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Distribution: weekly

  • [Burning Issue] India US relations in the backdrop of recent hiccups

    Context

    • While India and the US claim to be strategic partners, the bones of contention are now more numerous and more substantial than they’ve been before.
    • The relations between the two countries had been plateauing for months with Trump being preoccupied with domestic and international battles.
    • The whim of US Administration under Trump and recent events has put the India-US relations again under test of time.

    Let’s take a look a timeline of recent events:

    • Discontinuing India’s designation as a beneficiary of its Generalized System of Preferences (GSP) duty concession programme
    • Freedom of religion issue
    • US claim of credit for settling Balakot Air strikes and Pulwama attack
    • US offer for mediation on Kashmir

    At glance

    I. Trade Issues

    • Trade is a big source of friction between the two nations. US companies see India’s 1.3bn people as a potentially lucrative market.
    • But they have been frustrated with New Delhi’s protectionism and unpredictable regulations and policies, which make India a notoriously tough place to do business.
    • Specific points of irritation include India’s price caps on medical devices such as stents; restrictions on US dairy imports; restrictions on foreign companies operating in e-commerce and retail; and new data localisation rules.
    • Trump has repeatedly complained about India’s 50 per cent import duties on Harley-Davidson motorcycles.
    • US administration also terminated India’s designation as a beneficiary of the GSP citing unfair protectionist measures by India.
    • The withdrawal of duty-free access to Indian exporters is somehow bound to damage the Indian economy.

    II. Visa Issues

    • Indians are not as welcome in the US as they used to be as thousands of techies seen their demand for an H1B visa extension rejected.
    • Such a cap on the Indian H1B visas would be an additional blow as Indians get about 70 per cent of the 85,000 H1B visas granted every year by the US.
    • One may argue that such practices are unfair, but India’s attempts at regulating migration in the North-east reflect the same agenda — the kind of agenda on which national-populists are elected.

    III. Freedom of Religion issue

    • The annual report of the State Department on Freedom of Religion accuses India that for more than half a decade India of not treating its minorities in the right manner.
    • It alleged the role of vigilante and right wing groups involved in “mob lynchings” to alienate non-Hindus or lower-caste Hindus is a significant contributor to the rise of religious violence and persecution.

    IV. Autonomy issues

    • India has long valued its strategic autonomy and its freedom to maintain a complex web of warm foreign relationships.
    • In particular, Iran and Russia are both longstanding traditional friends which have historically provided India with oil and military hardware.
    • India is in the process of purchasing S400 surface-to-air missile systems from Russia which could mean more sanctions as per a US law called “Countering America’s Adversaries Through Sanctions Act” (CAATSA).

    V. Content over Iran

    • Similarly, to be a friend of Iran and the US at the same time is getting more and more difficult.
    • New Delhi has had to bow to Washington when the Trump administration ended waivers that allowed India (among others, including China) to continue their oil imports from Iran
    • After all, India needs Iran because of Chabahar and Afghanistan — where the American withdrawal is another bone of contention.

    Immediate cause of rift: Unwelcomed move over mediation on Kashmir

    • More recently, Trump threw a bombshell at India during his meeting with Pak PM Imran Khan by saying that PM Modi had asked him to mediate on Kashmir.
    • India’s insistence on bilateralism has historically stemmed from the distrust of outsiders meddling in its internal affairs.
    • India has sought outside help from the world, not for mediation, but to rein in Pakistan’s meddling of terror in Kashmir.

    Why is US frustrated with India these days?

    • An important question is arising for Washington is: How far can the US rely on India to contain China?
    • In the last SCO meeting at Bishkek, Modi did not rule out India joining hands with Russia and China in the emerging trade war with the US.
    • Huawei is another potential sore point. The Chinese tech giant has plans for expansion in India and hopes to play a role in building the country’s 5G network.
    • The US has been pressurizing India to ban the Chinese company from its 5G development and deployment on the back of security concerns of Chinese surveillance on these networks.

    U.S. deterrence is not unusual

    • The US president claimed to have defused the India-Pakistan standoff that arose from the Pulwama attack. The US is said to have played a part in release of Abhinandan.
    • The US also played a role in forcing China to agree to the designation of Jaish chief Masood Azhar.
    • And most recently, Trump took credit for the arrest of Hafiz Saeed. Perhaps Trump thinks he has already resolved much of the problem.

    U.S. is still important

    • The US move to take a listing request for Jaish-e-Mohammad founder Masood Azhar directly to the UN Security Council is an indicator of its undeterred support for India.
    • The recent passing of a bill titled Fairness for High-Skilled Immigrants Act (HR 1044) which would make shorter wait time for Indian applicants of Green Cards is one of the major sigh of relief for Indian migrants.
    • Passing of HR 2123 Bill to give India Nato-ally like status is a vital step to enhance strategic cooperations.
    • The isolation of Pakistan by US is another boon for India’s quest for peace in South Asia.

    Conclusion

    • The US president’s statement can be explained away as another instance of “Trump being Trump”.
    • As usual, India cheers the strong support by the U.S. on multiple fronts.
    • The US like always has been clear to seek greater market access and the removal of trade barriers in our economic relationship.
    • Unlike the US-China trade war, and the US-Mexico disputes the recent differences were never at the centre of India-US relations.
    • As correctly pointed by Mike Pompeo, Great friends are bound to have disagreements.

    Way ahead

    • The current state of play suggests that the two countries were now at a crossroads.
    • There is no easy way to sugarcoat the present state of the relationship, it is one in which the only common denominator is a fundamental misunderstanding of priority objectives on the other side.
    • A strong commitment to improve the bilateral trade relationship and build a sound foundation for future successes is necessary.

