What to Expect from the Modi-Biden Summit
Prime Minister Modi will travel to Washington D.C. this week for his first summit with President Biden, as well as for the first in-person Quad Leaders' Summit
Hi there, I’m Aman Thakker. Welcome to Indialogue, a newsletter analyzing the biggest policy developments in India. The aim of this newsletter is to provide you with quality analysis every week on what’s going on in India. Here’s what you can expect in this week’s newsletter:
Thank you very much for subscribing. My writing, and this newsletter, benefits from your feedback, so please do not hesitate to send any suggestions, critiques, or ideas to aman@amanthakker.com.
What to Expect from This Week’s Summit between Prime Minister Modi and President Biden
On September 14, the Indian government announced that Prime Minister Narendra Modi will head to the United States later this week, where he will first visit Washington D.C. In Washington, he will participate, alongside Prime Minister Scott Morrison of Australia, Prime Minister Yoshihide Suga of Japan, and President Joe Biden of the United States in the first-ever in-person Leader’s Summit of the “Quad” on 24 September. He will then travel to New York City, where he will address the General Debate of the High-Level Segement of the 76th Session United Nations General Assembly (UNGA) on 25 September.
Moreover, according to the Official Spokesperson for the Ministry of External Affairs, Arindam Bagchi, Prime Minister Modi “will also have a bilateral meeting with President Biden,” as well as engage in possible “bilateral meetings with other Quad leaders, time permitting.”
However, the bilateral meeting with President Biden, or with any other leaders, have not yet been confirmed, with Mr. Bagchi said “the elements are still being worked out and we will certainly share with you. For the moment I can confirm 24th is the quad and the 25th is the UN General Assembly debate.”
If and when the bilateral take place (and it seems likely that it will likely take place on September 23 before the Quad summit), several issues are sure to come up in the meeting.
The issue that remains front of mind, given the fall of Kabul to the Taliban on August 15, will be the future of Afghanistan. The U.S. withdrawal from Afghanistan has had direct implications for Indian strategic interests - be it the fact that India’s chief rivals - China and Pakistan - now have an opportunity to expand their diplomatic, military, and economic footprint in a Taliban-led Afghanistan, or the fact that India will now have to grapple with the prospect that Afghanistan could return to becoming a safe haven for terrorist organization, espeically those that may seek to attack India.
U.S. and Indian officials have had several discussions on Afghanistan, including during Indian Foreign Secretary Harsh Vardhan Shringla’s visit to the United States and CIA Director Bill Burns’ visit to New Delhi, both last month, as well as phone calls between External Affairs Minister Dr. S. Jaishnkar and Secretary of State Anthony Blinken. Exchanging views on how to manage the future of the crisis will be top of mind for both leaders in their discussions next week.
Climate change is also likely to be front-and-center in the agenda, especially given that the issue is a priority for President Biden, as well as the upcoming COP26 summit, scheduled to be held from October 31 to November 12, 2021, in the United Kingdom. The recent visit by U.S. Special Presidential Envoy John Kerry to New Delhi last week resulted in new announcements under the bilateral “India-US Clean Energy Agenda 2030 Partnership,” and ensuring further progress on the partnership will certianly be a priority for both country.
Finally, while any references to China may not come up in any press statements, read-outs, or joint releases, the two leaders are likely to discuss how China’s actions have presented significant challenges to, both, Indian and U.S. interests, and how the two countries can work together in the Indo-Pacific and beyond to tackle tohose challenges.
These three issues - Afghanistan, climate change, and China - are not the only issues that are likely to be discussed. The continued spread of the COVID-19 pandemic, the issue of vaccines and India’s centrality as a producer of vaccines, cybersecurity, counterterrorism, and other issues are also likely to come up in discussions.
However, beyond this gamut of issues wherein the two countries can deepen their collaboration, the United State and India should also use the summit to discuss issues where there are significant differences, and craft a plan to at least bridge those differences, if not overcome them entirely.
