INDIA-US RELATIONS

BACKGROUND
• India and the US today have strategic partnership but this was not always the case. After India got
independence, India took the Kashmir matter to the United Nations on the insistence of the US.
o But, out of its own interests to maintain its relations with Britain, the US supported the idea
of plebiscite and a political solution to the issue of Kashmir.
• The US even warned that if India did not cooperate, it could have consequences for the Indo-US
relations.
• As the Cold War deepened, the US started to recognise that India is a democratic state, which is
a shared value between the two countries and also, it is geographically proximate to the
communist China.
o Hence, US supported India during the Indo-China war, 1962 and even decided at one time to
supply military equipment and weapons which was not necessitated due to the declaration of
ceasefire by China.
• But, during the period of India’s NAM policy, India was slightly tilted towards USSR over US
primarily due to two reasons:
o USSR did not have any colonial history while the US was an ally of the western powers who
were colonists in the past.
o India was inclined towards the soviet model of state-led economy and industrialisation rather
than the free market economy of the US.
• Post 1971, India-US relations could not strengthen due to following reasons-
o Signing of Treaty of Peace and Friendship between India and USSR in 1971;
o India’s economic model did not appeal US as India was a closed economy;
o Pakistan was an ally of the US who used Pakistani territory as a military base for the
containment of the USSR. (US even sent help to Pakistan during 1971 war of Liberation of East
Pakistan/Bangladesh).
o Testing of nuclear weapons by India in 1974.
• After the end of the cold war between the US and Soviet Union, India initiated a defence
partnership with the US and bilateral relations started to improve gradually.

Key Events in India-US Relations

Year Key Event
October, 1949 PM Nehru visited the US for a multi-week tour. The trip was before India’s
formal proclamation of Non-Alignment Policy.
December, 1959 US President Eisenhower visited India becoming the first US President to
visit India.
October, 1962 During the India-China war, Indian PM Nehru wrote to President John
Kennedy to request support from the US.
The US supports India in the conflict, recognising the MacMohan line as the
border, and provides air assistance and arms.
1971 The US supported Pakistan in the War for Liberation of Bangladesh
between India and Pakistan.
1974 India conducted Nuclear tests and became the first country outside the five
permanent members of the UNSC to have declared nuclear capabilities. This
move resulted in a downturn between the Indo-US relations for nearly 2
decades.

For More Study Material, Visit: studyiq.com Page no.

1
 1978 US enacts Nuclear Non Proliferation Act, which required countries not
included in Non-Proliferation Treaty (including India) to allow inspections of
all nuclear facilities by the International Atomic Energy Agency. India
refuses and Washington ends all nuclear assistance to India.
1984 A toxic gas and chemical leak at the American-owned Union Carbide
Pesticide Plant in Bhopal, India, kills thousands. India seeks extradition of
the company’s chief executive from the United States for criminal
prosecution which is denied by the US. This incident further strains Indo-US
relations.
1998 India conducts nuclear tests which were condemned by the international
community along with the US and badly damage Indo-US relationship. US
imposed economic sanctions on India.
2000 President Bill Clinton became the first US President to visit India after 1978.
The visit ends the estrangement of the post-1998 Indian nuclear weapons
test.
The trip was an indication of the shift in the US policy from its cold war
alliance with Pakistan.
September, 2001 After the terrorist attack on the World Trade Centre in the US, George W.
Bush administration lifted all economic sanctions imposed on India after
its 1998 nuclear test.
2005 US and India signed a new Defence framework which sets priorities for
defence cooperation in maritime security, HADR and counterterrorism.
In October, two countries conducted air, land and naval exercises.
2005 India and US ink the landmark civil nuclear deal which lifted a three-decade
US ban on nuclear energy trade with India.
March, 2006 US President George W. Bush visited India and finalised a framework of the
civil nuclear deal and boosted security and economic ties.
2010 US and India hold first Strategic Dialogue.
2010 US President Obama visits India and addresses Parliament and backs the
country’s long held bid for a permanent seat on the UNSC.
2014 US President Obama invited Narendra Modi after being elected as the PM
of India lifting his visa ban.
PM Modi visited the USA in September, 2014 and gave a speech in New
York’s Madison Square Garden.
2015 US President Obama visited India as the Chief Guest of Republic Day
celebrations
2016 US recognises India as the Major Defence Partner; a status no other
country holds. Also, both the countries signed an agreement on deeper
military cooperation after nearly a decade of negotiations.
2017 US President Donald Trump and Indian PM Narendra Modi meets for the
first time and emphasised on strengthening their defence partnership,
cooperation on counter terrorism efforts and boosting economic relations
2018 During the “2+2” dialogue in New Delhi, COMCASA agreement was signed
after being negotiated for over a decade.
2020 US President Donald Trump visited India for the first time and several
agreements were signed between both countries.
2020 During the “2+2” dialogue, the Intelligence sharing agreement BECA (Basic

For More Study Material, Visit: studyiq.com Page no.

2
 Exchange and Cooperation Agreement) was signed between the two
countries.
2022 Indian PM Modi and US President Joe Biden met twice on the sidelines of
Quad summit and G-20 Leaders Summit.

Factors Responsible for Recent Growth in India-US Ties

• Rising China
o China has grown its economic as well as military power immensely. It is posing a direct threat
to the US in terms of its image as a global leader. This is visible from the trade and technology
war going on between the two countries. Therefore, the US needs allies to counter the Chinese
hegemony. India has huge potential to counter China in terms of its young population and
growing economy.
o On the other hand, China’s actions along LAC does not comfort India with the claims in
Arunachal Pradesh as well. Memories of the Indo-China war, 1962 constantly reminds India
about the possibility of a future war. Hence, India seeks sophisticated defence technology as
well as partners to contain Chinese aggression in future.
• Indo-Pacific cooperation
o The Indo-Pacific region has gained importance in the 21st century due to the emergence of
Asia-Pacific countries and a greater role played by these countries in global geopolitics.
o Advanced countries like US and European countries are understanding the gaining importance
of the region through which large amount of global trade passes and hence, security and safety
of sea lanes is vital to ensure uninterrupted trade.
o Chinese aggression in the region has also brought India-USA closer to cooperate in ensuring a
free and inclusive Indo-Pacific as the US’ power is waning and it needs like-minded allies to
contain rising China in the region.
• Alternative Supply chains
o The world witnessed dependency on few countries for key supplies during supply chain
disruptions due to Ukraine-Russia war and semiconductor shortage in 2022 due to weather
extremities in Taiwan, which is a key producer of semiconductor chips.
o Hence, the US felt the need to develop alternative supply chains with its key partners including
India. An initiative was also launched under Quad group for developing the same.
• Need for Critical technologies
o Critical technologies like AI, Quantum Computing, Advanced material and manufacturing,
robotics, drone technology, biotechnology including gene technology are the technologies of
21st century with potential to disrupt social order, regional and global security and defence of
the countries.
o Both the countries are finding ways to collaborate on critical technologies along with their
partners to set new global rules for managing them.
o It becomes even more important in the light of US-China technology war.
• India’s growth and development
o Both India and USA are democracies and India is one of the fastest growing major economies
of the world. It is expected to become the world's third largest economy by next decade.
o India also has a strong military which is expected to become stronger over time.

For More Study Material, Visit: studyiq.com Page no.

3
 o India is doing well in the field of Space technology with ISRO’s plans to launch various missions
along with its human spaceflight mission.
• CoVID-19 cooperation
o India supplied critical medicines like hydroxychloroquine and Personal Protective Equipments
(PPEs) to the US during the first wave in the US in 2020.
o The US reciprocated with vaccine and drug components during the second wave in India in
2021.
o Overall, the US provided aid worth $500 million to India during the pandemic through its public
and private sector.
o India and the US also collaborated through Quad to strengthen equitable vaccine access to the
Indo-Pacific with close coordination with multilateral organisations including the WHO and
COVAX..

