From UPSC perspective, the following things are important :
Prelims level : Not Much
Mains level : Impact of US regime change on India
Donald Trump’s rise to the White House as well as his exit has led to a wide reactionary response in India.
[Burning Issue] India US relations in the backdrop of recent hiccups
(1) Economic Impact
- There are several ways in which the US economy, its health and the policy choices of its government affect India.
- For one, the US is one of those rare big countries with which India enjoys a trade surplus. In other words, we export more goods to the US than what we import from it.
- The trade surplus has widened from $5.2 billion in 2001-02 to $17.3 billion in 2019-20.
- Under a Biden administration, India’s trade with the US could recover from the dip since 2017-18.
FDI and FPI
- The US is the fifth-biggest source for Foreign Direct Investment (FDI) into India. Of the total $476 billion FDI that has come in since April 2000, the US accounted for $30.4 billion — roughly 6.5 per cent — directly.
- Only Mauritius, Singapore, Netherlands, and Japan have invested more FDI since 2000.
- Apart from FDI the US also accounts for one-third of all Foreign Portfolio Investments (that is, investment in financial assets) into India.
- A Biden presidency may also see a renewed push towards a rules-based trading system across the world.
- Instead of outright ad-hocism as was the case under Trump — as well as a move away from the protectionist approach that has been getting strong across the world.
- For instance, how a US President looks at the H1-B visa issue, affects the prospects of Indian youth far more than the youth of any other country.
- Under Trump, who severely curtailed the visa regime, thanks to his policy of “America First”, India had suffered the most.
- That could change under Biden, who is unlikely to view immigrants and workers from India with Trump-like suspicion.
- Other points of contention between India and the US are the tricky issue of data localisation or capping prices of medicines and medical devices.
- These have a better chance of getting towards a resolution as we move away from the radical approach of President Trump to the pragmatism of a Biden presidency.
- Further, under the Trump administration, the US sanctions on Iran severely limited India’s sourcing of cheap crude oil.
- For an economy such as India, which needs a regular supply of cheap oil to grow fast, a normalization of US-Iran relationship (and lifting of sanctions) would be more than useful.
- On China, too, while the US apprehensions are unlikely to be fewer. It is more likely that a Biden administration will help India against China, instead of clubbing the two together.
(5) Climate Action
- Biden has promised to rejoin the Paris Climate Accord, and this may help countries such as India in dealing with the massive challenges — both technical and financial — on this front.