     

    Also read:

     

    For amazing timeline of India-US relations since 1947 , navigate to the page:

    https://www.cfr.org/timeline/us-india-relations

  • Govt plans $2 bn incentive for Green Hydrogen Industry

    The govt is planning a $2 billion incentive program for the green hydrogen industry, in a bid to cut emissions and become a major export player in the field.

    What is Green Hydrogen?

    • Green hydrogen is hydrogen gas produced through the electrolysis of water.
    • It is an energy-intensive process for splitting water into hydrogen and oxygen— using renewable power to achieve this.
    • The current cost of green hydrogen in India is ₹300 to ₹400 per kg.

    Hydrogen Energy: A Backgrounder

    • Hydrogen is an important source of energy since it has zero carbon content and is a non-polluting source of energy in contrast to hydrocarbons that have net carbon content in the range of 75–85 per cent.
    • Hydrogen energy is expected to reduce carbon emissions that are set to jump by 1.5 billion tons in 2021.
    • It has the highest energy content by weight and lowest energy content by volume.
    • As per International Renewable Energy Agency (IRENA), Hydrogen shall make up 6 per cent of total energy consumption by 2050.
    • Hydrogen energy is currently at a nascent stage of development, but has considerable potential for aiding the process of energy transition from hydrocarbons to renewable.

    Why hydrogen?

    • Better properties: At standard temperature and pressure, hydrogen is a nontoxic, nonmetallic, odourless, tasteless, colourless, and highly combustible diatomic gas.
    • Clean fuel: Hydrogen fuel is a zero-emission fuel when burned with oxygen. It can be used in fuel cells or internal combustion engines. It is also used as a fuel for spacecraft propulsion.
    • Ample sources: Hydrogen can be sourced from natural gas, nuclear power, biomass, and renewable power like solar and wind.
    • Phasing out carbon: India remains committed to environmental and climate causes with a massive thrust on deploying renewable energy and energy efficiency measures.
    • Diversification of our energy basket: This would be the key lever enabling this transition. That’s why the emergence of hydrogen at the centre stage is a welcome development.

    How Hydrogen can be produced?

    Commercially viable Hydrogen can be produced from –

    1. Hydrocarbons including natural gas, oil and coal through processes like steam methane reforming, partial oxidation and coal gasification
    2. Renewables like water, sunlight and wind through electrolysis and photolysis and other thermo-chemical processes.

    How is Green Hydrogen produced?

    • For source material, green hydrogen today is typically generated from water through a process known as electrolysis, which uses an electric current to split water into its component molecules of hydrogen and oxygen.
    • This is done using a device called an electrolyzer, which utilizes a cathode and an anode (positively and negatively charged electrodes).
    • This process produces only oxygen – or steam – as a byproduct.
    • As for energy supply, to qualify as “green hydrogen,” the source of electricity used for electrolysis must derive from renewable power, such as wind or solar energy.
    • Currently the production of green hydrogen is two or three times more expensive than blue hydrogen.

    How can green hydrogen be used?

    Hydrogen can be used in broadly two ways. It can be burnt to produce heat or fed into a fuel cell to make electricity.

    • Fuel-cell  Mobility: Hydrogen electric cars and trucks
    • Container ships powered by liquid ammonia made from hydrogen
    • “Green steel” refineries burning hydrogen as a heat source rather than coal
    • Hydrogen-powered electricity turbines that can generate electricity at times of peak demand to help firm the electricity grid

    Challenges in producing Green Hydrogen

    India’s transition towards a green hydrogen economy (GHE) can only happen once certain key issues are addressed.

    • Supply-Chain Issues: GHE hinges upon the creation of a supply chain, starting from the manufacture of electrolysers to the production of green hydrogen, using electricity from a renewable energy source.
    • Technology: Green hydrogen needs electrolysers to be built on a scale larger than we’ve yet seen.
    • Storage: Either very high pressures or very high temperatures are required, both with their own technical difficulties.
    • Explosion Hazard: It is hazardous because of its low ignition energy and high combustion energy.
    • Risk to use: Automotive fuels are highly inflammable, but a vehicle laden with hydrogen is likely to be more vulnerable in case of a major accident.
    • High Cost of Production: To become competitive, the price per kilogram of green hydrogen has to reduce to a benchmark of $2/kg. At these prices, green hydrogen can compete with natural gas.
    • Energy intensivity: Creating green hydrogen needs a huge amount of electricity, which means an enormous increase in the amount of wind and solar power to meet global targets.
    • Lack of proper infrastructure, only 500 Hydrogen stations exist globally. Only countable manufacturers are involved as market players in this technology.
    • Others: Low user acceptance and social awareness. Developing after-sales service for hydrogen technology.

    Policy and Economic Challenges

    • Economic sustainability: One of the biggest challenges faced by the industry for using hydrogen commercially is the economic sustainability of extracting green or blue hydrogen.
    • Technological challenges: The technology used in production and use of hydrogen like Carbon Capture and Storage (CCS) and hydrogen fuel cell technology are at nascent stage.
    • Cost Factor: These technologies are expensive which in turn increases the cost of production of hydrogen and will require a lot of investment which in turn add fiscal pressure on government.
    • Higher Maintenance costs: Maintenance costs for fuel cells post-completion of a plant can be costly.
    • Need for legal and administrative adherence: Certification mechanisms, recommendations, and regulations for different components of the system.

    Way forward

    • Hydrogen energy is at a nascent stage of development but has significant potential for realizing the energy transition in India.
    • The new policy is a futuristic vision that can help the country not only cut down its carbon emissions but also diversify its energy basket and reduce external reliance.
    • India’s transition can be a testament to the world on the achievement of energy security, without compromising the goal of sustainable development.
    • The GoI must strongly pursue the objective of creating a GHE to make India a global manufacturing hub and place itself at the top of the green hydrogen export market.

     

     

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