‘We have a lot of economic friction’

Alyssa Ayres, Senior fellow for India, Pakistan and South Asia at the Council on Foreign Relations in New York, is a keen observer of India-US ties. During 2010-13, Ayres was deputy assistant secretary of state for South Asia under the Obama government. The author of, most recently, Our Time Has Come: How India is Making Its Place in the World speaks to BusinessLine on her book, India, the US and more. Excerpts:

The defence and strategic aspects of the relationship have really moved ahead and that is turning out to be one of the strongest components in US-India ties. But we have lot of economic friction. It was there in the Obama administration, George W Bush’s administration and even in the Clinton administration, which basically began opening up to India after decades of estrangement.

We have seen two-way trade increase fivefold in the last 15 years to about $115 billion last year, but it’s only about one-sixth of the US-China trade. So there is still a great distance to go. Yes, the Indian economy is not as large as China’s, but there is this ambition. Even though Trump is taking a different approach to answering India’s economic questions , we were previously not focussed on issues like trade deficit — India falls in the category of top ten economies with which US runs a trade deficit and that is becoming an issue — or specific tariff issues such as the one on Harleys. We are going to see some continued friction economically in any case because it has been that way.

Defence ties are offsetting the economic friction. The Defence Technology and Trade Initiative (DTTI) — begun under Obama — is continuing to move ahead. There is an interest to deepen military-to-military relationship. The announcement of the Indo-Pacific strategy puts India much more geographically central. Also, under the Trump administration, there is more vocal interest in an economic partnership with Afghanistan and, perhaps, a more vocal criticism of Pakistan. The Obama administration was clear with Pakistan about American concerns and the problem of terrorism in that country, but you did not see the President so vocal at that level because it was more of a private diplomacy.

On the intellectual property rights (IPR) issue, I am not terribly optimistic. India is very committed to its patent law. The section 3(d) is fairly unique with India’s Patent Law. It is a point of disagreement with the US but I really don’t see a tremendous groundswell in India to make changes to the law.

The National IPR Policy does not address that specific issue and it was focussed more on ways to encourage innovation. There has been great progress on the question of copyright so I actually don’t hear as much concern in the US on this issue, which used to be a big concern.

This is not solely a book on Indian business history but I felt it was important to make a reference to how some Indian businesses have become global conglomerates. That has led to further deepening of ties with the US because you see so many Indian business houses having deep stakes in the US. The people-to-people connection has also really grown.

Businesses are developing their own relationships by making deals, looking for new markets and carrying out their mergers, that is all in the private sector. You look to governments to help create a favourable policy environment but businesses are doing that on their own. But there has been a real geopolitical shift. The rise of China and a more general sense that China’s ambitions throughout the Asia-Pacific are not necessarily to see a balance of power in the region and India’s deep interest in seeing a balance of power here, the US seeks a balance of power here across the Indo-Pacific region, we have convergence on that question. And this has become a geopolitical convergence that wasn’t as recognisable 20 years ago as it is now. And that also contributed to bringing India and US much closer together.

We have been pretty constant on our H1-B policies since 2004. During the last part of Clinton administration, our levels of H1-B were up to 195,000 and then Congress did a reform of our immigration laws in 2004 and brought that level down to 65,000 with another 20,000 that could be accorded to people who studied in the US, making a total of 85,000. And that level has remained constant. We saw frictions between India and US on this question with the passage of the Zadroga Act and then its renewal in 2015, which doubled the visa fees applied for the high-skilled visa. Still, the percentage of these visas that have gone to Indians have increased. So of the high-skilled worker visa, India firmly dominates this, with 70 per cent for this type of visas goes to Indian citizens. The next closest nation is China with only nine per cent. So, it should be considered as an area of success but somehow it has become an area of friction. The only change that we saw the Trump administration make so far is on this issue of whether a two-year degree can be considered a high-skilled degree; the person has to have a four-year degree.

You had the tech industry say we need to retain these visas to keep the industry competitive. So far we haven’t seen any major discussion on this in the Congress. There are many Indian workers who are stuck for a very long time to get a green card. Those people cannot be kept in limbo forever.

The real concern now is the changing nature of work and keeping up with how technology is changing. And this is not just in technology but also in manufacturing with the coming in of robotics and artificial intelligence.

It is certainly about maritime security and certainly to strengthen freedom of navigation across the entire maritime space. It is certainly focussed on creating a partnership that helps keep Indo-Pacific region free and open. I have also seen governments, be it the US, India or Australia, offer that if China is interested in maintaining a free and open Indo-Pacific region then that’s great.

But there is nothing that should stop countries that think there should not be island building and seizure of territory in the middle of the South China Sea. The US, India, Japan and Australia have been very vocal about the issue. So this is about countries coming together who are clear about territorial sovereignty and freedom of navigation.

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