POLITICAL RELATIONS
• The frequency of high-level visits and exchanges between India and the U.S. has gone up
significantly of late.
• Prime Minister Modi visited the U.S. in 2014 and a Vision statement and a Joint statement were
issued during the visit.
• The visit was followed by President Obama's visit as the Chief Guest at India's Republic Day in
2015. Both sides elevated the Strategic Dialogue between their Foreign Ministers to Strategic and
Commercial Dialogue of Foreign and Commerce Ministers.
• Since then, the Prime Minister of India and US President has visited many times including the
landmark events of Howdy Modi (Organised by US to welcome PM Modi in 2019) and Namaste
Trump (Organised by India to welcome President Donald Trump in 2020).
• There is frequent interaction between the leadership of the two countries, including telephone
calls and meetings on the sidelines of international summits such as- United Nations, G-20, East
Asia summit and Quadrilateral dialogue.
• A hotline has been established between the Prime Minister's Office and the U.S. White House
which was announced during the US president's visit to New Delhi to attend Republic Day
celebrations on January 26 as the chief guest. For India, this is the first hotline at the level of head
of state.
• The establishment of a hotline between the US President and Indian PM will help in increasing the
communication and frequent discussions between them on key bilateral, regional and global
issues on a secure line.

2+2 Dialogue
• A 2+2 dialogue refers to a mechanism between two countries where two appointed ministers
from each country meet to discuss their strategic and security interests.
• India and USA established a 2+2 dialogue in 2017 which replaced the India-US strategic and
Commercial dialogue which was a feature during the tenure of US President Barack Obama.
• The dialogue includes the External and Defence Ministers of India and their American
counterparts, Secretary of State and Defence secretary.
• Prior to the US, India had never held a 2+2 dialogue with any country at the ministerial level though
India had a 2+2 dialogue with Japan at the secretary level.
• This mechanism is a symbol of strengthening ties between the two countries and the US's
recognition of India's rise as an economic and strategic power.

For More Study Material, Visit: studyiq.com Page no.

4
• This dialogue puts the strategic, defence and security relationship between the two countries at
forefront.

GLOBAL COOPERATION
• Both countries have established a Comprehensive Global Strategic Partnership to International
Peace and Security.
• Both countries seek to continue to promote a resilient, rules-based International order that
safeguard sovereignty and territorial integrity, uphold democratic values and promote peace and
prosperity for all.
• Both countries are committed to work together in close coordination at the UNSC and
International Organisations.
o The US supports India’s bid for a permanent membership in a reformed UNSC.
o Both countries are collaborating on joint capacity-building efforts with third partner countries
to strengthen UN peacekeeping missions.
• USA has helped India in joining the export control regimes (Australia Group, Missile Technology
Control Regime and Wassenaar Arrangement) and has been consistent in supporting India’s
membership with the Nuclear Suppliers Group where its membership is being blocked by China
• Indo-Pacific Cooperation
o Both countries are committed to
▪ a free and open Indo Pacific in which sovereignty and territorial integrity of all states are
respected and countries are free from military, economic and political coercion.
▪ promote regional stability and prosperity with an inclusive regional architecture, abiding
by the rule of law, the freedom of navigation and overflight, peaceful resolution of
disputes, and ASEAN centrality.
▪ ensure adherence to International law to meet challenges to rules based order, including
in the South China Sea.
▪ empower Quad as a force for global good for the Indo-Pacific region in various areas of
vaccines, climate change, infrastructure, space, cyber security and critical and emerging
technologies for delivering practical and tangible benefits to the region.
▪ expand efforts to promote durable and sustainable infrastructure across the Indo-Pacific
including through Blue Dot Network and Build Back Better World (B3W) initiative.
▪ India joined the US-led Indo-Pacific Economic Framework for cooperation among regional
countries in the areas of trade, supply chain, decarbonising economy and anti-tax and anti-
corruption measures.
• Afghanistan
o Both countries are committed to close consultations on Afghanistan to help facilitate an
inclusive and peaceful future for all Afghans and emphasises on the importance of an
inclusive Afghan government and unhindered access for the UN and its partners to deliver
humanitarian assistance.
o Both countries supported the UNSC resolution 2593, which demands that Afghan territory
must never again be used to threaten or attack any country or to shelter or train terrorists, or
to plan or finance terrorist attacks.
o They urge Taliban to adhere to these and all other commitments which are respecting the
human rights of all Afghans, including women, children and minorities and uphold freedom of
travel.

ECONOMIC COOPERATION

For More Study Material, Visit: studyiq.com Page no.

5
• US-India trade picked up after the end of the Cold War and opening up of the Indian economy
after the launch of economic reforms in 1991.
• In 2005, two countries established a Trade Policy Forum, which is a ministerial level meeting to
expand bilateral trade, remove market access barriers and improve ease of doing business.
• The US Treasury and India’s Ministry of Finance launched an Economic and Financial Partnership
in 2010 as a framework to cement the economic bonds between the two nations and build a
foundation for greater cooperation and economic growth. (9th meeting took place in November,
2022).
• Areas of cooperation under the economic partnership between the two countries include
o financial and technical collaboration;
o multilateral engagement;
o climate finance and;
o Anti-Money Laundering and combating terrorist financing.

Trade and Investment

• Bilateral trade between two countries has increased from $16 bn to $157 bn in the last 2 decades.
• As per US State department data, Overall US-India Bilateral trade in goods and services reached a
record $157 Bn in 2021.
• According to the data released by the Ministry of Commerce and Industry, Bilateral trade in goods
between the USA and India was worth $119.4 Bn in 2021-22. (Exports- $76.1 Bn, Imports- $43.3
Bn).
• The USA was India’s largest trading partner for the first time and replaced China.
• Among India’s top 10 trading partners, the US is the only country with which India has a positive
trade balance which shows that the USA is the most important export market for India.
• Indian investments in the US Market totalled $12.7 Bn at the end of the 2020 supporting over
70,000 American jobs.
• USA was the second largest source of FDI in India contributing to around 18% of the total FDI
inflows in India in 2021-22.

Generalised System of Preferences (GSP)

• It is a preferential trade arrangement extended by developed countries to developing countries
which involves reduced tariffs by a developed country on eligible products which come from a
developing country.
• USA launched it in 1974 under which nearly 2000 products including auto components and textile
materials can enter the US duty-free if the beneficiary developing countries meet the eligibility
criteria established by congress. It covers around 2000 items valued at $6.3 Bn.
• India was the largest beneficiary under the programme in 2017 with $5.7 Bn in imports to the US
given duty-free status.
• Trump Administration revoked preferential treatment to Indian exporters in 2019 under its GSP
programme claiming that the US is not getting “equitable and reasonable access” to India’s
markets.
• But GSP status was later reinstated by the Biden administration in 2020.

Benefits of GSP status

• It reduces the cost of the product due to either reduced tariff or duty-free entry of eligible
products which increases competitiveness of the Indian products in the US market.

For More Study Material, Visit: studyiq.com Page no.

6
• This tariff preference helps the new exporters penetrate a market and established exporters to
increase their market share

ENERGY COOPERATION
• US-India Energy Dialogue was launched in 2005 to promote trade and investment in the energy
sector. There are six working groups under the Energy dialogue in-
o oil & gas, coal, power and energy efficiency, new technologies & renewable energy, civil
nuclear cooperation and sustainable development.
• Both the countries have also set up the joint Clean Energy Research and Development Center
(JCERDC) to promote clean energy innovations by teams of scientists from India and the United
States, with a total joint committed funding from both Governments of US$ 50 million.

Oil and Gas Cooperation

• India has increased its oil and natural gas purchases from the US after discovery of shale gas
reserves in the USA.
• The US lifted a ban on its crude oil exports in 2015 and India started importing it in October, 2017
to diversify its sources of crude oil.

