherics, the visit is going to be important; it won’t have the ceremonial trappings or the bells and whistles of a state visit, but the visit will begin even before he reaches Washington, in the Madison Square Garden in New York. It is not the sheer size of the gathering, but the energy and the enthusiasm of the gathering will have its vibes felt across the US. It is not going to be a partisan gathering, with people coming from across the US. It will be a visit that is unprecedented either by an Indian leader or any other foreign visitor addressing such a large gathering at least in the last 40 years. This will send a signal all over and it will have its impact on the US Congress and elsewhere.

The second aspect is that it will have an impact on the interaction in the White House as well as Wall Street. As far as White House is concerned, Modi will be meeting President Obama for the first time. President Obama is on to the second half of his second term; so some people say, well it’s a lame duck presidency in contrast with a newly elected leader with a massive mandate, for the first time in three decades, for a single party in our parliament. This bit about Obama being lame duck is wrong, because if you look at it in terms of the new push which has been given to our bilateral relations, it happened in the last year of Bill Clinton’s presidency. His visit had an impact. Then if you look at President Bush, he pushed through the civil nuclear deal with tremendous bipartisan majority in the Republican-controlled, as well as the Democratic-controlled, Congress in the last year of his presidency. So that is a wrong conclusion. Bush was able to do more for this relationship than any other president, and at the height of the transformational period from 2005-2008, because he took personal responsibility for the India account. Now I am sure Prime Minister Modi will take personal responsibility, but whether Obama assume personal ownership is yet to be seen. But if that does take place, this visit will be very important in terms of reviving, revitalising and rejuvenating this relationship and adding new dynamism and dimensions to it. But I do not expect any dramatic breakthroughs.

In some respects this relationship had lost its momentum, in fact there have been negative vibes particularly from the second half of 2010. And a lot of these vibes had come at a time when the Indian economy was going down, and same with the US economy. And, also at a time when corporate America took the lead in a very shrill campaign against some steps we had initiated, whether it is Intellectual Property Rights (IPR), or taxation or retrospective application of domestic laws to previous arrangements. If you take taxation, Vodafone is a British company, Novartis is Swiss company, Baer is a German company but Pfizer took the lead. But I think that those sentiments have changed. Reforms have continued, some steps have been taken in defence, and insurance. Defence is a good first step. I don’t think it will generate high FDI immediately, but it is a good first step. There is a new sense of cautious optimism. Overall, the visit is going to be an important landmark.

Q) In terms of tangible outcomes, do you expect an upswing in American investments coming into India?
A) I am glad you raised the question of the business aspect of the visit because it is very important, and I am glad it is being stressed because it is high time we did that. Rajiv Ghandi was the first prime minister to take a business delegation along on a foreign visit; I remember that because I was in the Kremlin at that time and he visited the Kremlin. We have not been giving enough importance to the economic dynamics of the relationship. Without economic ballast, no relationship can maintain its resilience. The economic relations must be seen as being in mutual benefit. Now if you see the US, it is not just the number one economy in the world or the leading military power, but is, most importantly, the global leader in innovation. The largest trading partner with India is the US; some say China because we take into account only goods, but goods are only one aspect of it. Services are a much bigger chunk in our economy than manufacturing and that is going to remain important. Our trade with the US is not only balanced, but we have a positive balance of trade, meaning we are exporting more than what we are importing. And the US is our largest export destination, the second largest is the UAE.

You mentioned investment, if you take into account the root of the investment, the biggest investor in India is the US, both in terms of foreign institutional investments and FDI. But we can do more. What is going to happen is unlike in the case of China, and to a certain extent Japan, the decisions are not going to take place in the government, but certain board rooms. Similarly, in India most decisions on investment from India in the United States are taken in boardrooms of this country. Even when I was there from 2004-2009, we had investments of something around 22 billion USD and it was exclusively from Indian private companies. Thus, the prime minister’s meeting with CEOs is going to be important. But governments can only be catalysts. The US is already easing transfer of technology terms, a lot had already been done during the civil nuclear energy deal. That deal was about more than nuclear cooperation, it was about a level of comfort in dual use technology as well. They have already created that by easing hi-tech exports. The US is already the most open market for us, but we can further improve it. So if you look at it in that perspective, the visit is going to be important but not in terms of announcements made in meetings.

Q) India and the US have been trying to forge an innovation partnership. Could you talk a little about that?

