Blossoming American-Indian Romance

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The British love to talk about their “special relationship” with America. But for the 21st century, America’s special relationship with India seems to be like this.

Joe Biden came close to saying as much this week. Following Prime Minister Narendra Modi’s visit to Washington this week, the US President told a press conference that America’s relationship with India is “one of the most important relationships in the world”.

Like many blossoming romances, it took a third party to bring the couple together—in this case, China. America and India fear the growing Chinese power which is bringing them closer to each other.

There has been so much focus in Washington on the deterioration of US-China relations that it is easy to overlook an even more dramatic deterioration in relations between India and China. The US is still debating whether to kick out TikTok. But India has already done so, despite the fact that the Chinese app had crores of users in India. There is no direct flight between India and China now. Nor, after a spate of tit-for-tat expulsions, are there any Indian journalists left in Beijing; And Just one, If any, Chinese journalists migrated to Delhi. Meanwhile, the India-China border dispute continues – 50,000 troops are deployed on both sides of the border.

As far as the US is concerned, it wants to reduce its economic dependence on China and is looking at India as an “alternative China”. The only other country in the world with a population of over 1 billion people, India offers immense untapped potential, both as a market and production base. Big announcements made during Modi’s visit – India’s purchase of Boeing aircraft, and investment by the US company Micron in a new semiconductor plant in India – underscored the potential and raised enthusiasm.

People-to-people relations are also increasing. Several prominent US CEOs are originally from India – including Microsoft’s Satya Nadella, Alphabet’s Sundar Pichai and IBM’s Arvind Krishna.

But as is the case with many budding romances, caution may be warranted. Actually, several words of caution.

Firstly, it is not entirely correct to see India as a ready-made alternative to China when it comes to economy and markets. In 1990, the economies of China and India were approximately the same size. But nowadays China’s economy is five times bigger than India’s. The level of education and infrastructure in China is far ahead of India.

When it comes to politics, India’s biggest identity card is its claim to be the “world’s largest democracy”. But India has slipped backwards in most rankings of political freedom in recent years. Talking to Indian colleagues in journalism and academia, there is no doubt that many feel intimidated by the current political and intellectual climate. Some have lost their jobs.

The third issue is strategic. India may be America’s partner – but it is certainly not an ally. The fact that India continues to buy Russian oil and weapons during the Ukraine war has caused considerable irritation in Washington.

Indians sometimes protest that – for national security reasons – they cannot break ties with Russia. About 80 percent of Indian weapons are bought from Russia. If ever there is a war with China, India will be dependent on Russia for spare parts or ammunition. But Indians will also remember that Russia itself has become very dependent on China. The question must be arising whether Moscow will really provide India with the necessary weapons in the event of a confrontation with China.

That’s why America’s biggest long-term game with India is to sell more arms to Delhi. Many big deals were announced during Modi’s visit. This will give economic and strategic benefits to America. The military industrial complex (yes, it exists) would benefit from the contracts. And – a decade later – India will be less dependent on Russia and more tied into the US military ecosystem.

Both the US and India are looking at this as a long-term relationship – and they are both ready to invest in each other (literally and figuratively) with the hope of reaping the benefits for many years.

But what do you think, Brooke? Will all these expectations be fulfilled? Or will the courting couple discover more unpleasant truths about each other – just as they settle into a relationship?

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Brooke Masters answers

Gideon, I think you are absolutely right to focus on the relationship between the US and India. In fact it feels like the relationship has taken a huge step forward. Over the past few weeks, I have been amazed at how many top US wealth managers and executives have unintentionally increased their focus on India. I wasn’t talking to top bankers and CEOs when American corporates first forged deeper ties with China, but those who were told me that India’s market size, spending power and growing openness to Western investment Some of the things about today seem very similar.

There is definitely a warning in that. The dream of the US and Europe that industrialization and economic development would lead to countries becoming like the Western capitalist democracies, which have repeatedly collapsed. Modi has made it clear that he, like Chinese leaders before him, wants access to American technology and investment to help his country grow. But India is a massively complex society that has for generations thwarted Western attempts to pick sides. Its governments have also resisted Western multinational efforts to penetrate its markets. The mood music is different at the moment, but who knows how long that will last. Relationship advice columnists always suggest that couples in the first wave of attraction take time to build trust before starting to share bank accounts or buy property together. The same is true for countries considering deeper economic and political ties.