Nuclear Energy Cooperation

Timeline
1960s The US financed India’s first nuclear power plant and trained Indian nuclear scientists
under its “Atoms for Peace” Cold war programme
1968 India refused to sign NPT citing in discriminatory nature.
1974 India conducted its first nuclear test.
1974 US imposed sanctions on India and create Nuclear Suppliers Group (NSG) which is a group
of countries to regulate their nuclear exports to prevent diversion of nuclear material to
weapon’s use
1998 India conducted further nuclear tests, attracting more US sanctions
Early US realised the potential of India as a strategic partner and develops a strategic dialogue
2000s for civil nuclear cooperation
2005 India-US civilian nuclear agreement was signed
2006 US congress passed the agreement
2008 Indo-US civil nuclear agreement comes into force

Significance of the agreement

• Through this agreement, India’s nuclear isolation by the USA and its allies was ended after 30
years which had started after 1974 nuclear tests by India.
• This agreement gives India the same status as signatories of the Non proliferation treaty (NPT),
although India has not signed the NPT.
• The deal enables full civil nuclear cooperation between the countries and provides for the
transfer of nuclear material, nuclear trade, equipment, components, and related technologies and
cooperation in nuclear fuel cycle activities.
• The deal enabled India to forge similar agreements with other allies of the United States like Japan,
Australia and France.

For More Study Material, Visit: studyiq.com Page no.

7
DEFENCE AND SECURITY COOPERATION
• Indo-US Defence cooperation started only after the collapse of erstwhile USSR and the end of cold
war.
• At the same time, India also took economic reforms to open up its economy.

Timeline
1991 US Army chief Claude Kicklighter visited India and presented the famous Kicklighter
proposals
1992 Malabar naval exercises began between two countries
2005 A 10-year framework for Indo-US defence partnership was finalised including the
provision of defence trade between two countries.
2015 10-year framework for Indo-US defence partnership was renewed.
2016 The US designated India as a Major Defence Partner.

Defence Trade and Technology Initiative

• It was launched in 2012 with an intent to
o to help eliminate bureaucratic obstacles and accelerate timelines,
o promote collaborative technology exchange and strengthening cooperative research,
o enabling co-production/co-development of defence systems and
o modernisation of military forces.
• The core components of DTII are
o Defence Cooperation
o Defence Trade
o Joint Research and Development and;
o Co-development of equipment.
• Its aim is to strengthen the US and India’s defence industrial base by moving away from the
traditional “buyer-seller” dynamic toward a more collaborative approach.

Expanding defence partnership

Major defence partner status to India
• According to a joint statement issued by the two sides, the designation “is a status unique to
India".
• It institutionalised to facilitate defence trade and technology-sharing with India to a level at par
with that of the United States’ closest allies and partners, and ensures enduring cooperation into
the future,"
• India is neither a treaty/formal alliance partner of the US like Japan and Australia nor it is a
member of NATO.
• It will make procurement of weapons’ systems, spares for those platforms already in the Indian
inventory and most critically the transfer of technology will get smoother.

STA-1 status to India

• STA-1 countries have licence free access to almost 90% of dual-use technology and are eligible to
import items that are controlled for reasons of national security, chemical or biological weapons
etc.
• It will lead to greater high-end technology trade between the two countries.

National Security Strategy of USA

For More Study Material, Visit: studyiq.com Page no.

8
• USA released the document in 2017 which outlines its priorities and policies designed to “make
America great again”.
• The policy recognises India as a leading global power and a major defence partner with which the
US seeks to deepen its strategic partnership.
• It recognises the leadership role of India in the Indian Ocean security and throughout the broader
region.

Increase in Defence trade

• India-US defence trade has grown significantly in a short span of time from $1 Bn in 2008 to $21
Bn in 2021.
• India has procured around $18 Bn worth of defence times from the US since 2008.
• As per SIPRI report, USA emerged as the third largest arms supplier to India in 2017-21 accounting
for 18% of India’s total imports.
• Various deals have been signed related to procurement of Apache attack helicopters, Chinook
heavy-lift helicopters, MH-60R sea hawk multi-role helicopters.
• India already has several U.S. military platforms and equipment and many such proposals for new
acquisitions are in the pipeline.

Key Foundational Security Agreements between India and USA

General Security of Military Information Agreement (GSOMIA)’
• The agreement was signed in 2002.
• It allows sharing of classified information between the US government and American companies
with Indian government and Defence PSUs but not with Indian private companies.

Logistics Exchange Memorandum of Agreement (LEMOA)

• The agreement was signed in 2016.
• It allows the militaries of both countries to access each other’s facilities for replenishment that
includes food, water, oil, petroleum, clothing, medical services, lubricants, refuelling, spare parts
and components, repair and maintenance services, training services and other logistics items and
services.
• A big benefactor of this agreement has been the Navy since it requires replenishment more often
than the Air Force and the Army.

Communications Compatibility and Security Agreement (COMCASA)

• It was signed in 2018 during the maiden 2+2 ministerial dialogue between two countries.
• It facilitates transfer of high-end secured communication equipment which is installed on military
platforms imported from the US.
• It will help in providing access to encrypted and secret communications to Indian forces from the
US and other militaries that use US-origin systems for secured data link.

Basic Exchange and Cooperation Agreement (BECA)

• It was signed in 2020 during the third 2+2 ministerial dialogue between the two countries.
• It enables supply of high-end equipment as well as real-time intelligence and information, which
will allow India to piggyback on American geo-spatial information to hit enemy targets with
pinpoint accuracy.
• It enhances the accuracy of a missile or a drone.

For More Study Material, Visit: studyiq.com Page no.

9
Military Cooperation
• The Indian military undertakes a maximum number of exercises with the USA to increase
interoperability between the two forces and train them to work together in UN Peacekeeping
Nations, HADR operations etc.
• Defence exercises between two countries in both bilateral and plurilateral formats have increased
in frequency, scope and coverage.
• India and the US are also expanding information-sharing partnerships across all warfighting
domains.

Name of the exercise Purpose

Yudh Abhyas Army Exercise
Malabar Naval exercise (also includes Australia and Japan)
Vajra Prahar Takes place between Special Forces of the two countries to train in
Special and Counter-terrorism operations
Tiger Triumph Tri-services amphibious military exercise

SCIENCE AND TECHNOLOGY COOPERATION

• In 2000, both the governments endowed the India-U.S. Science & Technology Forum (IUSSTF) to
facilitate mutually beneficial bilateral cooperation in science, engineering, and health. It has
facilitated interactions between the Indian and US scientists and has established joint research
centres.
• The India-U.S. S&T cooperation has been steadily growing under the framework of U.S.-India
Science and Technology Cooperation Agreement signed in October 2005.
• Also, there is an Indo-U.S. Science & Technology Joint Commission, co-chaired by the Science
Advisor to the U.S. President and Indian Minister of S&T.
• A Science and Technology Endowment Fund was established in 2009 to promote
commercialization of jointly developed innovative technologies with the potential of positive
societal impact.

Collaboration Projects
• Thirty-Metre Telescope
o It is a US-led project which is being implemented in collaboration with many other countries
like India, China, Japan and Canada.
o The Department of Science and Technology has provided funding as well as the Indian private
sector is involved in the construction of this telescope.
• LIGO-India
o It is a large-scale laboratory being developed to detect gravitational waves in India. It is being
developed on the lines of LIGO-USA.
o It is a joint collaborative project between the LIGO laboratory of the USA and Indian Initiative
in Gravitational-wave Observations (IndIGO).

SPACE COOPERATION

For More Study Material, Visit: studyiq.com Page no.