A) In my time there I visited many universities; a lot of this innovation is taking place in universities, they are the incubators of new ideas and are transforming those ideas into practical application for commercial exploitation. We have not created the right kind of atmosphere. A lot of it is on hold. We have a legislation pending in the parliament. Today we are not even neutral, we are hampering such exchanges. Unless we get our research institutions and universities directly in touch you can’t do it. The old ways of government exchange does not work. Research scientists don’t want to waste time in generalities, they want to focus on such programmes. The best way to do so is institution to institution and ultimately individual to individual partnership. We have to get our act together. Did you know that even for OCI card holders there were restrictions on conducting research? That is something we should be actively encouraging. Our system on research today is even more restrictive than China. In terms of potential and what we are actually realising it is just a small fraction of that.

Q) Your ambassadorial tenure saw the sealing of the civil nuclear deal, the larger promise of which was the dismantling of the technology denial regime. It’s been nine years, and we are still waiting to see the fructification of the much-touted nuclear deal? How do you see the nuclear deal progressing in the future?

A) We have made progress, undoubtedly. There were issues pending on the US side also; but they have got their act together. There were certain clearance needed from the Nuclear Regulatory Commission of the US for their companies like General Electric and Westinghouse; those were forthcoming. We have to think in terms of not just the US but the larger world. We have to look at this not just in terms of nuclear technology, but all other kinds of technology as well. This deal, after all, opened the doors for the rest of the world. What has happened is that the nuclear liability law has posed a big constraint not only for foreign suppliers, let alone the US, but also our domestic suppliers. It is a problem across the board, because they apply to large and smaller suppliers equally. It is a problem and we will not be able to realise the potential in terms of transfer of technology in terms of manufacturing in India or linking to global supply chains as long as the liability law is in place.

At the same time, it enhances costs, because of insurance, without giving one paisa more to the victims. While politically it is not easy, we need to take a more realistic look for our own interests.

Q) Can we do it within the “four corners of the law” as the previous prime minister said?
A) You cannot do it. You are going to square the circle, it is impossible.

Q) What is the way out? Is it a stalemate?
A) You can do it through rules but you are not going to avoid enhanced costs of production which you will pass on to the Indian consumer and the taxpayer. And the public, who might get affected –- through it is very unlikely –- you are not going to give one paisa more in terms of compensation. There is a strong case to revisit this issue in terms of our own interest. Because we are unique in this respect.

Q) This is the first time an Indian prime minister will be given a public reception hosted by the Indian-American community. How do you see the role of the Indian-American community in building bridges between the two vibrant democracies?

A) The Indian-American community plays a critically important role. And this will be a coming out event for them. This is not the first time they have been mobilised. The first large-scale mobilisation at a grassroots level happened in lobbying their Congressman and senators for a cause they felt was very dear to them –- the civil nuclear deal. Across the board, and beyond political affiliation, not just American political affiliation but also their affiliation or their sympathies to political parties in India. This transcended it all. It brought them together. It sent a very important message.

The 3-million strong Indian-American community in the US, i.e. US citizens of Indian origin and a million strong Indian citizens with permanent residency in the United States play a role more than their numbers indicate. Why? Because if you look at this community in terms of educational accomplishment, they are higher than any other ethnic group. They are also the lowest in some areas like crime. And in new developments, and I think this will grow further, you have representatives in local governments, governors, members in the US Congress. You will shortly have an Indian-American ambassador to India. If you look at universities, business, doctors, lawyers and hoteliers, the number of Indians is very large, therefore their impact is much more than their numbers. I felt that tangibly when the civil nuclear deal was pending in the Congress. You will see that becoming more and more evident with each passing years. They are robust bridge builders.

And they are loyal to the flag to which they have sworn their allegiance. Why did they push the civil nuclear deal? Not only because it is good for India, because it is equally good for the US. It is of mutual benefit and is going to be good for the world. They thought it is a historic wrong that has been corrected. They are convinced that what meets the core national interest of the US, to which they are committed, coincides with the national interest of India.

Q) What makes the Indian community so successful in America? What does that reflect about American, the community and the bonds between the two countries?

