et us not be too excited about the nuclear “breakthrough” between Barack Obama and Narendra Modi. The deal aims to cap the liabilities of US suppliers to India’s civil nuclear programme should there ever be an accident. This has hitherto been a barrier to trade and investment. But the pact is far from completed. Nor is it likely to open the floodgates to US investment in India’s nuclear power industry.
The point of the original 2005 deal between George W Bush and Manmohan Singh was to give India implicit recognition of its nuclear weapons status. New Delhi achieved what it wanted. Having together watched the annual Republic Day parade of India’s military hardware, Messrs Obama and Modi have put relations on a more intimate footing, hugging and joking like lost brothers. Unlikely a “bromance” though it is, the two have restored sparkle to what should be a natural alliance.
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The goal now, as ever in the often emotionally overwrought US-India relationship, is to add substance to symbolism. Most of the onus will rest on Mr Modi to deliver on promised economic reforms. But Mr Obama too must follow up on the hopes he has invested in India as a strategic partner.
Underlying the personal chemistry is a mutual wariness on the rise of China. In their statement, the leaders called pointedly for maritime and overflight freedom “especially in the South China Sea”. They also upgraded their annual Malabar joint naval exercise in the Bay of Bengal, where Chinese submarines have recently been spotted. Most important, they renewed US-India joint defence co-production, which will include small-scale drones, technology for aircraft carriers and jet engines.
China was not mentioned by name. India sees itself as a “multi-aligned” country that eschews formal military alliances. But its “Look East” stance is little different from Mr Obama’s “pivot to Asia”. Both wish to hedge against a potentially ebullient China without giving it cause for provocation.
It is a delicate line to walk. The less they say about it publicly the better. Yet officials made it clear that in the two leaders’ private talk the first 45 minutes was all about China.
Much has changed. A few years ago it would have been all about Pakistan. It is to both countries’ profit they have delinked the notorious India-Pakistan “hyphenation”. Their goal now must be to ensure it is not replaced by a China-India one.
On the economic front, China still dwarfs India as a US partner, with almost six times the $100bn in annual US-India trade flows. Much has been made of the need to fix India’s nuclear liability problem. But it is more of a psychological barrier to US investment in India than in the civil nuclear sector itself. If Japan has trouble guaranteeing a safe nuclear power industry, there should be scepticism about India.
Mr Modi has promised to lift foreign investment caps in a range of sectors, from insurance to pharmaceuticals. The faster he can deliver on these pledges, the more inward investment India will attract.
Mr Obama can only urge him on. Unlike the Chinese or Russians, the US president cannot tell companies where to put their money. That said, Mr Obama can do more to help India play a full role in the global climate change talks. The money he promised to help India’s solar power capacity was welcome. So too was Mr Modi’s pledge to help make the Paris summit a success.
We shall see. Too often in the past, the promise of US-India relations has drifted into abeyance after a highfalutin summit. This one exceeded the normal hype. Let us hope the follow through also beats expectations.
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