10
• There is a bilateral Joint Working Group on Civil Space Cooperation that acts as a forum for
discussion on joint activities in space.
• NASA and ISRO are collaborating on a NISAR mission which will be a first-of-its kind radar to
systematically map Earth, using two different radar frequencies.
• ISRO also launches US satellites in space during its own space missions.
• Both the countries have Signed a new Space Situational Awareness agreement that will help in
exchange of data on the threat posed to the satellites and other assets between the two countries.
• With the SSA agreement, India will receive data from the US about space debris and other objects
in space and the potential threat that may pose to the safety and security of the new launches as
well as the existing satellites and other space assets.

COOPERATION IN HEALTHCARE
• Under the 2010 U.S.-India Health Initiative, four working groups have been organised in the areas
of
o Non-Communicable diseases;
o Infectious diseases;
o Strengthening Health systems and services and;
o Maternal and Child health
• In order to build up the disease surveillance and epidemiological capacity in India, Global Disease
Detection-India Centre was established in 2010 and an Epidemic Intelligence Service program
launched in Oct 2012.
• A bilateral Health Dialogue was initiated in 2015 to collaborate on different aspects of health. In
the first dialogue, both sides agreed to collaborate institutionally in the new areas of mental
health and regulatory and capacity-building aspects of traditional medicine.
• 4th Health Dialogue organised in 2021 put focus on
o Pandemic preparedness and CoVID-19 management;
o Antimicrobial Resistance;
o Food and Drug regulation;
o Communicable and Non Communicable diseases;
o Infectious diseases
• A MoU was also signed on cooperation in the field of Health and Biomedical Sciences.

PEOPLE-TO-PEOPLE TIES AND CULTURAL COOPERATION

• As per MEA data, there are over 3 million PIOs and 1.3 million NRIs living in the USA. This number
accounts for over 1.3% of the total population of the USA.
• The US issued over 80,000 visas to Indian students in 2022.
• As per census 2020 of the USA
o 9% of the doctors in the USA are of Indian descent and;
o 10% of the US tech workers are of Indian origin.
o 1 in every 3 startups has an Indian co-founder.
o There is also a large number of Indian-origin faculty in the US business schools.
o Many Indians are employed in the field of financial management too.
o In 2020, close to 60 Indian Americans ran for the state legislature or the US congress.
• The Indian Diaspora has assimilated into their adopted country and is acting as a catalyst to forge
closer and stronger ties between India and the U.S.

For More Study Material, Visit: studyiq.com Page no.

11
• Also, cultural cooperation between India and the U.S. is rich and manifest in diverse ways. Apart
from the India-focused educational programs at the Universities and educational institutions,
many private institutions teach Indian cultural arts.

CHALLENGES IN INDIA-US RELATIONS

• Issues in WTO
o Public Food stockholding issue
▪ The issue is pending before the WTO due to the lack of interest of the USA to find a
permanent solution to this issue which is an important matter for India.
o Export Subsidies
▪ USA filed a complaint in 2018 against export subsidies provided by the Indian government
under its MEIS scheme claiming that they harmed the workers of America.
▪ As a result, India had to replace the MEIS scheme with the WTO-trade compliant RoDTEP
scheme.
• IPR issue between India and USA
o IPR has been flagged as the biggest concern that the US has with India during the trade policy
review.
o The US has raised objections against India’s weak IPR protection many times and wants India
to strengthen its patent regulations.
o The US sees IPR purely from a commercial point of view, while India sees it as a developmental
measure.
o Special 301 report released by the United States Trade Representative (USTR) put India under
its Priority Watch List
• Issues related to US Visa
o There remains an uncertainty in the Visa regime of the USA with the change in the leadership.
For example, Donald Trump did put restrictions on Visas for highly skilled professionals seeking
to take employment in the USA under its America First policy. He had limited the H1-B quota
for Indian skilled professionals to 85,000.
o Presently, there is a long delay in issuance of Visa to travel to the USA. There is a long waiting
period for first-time visa applicants in India, especially for those applying under Business and
Tourism categories.
• US’ criticism on the condition of human rights in India
o In the 2021 Human Rights Report on India, US State Department flagged concerns over
arbitrary arrests and detentions, extra-judicial killings, violence against religious minorities,
curbs on free expression and media, overly restrictive laws on funding of NGOs and Civil
Society Organisations, and government harassment of domestic and International human
rights organisations.
o Some Members from the US congress and civil society have criticised India’s revocation of
Article-370, suspension of Internet in Jammu and Kashmir, new citizenship law and Delhi riots
(2019).
• Challenges in International arena
o India’s position on Russia after Ukraine-Russia war
▪ The USA is not happy with India’s reluctance to criticise Russian annexation of Ukraine’s
territories publicly and has highlighted this many times in the last one year.
▪ According to the USA, if India projects itself as a supporter of democracy and rules-based
International order, then it should criticise Russia’s autocratic unilateral actions.
o Impact on India’s strategic interests due to US sanctions on Iran

For More Study Material, Visit: studyiq.com Page no.

12
 ▪
India had to cut down its oil imports from Iran to “zero” in 2019 due to US sanctions. This
has posed a challenge to Energy security of India
▪ Though the USA provided a sanctions waiver for Chabahar port and rail line to Zahedan,
but India could not start the railway project because it is becoming difficult for Iran to
obtain necessary parts and equipment related to the project.
o Impact of withdrawal of the USA from Afghanistan
▪ Taliban rule has returned after withdrawal of the US troops from Afghanistan which poses
a threat to India’s national security as seen in the previous regime of Taliban rule during
the 1990s.
o Indo-Pacific cooperation
▪ Both the countries have different meanings of Indo-Pacific as well as different approaches
towards it.
▪ India’s policy is not directed towards any third country and seeks to ensure a peaceful Indo-
Pacific which is inclusive in nature.
▪ However, the US' policy is directed against China which is also one of the reasons for
deterioration of India-China ties.

WAY FORWARD
• Trade
o Both the countries should try to finalise the limited trade deal as soon as possible to realise
the full trade deal in the future.
o This will help in further integration of the supply chain of both the countries which could also
help in building regional and global supply chains under the US-led Indo Pacific Economic
Framework (IPEF).
• Nuclear Energy
o India wants to export its indigenously developed pressurised heavy water reactors (PHWRs)
abroad. Currently, NSG rules prohibit India from fulfilling this vision.
o The US and India may collaborate in this area to export PHWRs together to other countries
in the same way India and Russia are jointly developing the Rooppur nuclear plant in
Bangladesh.
• Defence Cooperation
o US may also become a partner in India’s Make in India programme in the defence sector to
enhance domestic capabilities of India’s defence private sector.
• Healthcare
o Joint production of vaccines- India has an unmatched affordable vaccine production capacity,
which can be vital in ensuring the availability of vaccines to the developing and least developed
countries counteracting China and Russia’s vaccine nationalism.
o The US can provide technical assistance to India to set up an Indian Centre for Disease Control
and Prevention on the lines of African CDC to upgrade India’s disease surveillance and tracking
and risk mitigation capacity.
o Both countries can collaborate on Digital Health Technologies, especially after the launch of
Digital Health Account by India.
• People-to-People ties
o There is a need to recruit and train more visa counsellors to reduce the waiting time for
issuance of US Visas.

INDIA-CANADA RELATIONS

For More Study Material, Visit: studyiq.com Page no.