A) The success of the Indian-American community in the US, in a sense, reflects the uniqueness of the relations between Indian and the United States. We have a common colonial history, we are democracies, but we are not just two democracies: we are both countries with federal policies, both incredibly diverse in every sense of the world. We are incredibly diverse in terms of religion culture, cuisine, languages, costumes, interest, ideas, and family values –across the board. Unlike our other strategic partners, except perhaps one or two of them, this is not an intergovernmental relationship, it is not a relationship which is determined by cabinets meetings, it is made in board rooms, universities campuses, in laboratories, and family dining rooms. It is a people-to-people relationship. Virtually every middle class family has some member in America and that number is growing. This community is more than a bridge; this is more dynamic and is growing in terms of importance with each passing year.

Q) IPR is a contentious issue between the two countries, with position virtually non-negotiable. From our point of view, is there a possibility of a middle ground?

A) We have to take a pragmatic view. When I was the Secretary to the Atomic Energy Commission, with the Department of Atomic Energy, we lost a lot of people. A number of people working in our laboratories got their patents registered not in India, but went abroad for that. Why? We have to look at it. When we talk about innovation, new technology, this is a very promising area, but you cannot divorce this from IPR issues. No individual, even Indians, is going to get an IPR over here if they are going to get a better deal in London or New York, both in terms of ease of registration and safeguards and in terms of rewards for the research they have put in. Now you have IPR stakeholders in India as well as we create new assets. I don’t think we should have such a low sense of self-esteem that we will always be on the receiving side. It hurts my sense of pride as an Indian national when I see this kind of attitude. Why should we be on the receiving side? Now we have IPR concerns, Bollywood and even the music industry has IPR concerns, there is a lot of piracy. So we will become stakeholders.

Q) What about the pharmaceutical sector? How tenable is our argument there?

A) In the pharmaceutical sector our argument is tenable. We have to look for a middle ground there. Reasonable profits yes, but who will determine what is reasonable. Basically, we will end up having to go by market forces. The US itself has provision of compulsory licensing, when they have threats that they face. But both sides have to get off their ideological high horse. Particularly on trade and environment issues, we are becoming globally isolated, when you look at the recent WTO impasse. People are looking at it as an India-US issue, but for God’s sake there are 160 countries involved! It is multilateral forum. It is okay to be in a minority of one when there are vital national security issues, but on certain issues we should not pretend that being the boy on the burning deck is necessarily the best step. Sometimes you cannot insulate yourselves from developments like climate change and trade. In terms of trade, when we initiated reforms, trade was less than 1/5^th of our GDP, today it is half our GDP. It is important. Agriculture is vitally important; it is no longer half our GDP, it is 14% of our GDP, and still it holds a disproportionate portion of our population, so it is important. But trade facilitation which is being held up is equally important. We should not compromise one at the cost of another. We have to see how both can be accommodated, and for that we must have a dialogue. So sometimes either side, whether it is developing or developed countries should look at pragmatic solution to find the way ahead, where we can serve the larger interest as well as our own interest.

Q) America still enjoys a better reputation in India than in many other countries. The American dream still burns in India. Do you think American and Indian dreams intertwined?

A) In that way a lot of Indians, particularly the aspirational class, vote with their feet. Even if they don’t intend to settle there they want to go there as students, as researchers, they visit that country and think they benefit from it. This should take place in both directions and we should facilitate that, it would be better.

Q) President Obama called the India-US relationship as the defining partnership of the 21^st century. When you look at the trajectory from now onwards, can we look at a more friction-free relationship?

A) Yes, I think we can, and we should. We dropped the ball on the way, and I think on both sides there were other pre-occupations, but this relationship is important for both our countries. While we have been looking and discussing from a bilateral point of view, if you look at the US as the preeminent global power, not just in a vague context, but in terms of the security architectures in Asia, the US has an indispensable role as a balancing power; we’ll have to remember that and factor that in our cooperation.

On both sides, we will have to be more honest about what it is that we want. There is so much in common between us, but both sides tend to be self-opinionated. With the US we set our bar higher than any other strategic partner in terms of our expectation, but when there is a corresponding and reciprocal expectation from us we tend to bristle with righteous indignation at the dilution of our strategic autonomy. So we have to look at how both can work together. On one hand, we want the US to follow our script, but we become extremely uneasy to be seen working together also. On both sides, we will have to be much clearer as to what it is that we want.

Author Profile

Manish Chand

Manish Chand is Founder-CEO and Editor-in-Chief of India Writes Network (www.indiawrites.org) and India and World, a pioneering magazine focused on international affairs. He is CEO/Director of TGII Media Private Limited, an India-based media, publishing, research and consultancy company.