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A new paradigm in Indo-US relations

A new paradigm in Indo-US relations

Aparna Dutt Sharma, Chief Executive Officer, IBEF

Jan 26, 2015 10:48 AM

The occasion of India's Republic Day on January 26, 2015 heralded a momentous milestone in the relationship between India and the United States. US President Barack Obama became the first US President to be the Chief Guest at India's Republic Day celebrations. He also happens to be the first serving US President to have visited India twice. The visit highlighted the growing alignment between the geostrategic interests of the two countries and also the personal camaraderie between him and the Indian Prime Minister Mr Narendra Modi.

Most notably, the two sides made tangible progress on the historic civil nuclear agreement that was signed in 2008. On the issue of liability in case of accidents, the two countries have agreed to form an insurance pool. This will now allow nuclear power companies from US and other countries to set up facilities in India and will greatly enhance India's impetus towards clean energy for a sustainable future and create growth opportunities for both nations. The pool will be led by General Insurance Co and four other insurance companies amounting to around Rs 750 crore to indemnify companies while another Rs 750 crore will be provided by the Government of India. On his part, Obama used his executive powers to remove the condition that would have allowed US authorities to scrutinise nuclear material purchased by India even from other countries. From a larger perspective, they also agreed to take forward the strong partnership in meeting ambitious targets for renewable energy generation.

Defence cooperation has also been enhanced with the in-principle agreement towards co-development and co-production of advanced defence projects that will enhance India's indigenous capabilities in defence manufacturing. Other areas that were identified by the PM as key components of the Indo-US relationship included science, technology, innovation, agriculture, health, education and skills. Mr Obama announced US$ 4 billion in US backed investment and lending to India, which includes US$ 2 billion by the US Trade and Development Agency towards renewable energy, US$ 1 billion to small and medium sized enterprises in underserved rural areas of India by Overseas Private Investment Corporation and US$ 1 billion by US Export-Import Bank for exports of American products. It has also been agreed that the two sides will commence dialogue on the Bilateral Investment Treaty to boost bilateral investment and simplify the business environment; and also on the Totalisation Agreement to provide social security tax benefits to millions of Indian workers in the US.

The present momentum and commitment towards improving bilateral ties signifies the extent of natural synergies and potential between the world's oldest democracy and the world's largest democracy. It is truly a partnership that is of critical importance to the progress of both these nations and to the world at large. As Mr Modi rightly expressed during the joint media interaction, "The success of this partnership is important for our progress and for advancing peace, stability and prosperity around the world."

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