13
BACKGROUND
• Diplomatic relations between the two countries were established in 1947.
• During the Cold war, Canada became an ally of the US while India adopted the policy of NAM.
• From 1947 to 1955, Both countries cooperated at the United Nations for decolonisation.
• Canada wanted to act as a bridge between West and newly decolonised Asia but due to adoption
of the policy of Non-Alignment by newly decolonised countries, it could not do so.
• Canada also believed that the enhanced ties with India would help Canada to extend its reach to
other Afro-Asian countries and pursue its foreign policy in relative autonomy.
• After the 1971 Treaty of Friendship and Cooperation between India and USSR and Indian Nuclear
tests in 1974, relations between both the countries took a dip.
o Foreign policy experts claimed that these tests were carried out using the Canadian CIRUS
reactor. As a result, Canada ended all nuclear ties with India and political ties also suffered a
setback.
• India again conducted Nuclear tests in 1998 which led to deterioration in India-Canada relations.
Policymakers in Canada were concerned that Indian Nuclear tests would motivate other non-
nuclear states to pursue similar capabilities.
o Consequently, Canada suspended tentative nuclear cooperation with India and imposed
economic sanctions.
• In 1985, Sikh extremists blew up Air India flight 182 in Canada, killing all 329 passengers. India
accused Canadian agencies for negligence and delay in the investigations.
o Later, in 1997, both countries decided to create a bilateral joint working group on Counter-
terrorism to coordinate against Khalistan separatist groups.
• In 2001, Canadian PM Jean Chretien administration removed all economic sanctions and sought
for broader economic partnership for India.
• Canadian PM Paul Martin (2003-06) identified India as an emerging economy with which Canada
sought to broaden cooperation.
• Following this during the tenure of Stephen Harper government, there were 19 ministerial-level
visits from Canada to India, including Harper’s state visits in 2009 and 2014.
o Under his administration, greater emphasis was laid on FDI, technology transfers, trade
agreements and leveraging diaspora links towards expanding ties with India.

GLOBAL COOPERATION
• Both countries are committed to a rules-based International system and multilateralism.
• Canada has termed India a “critical partner” under its Indo-Pacific strategy which was released in
November, 2022.
• The strategy also called for greater engagement with India for a resilient supply chain and expects
a "greater Canadian involvement and alignment with regional initiatives, such as the Australia-
Japan-India Supply Chain Resilience Initiative".
• Both the countries also work closely in multilateral forums like International Civil Aviation
Organisation (ICAO), UN, Pacific Alliance, UNESCO and WTO.

CHALLENGES IN INDIA-CANADA RELATIONS

• Support to Khalistan Movement
o The early Sikh immigrants to Canada sought to politically organise themselves, reacting to the
anti-immigrant sentiments and discrimination they faced in the country.

For More Study Material, Visit: studyiq.com Page no.

14
 o Events such as the 1984 riots and the Golden Temple incident are frequently introduced in
Canada’s provincial legislatures, often in the form of petitions due to prominent involvement
of Sikhs in Canada’s politics and the regionalisation of Indo-Canadian politics.
o Various events in India such as proclamation of Emergency in 1975, rise of Sikh Militancy in
Punjab in 1980s, Operation Blue star in Golden Temple in 1983 and Anti-Sikh riots in 1984 has
fuelled secessionist tendencies in fundamentalist groups such as Babbar Khalsa to create a
Separate Sikh country, Khalistan.
o There is a small but highly motivated section of the Canadian sikh diaspora that support the
Khalistani movement which have contributed greatly to the India-Canada rift.
• Trade and Investment issues
o Negotiations for CECA and BIPPA have been going on for a long time but both the agreements
have not been finalised yet.
o Issues over Investor-dispute settlement mechanisms are holding back BIPPA. India wants that
any dispute should be heard in the domestic judiciary first before going to International levels.
On the other hand, Canada is concerned about slow judicial decision-making in India and wants
to go directly to International tribunals without a lengthy judicial process.
o Also, Indian economy faces structural impediments such as complex labour laws, market
protectionism and bureaucratic regulations.

WAY FORWARD
• India is a rising power which provides multiple economic opportunities to Canada because of
o emergence of a significant middle class consumer population;
o improvement in business climate;
o booming services sector;
o robust demand for natural resources.
• Canada being an advanced and resource rich country, offers a great opportunity for India to trade
in agricultural commodities.
• There is a high potential for energy cooperation between the two countries. Canada could emerge
as an alternative source of crude oil and LNG for India.
• The infrastructure and transport sectors, too, are potential areas of cooperation and investment.
o India’s Smart Cities mission creates opportunities for the Canadian firms to undertake
Infrastructure projects in various Indian cities.
o Canada’s experience in developing environment-friendly urban infrastructure can prove
beneficial for India.

INDIA-LATIN AMERICA RELATIONS

HISTORICAL AND GEOGRAPHICAL BACKGROUND OF LATIN AMERICA
• Latin America is typically believed to include the entire South American continent, as well as
Mexico, Central America, and the Caribbean islands whose residents speak Spanish,
Portuguese,and French.

For More Study Material, Visit: studyiq.com Page no.

15
•
• From the late 15th to the early 18th centuries, the inhabitants of this sizable region saw
colonisation and conquest by the Spanish and Portuguese, as well as struggles for independence
from both countries in the early 19th century.
• Lesser Antilles, a lengthy chain of little islands in the Caribbean Sea that stretches from Grenada
to the Virgin Islands in a north-south direction. Other islands that are physiographically a part of
the South American continental shelf but are typically referred to as the Lesser Antilles include
Trinidad and Tobago, which are off the northeastern coast of Venezuela, and the east-west island
chain that stretches from Margarita Island to Aruba, which is off the country's northern coast.
o The bigger Caribbean Sea islands of Cuba, Hispaniola (which includes Haiti and the Dominican
Republic), Puerto Rico, Jamaica, and the Cayman Islands are together referred to as the
Greater Antilles.

For More Study Material, Visit: studyiq.com Page no.

16
• Since the beginning, the Spanish had focused their efforts on the Greater Antilles, leaving the
smaller islands largely uninhabited. Even some of the larger islands in the Spanish Caribbean were
underpopulated as improvements passed by.
o Thus, throughout the course of the 17th century, the French and English were able to conquer
the tiny islands, Jamaica, and the western end of Hispaniola with the help of buccaneers of
their respective nations in order to cultivate tropical crops, especially sugar, for themselves.
• Most of Spanish and Portuguese America gained freedom very abruptly after three centuries of
colonial control.
o Except for the Spanish colonies of Cuba and Puerto Rico, all of Latin America escaped the
control of the Iberian powers that had dominated the continent since the invasion between
1808 and 1826.
• The Monroe Doctrine was released by the USA on December 2nd, 1823.
o This was an anti-European colonialism strategy in the Americas. Further attempts by European
countries to annex any independent state in North or South America would be seen as "the
expression of an unfriendly disposition toward the United States," according to the
document.
o The theory was initially introduced by President James Monroe in his seventh annual State of
the Union speech to Congress. In 1850, the phrase "Monroe Doctrine" was first used.

INDIA AND LATIN AMERICA RELATIONS

• India must become more well-known internationally and broaden its influence in the area, which
has a combined GDP of $4.9 trillion, 600 million people, or roughly half the population of India,
and a landmass five times that of India.
• Over the previous seven decades, the Cold War era, world politics, physical distance, and mutually
incompatible priorities have all had an impact on the relationships.
o For many years, India and South America have just about managed to keep up minimum
bilateral relations.
• In place of strong geographic linkages, South America and India are united by a shared post-
colonial past.
o Today, there are other factors besides economics that explain why India and South America
have strong bilateral ties, such as India's need to diversify its energy sources and a rising
Chinese influence in the region.
o Reducing India's reliance on West Asia for its energy security is in its strategic best interest.
• India wants to expand the range of its exports to include more recent markets in the Caribbean
and Latin America.
• The Ministry of External Affairs has however emphasised the possibility of greater trade volumes:
"India's exports to Latin America are rising at a robust rate. There are devoted buyers for Indian
pharmaceuticals, cars, textiles, chemicals, machinery, and other value-added items all over the
region.”
• Indian businesses like UPL, Godrej, Hero, and others have invested in greenfield ventures or
purchased local businesses. In development and delivery centres located throughout Latin
America, more than a dozen Indian software companies work with a few dozen to several
thousand software workers.
• In an increasingly unstable and uncertain global climate, Latin America provides a vital alternative
source for our raw material needs as well as new markets for the export of our goods and
services with value added.

History of Relations

For More Study Material, Visit: studyiq.com Page no.