For example, on trade and economic issues, tensions have been steadily building. Under the Trump administration, both countries took protectionist steps, be it India’s decision to raise custom duties, or the Trump administration’s decision to raise steel and aluminum tariffs from India and revoke India’s benefits under the Generalized System of Preferences. While the two countries were working towards a “mini trade deal” to address these issues, there has been limited progress so far on addressing those issues.
Rather, additional issues have come up, such as the Biden-era U.S. Trade Representative’s decision to announce deferred tarrifs against India for its digital services tax. Addressing the trade issues head-on during the summit will create a more robust partnership between the two countries.
Finally, perhaps the biggest challenge on the horizon for U.S.-India relations remains the prospect that the United States might potentially sanction India under the United States’ Countering America’s Adversaries Through Sanctions Act (CAATSA). India’s planned purchase of the S-400 missile defense system from Russia, the target of CAATSA, would trigger the sanctions.
While China and Turkey have already been sanctioned for their respective purchases of the S-400 system, the U.S. Congress has passed a waiver authority, which can be used to prevent sanctions from being applied to India. However, there has been no public committment from the United States that the waiver would be applied to India, and the United States has continued to express reservations about India’s decision to proceed with the purchase. India, for its part, has maintained it will not reverse its decision to aquire the S-400 system, placing the two countries at odds at a time when both countries are deepening their partnership.
To be clear, the application of sanctions on India would set U.S.-India relations back by decades, and would do little to counter Russia, as the act intends. Therefore, it is imperative that both countries reach some sort of agreement to lift the the cloud of potential sanctions currently hanging over the bilateral relationship, ideally by ensuring that India does obtain a waiver, or by working with the U.S. Congress to amend the law.
Clearly, Prime Minister Modi and President Biden have a vast agenda for their first bilateral summit since President Biden took office. However, they should ensure they not only move the ball forward on key issues like Afghanistan, climate change, and China, but also work to resolve differences in bilateral ties, be it on trade and economic relations, or on CAATSA and India’s continued defense relationship with Russia.
If you would like to support Indialogue, please consider sharing the newsletter on social media using the button below!
Book Recommendation: What Millennials Want
My friend, Vivan Marwaha, has an exciting new book out titled What Millennials Want. Here’s the description from the publisher of the book, Penguin Random House India:
India is one of the youngest countries in the world and the generation of millennials make up for over 400 million people. This is the largest generation of people in the world.
That means that the choices and trajectory of this generation have pivotal consequences on local, regional, and global politics and economics. So the important question is: What do Indian millennials want? What are their economic aspirations and their social views? Most importantly, what makes them tick?
If you’re interested in reading the book, please pick up a copy from your neighborhood bookstore. You can also pick up a copy on Flipkart (India) or Amazon (India). You can also follow Vivan on Twitter (@VivanMarwaha) here.
News Roundup
Prime Minister Modi participated in the 21st Meeting of the Heads of the State of the Shanghai Cooperation Organization on 17 September, 2021. While Prime Minister addressed the plenary session of the Summit virtually, External Affairs Minister S. Jaishankar was present physically at the Summit, which was held in Dushanbe, Tajikistan. A summary of Prime Minister Modi’s remarks is available here.
On the sidlines of the 21st SCO Summit, External Affairs Minister Dr. S. Jaishankar met with this counterpart from China, State Councillor and Foreign Minister Wang Yi. The meeting, held on 16 September, discussed the current situation along the Line of Actual Control in Eastern Ladakh, as well “recent global developments.” A readout from the Ministry of External Affiars on the meeting is available here.
The U.S. Special Presidential Envoy for Climate, John Kerry, visited India from 12-14 September for meetings with Indian officials in the run-up to the 26th Conference of the Parties (COP26) to the United Nations Framework Convention on Climate Change (UNFCCC), which is scheduled to be held from October 31 to November 12, 2021, in Glasgow, United Kingdom. During this visit, the United States and India announced the launch of the “Climate Action and Finance Mobilization Dialogue (CAFMD),” to strengthen India-U.S. bilateral cooperation on climate and environment.
