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President Barack Obama will become the first President of the United States to attend India’s Republic Day parade on January 26. But more importantly, it will also be his first visit to India since the National Democratic Alliance swept to power led by Narendra Modi. With India-US relations having plateaued since the heady days of the George W Bush-Manmohan Singh era, expectations are high on both sides that the visit will detangle many knotty issues that have plagued ties between the two nations.
Here’s a quick list of what will likely top the discussion agenda.
1) Transfer Pricing Agreement
Resolution of transfer pricing issues will be another key concern, and India is set to sign an agreement with the US to resolve such disputes. The agreement will likely serve as a template for settling such rows with multinational companies based in other nations.
India is targeting signing the advance price agreement with the US in three months, but only after the framework for pending cases starts yielding results. The major concern for multinational companies and other nations is the mark-up and tax dues on costs for services provided. Companies currently affected by transfer pricing payments include Cairn India, Shell, IBM, Nokia and Vodafone
2) Trade Ties
Regional trade is likely to be "near the top" of the agenda during President Barack Obama's India trip as expanding trade ties within the region can be a "game-changer", Assistant Secretary of State for South and Central Asia Nisha Desai Biswal said ahead of Obama’s arrival. (Read: Hoping for a breakthrough)
"Regional trade is likely to be near the top of the agenda," she told a Washington audience. This is of particular significance given new governments in at least three major South Asian nations – India, Afghanistan and, most recently, Sri Lanka.
3) Visa, labour laws and intellectual property right (IPR)
Indian companies, particular in the IT and ITES sector, continue to have problems with a tightening visa regime in the US, where anti-immigration groups, including Republicans and Democrats, claim that foreigners are taking US jobs at lower prices.
US companies, on the other hand, have been demanding changes in Indian labour laws, which currently make it hard for employers to hire or let go of employees easily. US companies also have differences with Indian intellectual property rights, which they feel allow Indian companies to get around global patent regimes. This is particularly true of the pharmaceutical sector, where Indian companies have taken the lead in generic versions using the process-based exemption provided in Indian patent laws.
4) Climate Change Talks
Both sides have made it clear that climate change talks will be a priority area, especially after recent climate talks in Lima nearly collapsed over severe differences between developing and developed nations. US Deputy National Security Advisor for Strategic Communications, Ben Rhodes has said that finding a common position on climate change would be on the "front burner". “Cooperation on clean energy and climate change is critically important, both because the United States and India are working together to develop additional clean energy sources …," he said.
On the Indian side, Union Environment Minister Prakash Javadekar downplayed the issue, saying “Climate change is not the prime issue but one of the talking points of the Indo-US joint statement.” The central issues, he said, would be bringing clean technology and green planet fund for developing countries.
At the same time, he said that India’s right to grow couldn’t be compromised. “We don’t answer to pressure. We don’t act under pressure and our action will be stronger,” he said at a recent conference.
5) Civil Nuclear Agreement
A key concern also remains the liability clause in the Indo-US civil nuclear agreement. India has made it clear the US will have to accept liability rules on an 'as is where is' basis, because any amendment in the liability law is impossible. After having done all the heavy lifting on India's behalf at IAEA, the US feels New Delhi needs to be more attuned to the requirements of American business. The clause has been a sticking point in the momentum of the landmark civil nuclear agreement that implicitly recognised India’s right to civil nuclear energy technology, despite having tested nuclear weapons in violation of the NPT.
6) Sanctions against Russia
India continues to be at odds with US diplomatic positions, especially with regard to Russia, which it still considers a friendly state. India has refused to back the sanctions imposed against Russia by Western nations in the wake of its abetment of pro-Russian rebels in Ukraine. Meanwhile, US sanctions, coupled with a global crash in crude prices, have dealt a near-death blow to the Russian economy.
7) Af-Pak Policy
As always, the US’ Af-Pak policy will be under the spotlight. With the US pullout nearly complete and a new government in Afghanistan, both Pakistan and India are jockeying for strategic depth in Afghanistan. India alleges that Pakistan continues to nurture jihadist elements and terrorists within its borders to destabilise Afghanistan. Some of these non-state terrorist groups have also been used against India, such as the 26/11 Mumbai terror attacks.
India is hoping that US will finally draw a line in the sand against the Pakistani sponsorship of such terror modules. In an email interview to a weekly news magazine ahead of his visit, Obama said the US was working with Pakistan to address the threat of terrorism but had made it clear to Islamabad that "safe havens within Pakistan are not acceptable and those behind the Mumbai terrorist attack must face justice"
India is hoping that US will finally draw a line in the sand against the Pakistani sponsorship of such terror modules. In an email interview to a weekly news magazine ahead of his visit, Obama said the US was working with Pakistan to address the threat of terrorism but had made it clear to Islamabad that "safe havens within Pakistan are not acceptable and those behind the Mumbai terrorist attack must face justice"