17
• The trips made by then-Prime Minister Indira Gandhi to eight Latin American nations in 1968 may
still be considered the pinnacle of Indian diplomacy with the continent.
• India and Latin American nations were both colonies of European powers. After achieving
independence, both adopted socialist policies, which did little to enhance relations.
• Many Latin America and the Caribbean (LAC) countries joined the Non-Aligned Movement
(NAM).
• India also supported LAC countries against US interventions in the UN and other multilateral
gatherings, but this did not address the deficit in the relationship.
• During his 2014 trip to Brazil for the BRICS Summit, Prime Minister Narendra Modi made a vow of
deeper engagement.
• After the BRICS Summit in 2014, Prime Minister Modi has not travelled to any Latin American
countries, and in 2016, he made history by missing the Non-Aligned Movement (NAM) Summit,
which was hosted by Venezuela that year.
• There hasn't been much political interaction either way; since 2014, only five presidents from
Latin America have visited India.

Major Area of Cooperation’s

Economic & Commercial
• In 2016–17, India traded $30 billion worth of goods with Latin America, of which $10.4 billion was
exported and $19.6 billion was imported.
• The decline in commodity prices that India imported from Latin America and the region's
recession in 2015 and 2016 are the primary causes of the decline in trade.
• Due to the drop in crude oil prices, from over $100 to less than $50, India's imports of crude oil
from the region decreased from $20 billion in 2014–15 to $9.5 billion in 2016–17. The amount of
imported crude has actually increased.
• With a US$6.69 billion trade surplus, Brazil has surpassed Venezuela to take the top spot as
India's top trading partner. Trade with Venezuela was $5.8 billion, including $3 billion from
Argentina, $2.6 billion from Chile, $1.69 billion from Colombia, and $1.5 billion from Peru.
• The Indian government has given Cuba a $173 million Line of Credit for projects like a milk
powder processing factory, a bulk fertilizer blending plant, a power cogeneration project, and a
wind farm.
• Ecuador indicated interest in establishing a PTA with India in May 2017 in order to strengthen
commercial ties.
o Colombia has also expressed interest in working with other nations in sectors including
agriculture and food processing.
o South African Customs Union (SACU) comprises South Africa, Lesotho, Swaziland, Botswana
and Namibia. So far, 5 rounds of negotiations of India-SACU PTA have been held.
• India enjoys Preferential Trade Agreements (PTAs) with Chile and Mercosur—a South American
grouping consisting of Argentina, Brazil, Paraguay, and Uruguay—these are limited in scope and
cover a small percentage of bilateral trade, with slightly lower import duties rather than duty-free
access.
o Unlike FTAs or Comprehensive Economic Partnership Agreements (CEPAs), PTAs do not
include investments, people-to-people exchanges, or services.
o So far, New Delhi has yet to negotiate an FTA with Latin America and has not shown any
interest in doing so either.
o Unfortunately, the region’s exclusion in New Delhi’s geoeconomics calculations is by design:
Latin America has always been the least visited region by Indian politicians, and the region

For More Study Material, Visit: studyiq.com Page no.

18
 receives far less attention in Delhi in comparison to Asia (or any sub-region, including Central
Asia), Africa, and Europe.
• India and Peru have begun discussions over a PTA.
o The PTA between India and Chile was expanded in 2016, with India granting reductions on
1,031 tariff lines while Chile offered some 1,798 tariff lines.
• India’s exports to Brazil at US $6.48 billion are more than the exports to Japan (US $6.1 billion) or
Thailand (US $5.7 billion)—both of which are FTA partners for India.
• Exports to Mexico at US $4.4 billion are more than exports to Canada (US $3.7 billion) or Russia
(US $3.2 billion).
• India-LAC trade nearly doubled over the past decade, reaching $42.5 billion in 2021 and there are
over 160 Indian companies present in LAC with investments exceeding $30 billion.
• Latin America remains one of the main export destinations for India’s cars, motorcycles,
pharmaceutical products, organic and inorganic chemicals, and textiles.
• Additionally, India imports vital resources from Latin America, including between 15 percent to
20 percent of India’s single-largest import item (crude petroleum oil), indispensable quantities
of minerals like copper, silver and gold, and vegetable oils.
• Indian companies are driven by two major factors to do business with Latin America:
o Latin America lies in the ‘Goldilocks zone’ for international business—it is a sweet spot
between the highly regulated markets of the United States (US) and Europe, where
competition is fierce and quality standards remain high, and the less-regulated markets of
Africa, which have less purchasing power.
o Latin America remains an important part of emerging markets globally, with a steady and
rising middle class. As a result, the region is the preferred export destination for India’s value-
added consumer products and inputs such as cars, motorcycles, pharmaceuticals, and
chemical products. Many Indian companies in these sectors hold considerable market share
in Latin America, and depend on the region for a healthy share of their global revenue.
• Panama is blessed with probably the largest number of Diaspora from India in the entire LAC
region and has a dollarized economy.
o Panama as “Hub of Hubs” is considered as the Bridge of the World and Heart of Universe. And
for India it could be exploited to connect logistics companies, Freight Forwarders, 3PL and 4PL
logistics services, including warehousing, value addition, and Supply Chain Management
o Panama City is seen as the Banking and Finance Hub of Americas, therefore there is a need to
open branches of some Banks from India. Also, there is a need to have direct flight between
the two countries. In fact, Tocumen Intl Airport (Panama City) is directly connected to more
than 90 destinations, especially to all the airports of the LAC region.
o Investment in agricultural lands, good ROI, re-export of Agri produce (including Teakwood and
Pine) to entire Americas, Europe and even to Asia (mainly Avocado, Coffee, Teak and Pine to
India).
• Argentina, Brazil, India, and Mexico are members of the G20, an intergovernmental grouping
which India will chair for the first time in 2023.
o With Brazil hosting the G20 and the BRICS in 2024 and Argentina’s intention to join the BRICS,
opportunities for policy coordination and economic cooperation arise.

Food and Energy Security

• In addition to the region's abundance of fertile land, food security is a significant factor influencing
India's decision to expand its relations with Latin America.
• For instance, Brazil is a global leader in agriculture, boasting vast expanses of cultivable land as
well as state-of-the-art food storage facilities. A leader in agricultural research is also Argentina.

For More Study Material, Visit: studyiq.com Page no.

19
 In the future, the two parties are prepared to establish more joint ventures and research
cooperation in this field.
• In recent years, Latin America has also emerged as a significant supplier of hydrocarbons for
India, accounting for 10% of the country's energy imports. India plans to expand its partnership
with Brazil in the area of environmentally friendly ethanol. Venezuela, Colombia, Mexico, and
Cuba are a few of the region's major oil suppliers to India.
• Recently, India is looking at the Latin American and Caribbean (LAC) region for energy security.
Due to the ongoing Russia-Ukraine war, India has requested the US help to recover its dues from
the sanction hit Venezuela.
• Also, India is Colombia’s third largest market for oil and ONGC Videsh has important investments
in oil fields in Colombia and an increasing collaboration with Ecopetrol, which is Colombia’s oil
company.
• The Caribbean nation is all set to overtake South American nation Brazil as top oil producer in the
region.
o India has been making efforts to diversify its imports of crude from other countries since 2020.
India is in talks to buy more crude from Guyana and talks are on.