The Union Cabinet approved several reforms aimed at improving the ease of doing business in India’s telecom sector, as well as generate employment, promote competition, and protect consumers. Among the major reforms, the government announced that:
It would adjust its definition of “Adjusted Gross Revenue” to exclude non-telecom revenue, which had been an issue of contention between telecom companies and the Indian government;
It would incrase the tenure of spectrums for all future auctions from 20 to 30 years; and
It would remove the cap on Foreign Direct Investment (FDI) under the automatic route, thereby allowing 100% FDI in the telecom sector.
The Indian government has approved new Production Linked Incentive schemes for the Auto Industry and for the Drone Industry. For both schemes, the government has allocated a total of Rs. 1.97 lakh crore ($26.7 billion) over five years, and expects to generate Rs. 47,500 crore ($6.4 billion) in investments and 760,000 new jobs through these schemes.
India’s health minister, Mansukh Mandaviya, announced on 20 September that India would begin exporting surplus doses of the COVID-19 vaccine next month. India had earlier suspended exports of doses of the vaccines after facing a severe spike in cases as part of a second wave of COVID-19 infections beginning April 2021.
Defense Minister Rajnath Singh spoke on the phone with U.S. Secretary of Defense, Lloyd Austin, on 20 September. The two ministers discussed “bilateral and regional issues” such as the developments in Afghanistan, counterterrorism, and deepening bilateral defense cooperation. The call comes days before Prime Minister Modi is scheduled to travel to the United States.
The Goods and Services Tax (GST) Council met on 17 September, and made several recommendations to changes in GST rates on the supply of goods and services in India. Significant recommendations include extending concessional GST rates for COVID-19 treatment drugs, reducing GST rates for cancer treatment Keytruda, and increasing GST rates for ores and concentrates of metals, specified renewable energy devices, and railway parts. The full list of recommendations is available here.
The Indian Army commenced the 15th Edition of the Indo-Nepal Joint Military Training Exercise Surya Kiran alongside the Nepal Army on 20 September. The exericise will be an Infantry Battalion from the Indian Arm and an equivalent strength from the Nepali Army will participate in the exercise in order to familiarise themselves with each other’s weapons, equipment, tactics, techniques and procedures of operating in a counter-insurgency environment in a mountainous terrain.
The Indian government announced that a total of 52 copmanies had filed their application under the PLI scheme for white goods (such as ACs and LED lights), committing a total investment amount of Rs. 5,866 crore ($796 million). The selection of which applicants will recieve benefits under the PLI scheme will be announced on 15 November, 2021. The government expects that the scheme would result in a total production of Rs. 271,000 crore ($36.7 billion) in five years, leading to 200,000 new direct and indirect employment opportunities.
The Border Roads Organization announced that it would carry out a road safety audit of all of its roads, in order to reduce the possibilties of accidents on its roads and improve road safety.
Five to Read
From cogent analysis to potentially big news that you should keep an eye on, here are a few commentaries and other pieces of writing that I found particularly enlightening:
Dr. C. Raja Mohan, director of the Institute of South Asian Studies at the National University of Singapore: India Welcomes AUKUS Pact as China Deterrent - Foreign Policy
Rashmi Banga, Senior Economic Affairs Officer, United Nations Conference on Trade and Development (UNCTAD): Building a resilient economy - The Hindu
Pramit Pal Chaudhuri, Foreign Editor of Hindustan Times - The Greatest Game: The Indo-Pacific - Hindustan Times
Diva Jain, Director at Arrjavv and researcher of behavioral finance and economics: Criticism of India's bankruptcy code is unwarranted - Livemint
Dr. Arvind Subramanian, a former chief economic adviser, and Josh Felman, former IMF resident representative in India - There finally seems to be a path forward for GST. Centre and states must strike bargain - The Indian Express
Thanks for reading this latest edition of Indialogue. Please let me know if you have any thoughts or feedback by emailing me at aman@amanthakker.com.