US Presidential elections: What matters for India?

The US-India strategic partnership is based on shared values of democracy, common geopolitical interests, mutual respect and understanding, and marked by warmth and friendship between its people. 
The Indian diaspora is also a crucial element in this endeavour.

This Presidential election has been one of the most keenly observed across the world including India. Apart from the fact that it has been marked by unusually sharp statements from both the candidates, this election impacts India in many ways, regardless of the fact, if Democrats or Republicans occupy the White House.

It is a given that India will remain a key partner due to the bipartisan support in the Capitol but it is also a fact that a change in the White House will also impact how India and US conduct their businesses and their policy that bears on trade, energy, defence and balance of payments.

It is widely anticipated that US policy on China will continue its course, though less shrill and less rhetoric but what is more strategic to Indian interest is the policy of the new administration towards Pakistan.

The Trump administration has unequivocal in calling out Pakistan as the hub of terror in the region and has cut off a large part of the military aid along with funding. It has also been supportive of Indian point of view at all international forums including the United Nations. It has supported India on the bifurcation of Jammu & Kashmir and abrogation of Article 370.

A new administration will be keenly watched by India on how it proceeds with Pakistan though it is widely anticipated that if Republicans continue in power there will be more of same and that could be good news for India.

However, the continued policy towards Iran may not be in the long term good for India as these two countries have enjoyed traditionally good relations with a sizeable investment in Iran as well as in the infrastructure developed at the Chabahar port by India with a direct link to Afghanistan by sea–road route bypassing Pakistan. 

In addition, cheaper crude sourced from Iran could lower the ballooning Indian crude import bill.

There could be a new dimension on how a new administration will support the Indian trade and business interests. As of now, US is India’s second-largest trading partner even though India was the ninth-largest trading partner for US.

In 2019, the US trade with India was an estimated $146.1 billion and the trade deficit with India was $28.8 billion with the US goods trade deficit at $23.4 billion. 

It is this deficit that will come more into play with the continuation of President Trump in office with an increased focus on doing the “Trade Deal” that has been elusive till now.

The key sectors to watch out for the US-India trade and its management of deficit will be defence, energy and pharma.

It is no secret that the US has emerged as an important supplier of military hardware to India through the G2G deals with increasing cooperation both at the troop-level with the US-India military exercises and the Malabar Exercise ( with Australia joining in for the first time since 2007).

 The unofficial QUAD is keenly observed by China with the axis of these four democratic nations playing war games in the Bay of Bengal and the Indian Ocean to ensure fair seas and Right of Navigation in the South China Sea and minimising Chinese military influence in the Indian Ocean Region.

The military hardware sales clocking more than $20 billion has been supported by the DTTI (Defence Trade & Technological Initiative) bolstered by India and US signing the Basic Exchange and Cooperation Agreement (BECA), which, along with the two agreements signed earlier — the Logistics Exchange Memorandum of Agreement (LEMOA) and the Communications Compatibility and Security Agreement (COMCASA) allow a seamless exchange of military information, logistics, communication and interoperability between the two largest democratic military powers of the world.

India’s emergence as the strategic partner of US not only in the region but outside of NATO, as the only nation to have been given the status of major defence partner to whom the US has consented to share sensitive military technologies, weapons and equipment in no small means catalyzed by the STA-1 status that India enjoys makes it a pivot in the Indo Pacific, regardless of the administration that may come to power in the United States.

The key area of interest to watch will be emerging role of US in the Indian energy market as a sustainable partner than just a trader as India buys more of Natural Gas to fuel its city gas networks and industry in the Coastal Economic Zones. 

US and India have continued to increase their energy trade as the bilateral trade increased by 93 per cent in the past two years reaching a total of $9.2 billion in 2019.

India is now the fourth-largest destination for US crude and fifth-largest market for US natural gas majors.

The natural gas market has seen long term agreements of GAIL and PetroNet LNG with major US energy firms, as the Indian infrastructure for LNG has picked up pace with 5 RLNG terminals in the West Coast of India with an installed capacity of 42.5 MMTPA including the LNG hub in Gujarat and upcoming 21.5 MMTPA capacity in the East & West Coast using FSRUs supported by more than 17,000 kms of pipelines connecting the West Coast to the heartland as India pursues its target of increasing the share of natural gas from the current 6 per cent to 15 per cent by Y2030.

India's interest will also be the operationalisation of the Civil Nuclear Energy as that is a shared legacy that has yet to bear fruits for a power-hungry India as it emerges from the pandemic with a projected growth rate by IMF of 8.8% in 2021-22.

(Disclaimer: The views of the writer do not represent the views of WION or ZMCL. Nor does WION or ZMCL endorse the views of the writer)