Defence
• Transnational Crime Organisation and Drug Trafficking Organisations are one of the most
significant threats that the entire region faces presently.
o These organisations have evolved over time to become extremely organized in nature and are
heavily armed with the latest in weapons.
• To combat this menace, the police of specific drug control units in most Latin American countries
have become highly militarized, hence requiring similar logistical support in context of weapons,
tactile equipment, armoured vehicles and textile.
• Indian companies which specialize in security equipment and technology, experts in cyber
security, small arms, patrol vessels, night vision equipment, and body armour will find a lot of
opportunities to export in the region.
• The Indian defence minister had unveiled around 75 technologies for the use by the Indian Armed
Forces as well as for civil usage. These technologies included dealing with cyber security too. Some
of these are meant to be exported to friendly nations.
• Following is some of the more notable sales of Indian defence goods in the Latin America:
• The donation of one Mahindra Rapid Intervention Vehicle and two Mahindra Rakshak armoured
vehicles to the Guyana Police Force.
• To the Honduran Army, 139 Ashok Leyland 4x4 trucks.
• To Belize, Uruguay, and Argentina with Mahindra 4x4 vehicles.
• The Chilean Carabineros Special Forces will receive 29 Mahindra Marksman vehicles.
• To Peru, two Dhruv helicopters of the civil model.
• Three Chetak helicopters to Suriname, and seven Dhruv helicopters to Ecuador.

Minerals:
• Copper and precious metals are imported from Chile and Peru; wood from Ecuador, etc.
• Raw Gold imports in 2017-18 were 2 billion dollars. Argentina, Bolivia and Chile together have the
most deposits of Lithium in the world. This region is also known as the Lithium triangle.

SIGNIFICANCE OF LATIN AMERICA

For More Study Material, Visit: studyiq.com Page no.

20
• Increasing energy demand: Latin America is of importance to New Delhi because of India's rising
energy needs and desire for foreign investment. After all, the area is rich in natural resources for
extraction.
• Important markets: Indian enterprises are eager to penetrate Latin America's sizable market given
that three G20 economies—namely, Brazil, Mexico, and Argentina—are located there.
o India's trade with Latin American nations has increased significantly over the past 20 years,
and the country has broadened its investment portfolio to include industries like
manufacturing and information technology (IT).
o Additionally, the area has grown to be a significant market for the Indian automotive and
pharmaceutical sectors.
• China's growth in the region: According to analysts in India's strategic community, China is quickly
becoming a strategic and economic partner of Latin America, and India must start growing its own
presence there.
• India's rising power position, its economic expansion, as well as its soft power in the form of its
cultural and civilizational traditions, such as yoga, have found traction in Latin America, which is
to its advantage.

Significance of Indo-Latin American Ties

• Additionally, India exports generic medications worth $1 billion to Latin America, assisting these
nations in lowering the cost of healthcare.
o Latin American local and international businesses have been under pressure to lower their
pricing as a result of the introduction of Indian generic medications over the past 20 years.
• A billion dollars has been invested in India by businesses from Latin America in industries like
soft beverages, multiplexes, theme parks, and auto components.
• Over a thousand Indian software engineers are employed by Latin American software
companies, which have established development and delivery centres there.
• Latin America has also become an important source of energy security for India.
o Presently, 20% of India's crude oil imports come from Brazil, Columbia, Mexico, and
Venezuela.
• India surpassed China in 2012 to become the region's biggest consumer of Venezuelan oil.
• Defending the Area Against Chinese Expansion
o Chinese imports clog their markets at the expense of local enterprises, which is why many
Latin American governments dislike them. Their increased reliance on Chinese capital is
another concern.
o In contrast, there is seldom any criticism to India's small trade and investment activities. In the
long run, this gives New Delhi an unanticipated competitive edge over China.

CHINA FACTOR FOR INDIA IN THE REGION

China is becoming a more important role in the world, and the Indian government should be motivated
to take the necessary steps to strengthen India's ties with South America by the country's gradually
expanding presence and influence. Throughout the 21st century, India has exported more
pharmaceutical products to Latin America than China, with the sole exception of 2021, when Chinese
exports of COVID vaccines to the region outnumbered India’s. India’s presence in Latin America is
dwarfed by China’s.
• India’s annual trade of US$30 billion to US$50 billion with Latin America is a mere shadow of
China’s US$400 billion.
• Chinese investments in the region, estimated to be roughly US$159 billion, and their loans of
US$136 billion, can only be compared with the US and Europe.

For More Study Material, Visit: studyiq.com Page no.

21
China’s Growth in the region
• In 2017, China displaced the European Union (EU) as the region's second-largest trading partner,
surpassing the US to become the top destination for exports from nations including Brazil, Chile,
and Peru.
• China aims to become the dominant economic force in the region by 2025 with a target of
US$500 billion in trade and US$250 billion in investments.
• China has launched significant infrastructure projects in the area, including the Nicaragua Canal
project and the Bi-Oceanic Railway linking the ports of Santos in Brazil and Callao in Peru. In fact,
China is putting a high standard for other states to meet.
• China, a manufacturing powerhouse, has enormous needs for raw minerals, including copper,
iron, silver, and tin, all of which are found in abundance in Latin America.
• China further plans to import significant amounts of agricultural products from Latin American
nations, especially crops like soybean, to meet the demands of its expanding population.
• Greater Latin American engagement challenges the United States' long-held control in the region
on a symbolic level. Latin America has a lot to offer in terms of the economy. For instance, Beijing
looks to the area to provide its oil needs, with Brazil and Venezuela emerging as key players in
China's energy strategy.

India’s Growth in the region

• In the automobile sector, India supplies more cars to the region while China exports more
motorcycles and auto parts. However, Indian companies in the automobiles and auto parts sectors
invest more and provide more employment than their Chinese counterparts in the region.
• Indian IT companies, which were amongst the first from India to enter the Latin American
region, today employ more than 38,000 people in the region.
o Although they initially sought to benefit from the ‘nearshoring’ model—to service clients in
the US and Canada—today they rely on Latin American clients.
o Indian IT companies even made inroads in smaller countries like Guatemala, where India’s HCL
Technologies employs 2,230 people.
o These companies add significant value to the service sector and are a means to diversify away
from Latin America’s dependence on commodity exports.

Difference in approaches of India and China

• India enjoys heaps of goodwill in the region, unlike China. But India is a democracy that faces
challenges similar to Latin American countries—of poverty alleviation, infrastructure

For More Study Material, Visit: studyiq.com Page no.

22
 development, frequent political battles, and a constant cycle of elections.

• China has for two decades formulated and updated its Latin America policy through official white
papers and special envoys, while India has no official policy for Latin America, a region resigned to
the last of India’s three concentric circles of foreign policy. India’s foreign policy is often framed
as operating in three concentric circles.
o The first circle refers to the neighbourhood (thus India’s ‘Neighbourhood first’ policy),
o The second includes the extended neighbourhood, particularly Asia, as well as strategic
partners like the US and Russia, and,
o The third and final circle includes the rest of the world, including Latin America.

Way Forward for India

• There are several situations when lessons can be learned. China ceased purchasing Argentine
soybean oil in April 2010, after Argentina imposed import restrictions on China. India quickly
increased their imports of this oil, saving Argentina's oil industry from suffering a significant
financial loss.
• Brazil, one of the BRICS nations, is also dealing with the fact that a much more powerful China is
attempting to use BRICS as an extension of its own economic clout. India can establish a much
more equal relationship with Brazil that will strengthen its reputation as a trustworthy global
stakeholder.
• Additionally, India's accession to the Pacific Alliance might strengthen its economic links with
the organisation and counterbalance China's ambitious Belt and Road Initiative.
o Currently, Chile, Colombia, Mexico, and Peru are all Pacific Ocean-bound members of the
Pacific Alliance, a Latin American trading group. In the bloc, India was given "observer" status
in 2014.
• Latin America may be a willing partner for India as nationalism and anti-immigration attitudes
spread throughout the developed world.
• Given India’s renewed interest in FTAs and its outward-looking economic policies, this is an
opportune time for New Delhi to frame a Latin America policy that could be a win-win for India’s
automobile, pharmaceutical, IT, energy, and agricultural companies, while equally benefitting
Latin America’s commodity exporters and the region’s value-added manufacturing and service
sectors.

REGIONAL INSTITUTIONS

For More Study Material, Visit: studyiq.com Page no.

23
MERCOSUR
• Mercosur is a sub-regional bloc of South American Countries.
• Its purpose is to promote free trade and the fluid movement of goods, people, and currency
• Its full members are Argentina, Brazil, Paraguay, Uruguay and Venezuela.
• Its associate countries are Bolivia, Chile, Peru, Colombia, Ecuador and Suriname.
• The Mercosur trading bloc was established in 1991.
• Headquarter: Montevideo (Uruguay).
• Brazil has asked India to expand its commercial and multilateral footprints in South America by
expanding its relation with MERCOSUR.
• The South American economic bloc Mercosur has suspended Venezuela from it for violating the
bloc’s democratic principles and failing to meet its basic standards. The membership was revoked
by the Foreign Ministers of the four founding members of Mercosur — Argentina, Brazil, Uruguay
and Paraguay.

IBSA
Basics and Backgrounds
• IBSA is a unique Forum which was formalised by the Brasilia Declaration of 6 June 2003 and brings
together India, Brazil and South Africa, three large democracies and major economies from three
different continents, facing similar challenges.
• All three partners are developing, pluralistic, multicultural, multi-ethnic, multilingual and multi-
religious nations.
• Established in June 2003, IBSA is a coordinating mechanism amongst three emerging countries,
three multi ethnic and multicultural democracies.

Objective
• Contribute to the construction of a new international architecture
• Bring their voice together on global issues
• Deepen their ties in various areas
• IBSA also opens itself to concrete projects of cooperation and partnership with less developed
countries.

Principles

For More Study Material, Visit: studyiq.com Page no.

24
• The principles, norms and values underpinning the IBSA Dialogue Forum are participatory
democracy, respect for human rights and the Rule of Law.
• The strength of IBSA is the shared vision of the three countries that democracy and development
are mutually reinforcing and key to sustainable peace and stability.

Structure
• IBSA keeps an open and flexible structure.
• IBSA does not have a headquarters or a permanent executive secretariat.
• At the highest level, it counts on the Summits of Heads of State and Government.

Initiatives of IBSA
• IBSA fund has formed various developing projects in needy countries like- Vietnam, Cambodia,
Burundi and so on.
• The external ministries of the three countries are actively supporting each other for a coordinated
grouping.
• India has been coordinating the IBSA Visiting Fellows Programme through the Delhi-based
Research and Information System for Developing Countries.

Cooperation of IBSA Countries

• Political Coordination
• Sector Cooperation, through 14 Working Groups
• IBSA Facility for Poverty and Hunger Alleviation (IBSA Fund)
• People-to-People fora (Involvement of other actors beyond the Executive, e.g., civil society)

IBSA’s Declaration on South South Cooperation

• SSC as a common endeavour of peoples and countries of the South. It notes the shared histories,
understanding and beliefs and developmental experiences of the global south.
• Developing Countries as developing Partners: Developing countries engaged in SSC are not
donors and recipients but developing partners.
• Solidarity and the spirit of sharing are the primary motivations for SSC.
• Voluntary in nature: SSC is voluntary in nature and not obligatory like Official Development
Assistance (ODA).
• Demand driven process: Partner countries determine the priorities in the SSC projects. Primary
responsibility towards development rests with the States themselves under their ownership and
leadership.
• Respect for national sovereignty is at the core of SSC. It is guided by principles of respect for
national sovereignty; national ownership and independence; equality; non-conditionality; non-
interference in domestic affairs; and mutual benefit.
• Complements North-South Cooperation: South-South Cooperation serves as a complement to
and not as a substitute for North-South cooperation, in supporting the acceleration of the
development agenda. It calls upon the global North to honour its ODA commitments fully, scale
up existing resources and commit additional resources to provide the necessary means to achieve
the goals of the Paris Agreement on Climate Change as well as implementing SDGs.

INDIA-BRAZIL-SOUTH AFRICA (IBSA) Dialogue Forum

• IBSA Dialogue Forum is an international tripartite grouping for promoting international
cooperation between India, Brazil and South Africa.

For More Study Material, Visit: studyiq.com Page no.

25
• IBSA was formally established by the Brasilia Declaration of 6 June 2003 by external affairs
ministers of India, Brazil and South Africa.
• It represents three important poles for galvanising South-South cooperation and greater
understanding between three important continents of the developing world namely, Africa, Asia
and South America, facing similar challenges.
IBSA Mechanism for Development Cooperation – IBSA Fund for the Alleviation of Poverty and
Hunger
• It was set up with the objective of facilitating the execution of human development projects to
advance the fight against poverty and hunger in developing countries.
• Each member country contributes $1 Million annually to this fund.
• The IBSA Fund is managed by the United Nations Office for South-South Cooperation (UNOSSC).
• With a cumulative contribution of $35mn, IBSA Fund has thus far partnered 19 countries from the
Global South for implementing 26 projects over the last decade. 62.4 percent of the IBSA Fund has
been devoted to Least Developed Countries (LDCs).

Relevance of IBSA vis-à-vis BRICS

• Although IBSA’s visibility in international affairs pales against that of the yearly BRICS Summits,
the three IBSA members have identified themselves as partners because they share a set of
fundamental notions about global order.
• All three IBSA members are multiparty democracies and are thus able to freely debate how to
implement difficult reforms necessary to boost growth in a messy and complex political context.
These matters cannot be discussed openly at BRICS Summits.
• In the same way, issues related to human rights and civil society are not mentioned when the
BRICS meet. During the 2011 IBSA Summit, the Brazilian President succeeded in including the
“Responsibility While Protecting” (a concept that seeks to qualify and refine the “Responsibility
to Protect” concept) into the final declaration, something which it promptly failed to do several
months later at the 4th BRICS Summit due to Chinese and Russian opposition.
• As emerging countries that are not yet fully integrated in today’s international structures, they
all consider current structures to be unjust and in need of reform. While the degree of rejection
of some institutions differs – for example, India is far more hostile towards the Non-Proliferation
Treaty (NPT) than Brazil – all three agree that they deserve more institutional responsibility,
including permanent seats on the UN Security Council.
• IBSA provides an intimate setting undisturbed by at times strained bilateral ties – after all,
relations between India, Brazil and South Africa are simply too incipient to hit any meaningful
roadblocks or clashes of interest.

Way Forward
• Strengthening IBSA is a positive step for the BRICS perspective also.
• It will then strengthen the voice of BRICS in other international institutions and forums.
• As IBSA’s main aims are-to contribute to the construction of a new international architecture,
bring their voice together in the world and to deepen their ties in various areas; IBSA has definitely
its unique importance in the global south.

PYQs
Q. What is the significance of Indo-US defence deals over Indo-Russian defence deals? Discuss with
reference to stability in the Indo-Pacific region. (2020)

For More Study Material, Visit: studyiq.com Page no.

26
 Q. ‘The time has come for India and Japan to build a strong contemporary relationship, one involving
global and strategic partnerships that will have a great significance for Asia and the world as a
whole.’ Comment. (2019)

Q. What introduces friction into the ties between India and the United States is that Washington is
still unable to find for India a position in its global strategy, which would satisfy India’s national self-
esteem and ambitions’. Explain with suitable examples. (2019)

Q. Economic ties between India and Japan while growing in recent years are still far below their
potential. Elucidate the policy constraints which are inhibiting this growth. (2013)

Q. “If the last few decades were of Asia’s growth story, the next few are expected to be of Africa’s.”
In the light of this statement, examine India’s influence in Africa in recent years. [2021]

Q. The newly tri-nation partnership AUKUS is aimed at countering China’s ambitions in the Indo-
Pacific region. Is it going to supersede the existing partnerships in the region? Discuss the strength
and impact of AUKUS in the present scenario. [2021]

Q. Indian diaspora has a decisive role to play in the politics and economy of America and European
Countries’. Comment with examples. [2020]

Q. Increasing interest of India in Africa has its pros and cons. Critically examine. [2015].

For More Study Material, Visit: studyiq.com Page no.

27