Economic
Highlights
New Delhi, 18 April 2022
2+2 Dialogue
ARMS BAZAAR LURES US
By Shivaji Sarkar
The recent virtual meet with the US
exemplifies that India does a great balancing act magically prioritising
billions of business sops to mighty powers and make the Americans announce,
“Energy imports from Russia are not banned and do not violate the US’ sanctions
amid the war in Ukraine”. The US means business and profits.
Prime Minister Narendra Modi and US President
Joe Biden’s virtual meet, followed by the 2+2 Summit between Foreign Minister S.
Jaishankar and Defence Minister Rajnath Singh with their counterparts Antony
Blinken and Lloyd Austin in Washington, stress on hefty $150 billion business
agenda and expanding its deals in stream for the last many years on nuclear,
space and cyber security. The energy import from Russia is a minor irritant as
it is a mere 2 per cent of Indian business that would be in Russian ruble. India’s
business offers huge saving to the US arms’ producers, who have raked in $5.436
billion profits for several trillion dollar sales since 2001 largely from the Indian
subcontinent. The US is lured by the expanding new arms bazaar.
“India has concerns about the links between
Russia and China,” US Press Secretary explained after the 2+2 Defence
Ministerial meeting between the two countries to the American press. In
response to why India does not choose to opt for a harsh tone against
Russia, US officials emphasised New Delhi’s diplomatic approach to
ensure regional security. The US official said,
“India, of course, is facing a very tense
situation along the Line of Actual Control. And when India sees the tight
links between China and Russia, that’s obviously going to impact their
thinking”.
The US understands that even if its companies
set up manufacturing units in India, as per its ‘Make in India’ priority, they
will repatriate huge profits and the 20 largest US arms’ manufacturers will
continue to create employment at home. A country in economic crisis, particularly
post-Afghanistan scenario, finds the Indian magic touch soothing even as
European NATO allies remain cautious on the Ukraine war.
The gap between India and the US on the
Ukraine crisis was evident. The White House expansive preamble spoke of close
consultations on the consequences of the brutal war. Prime Minister Modi was
unequivocal on Bucha killings in Ukraine. The terse Indian preview outlines a
broader agenda and exchange of views on developments in South Asia,
Indo-Pacific region and global issues of mutual interest.
Both sides look forward to India’s co-hosting
of the Indo-Pacific Armies Chiefs Conference (IPACC) and Indo-Pacific Armies
Management Seminar (IPAMS) in 2023. Rajnath Singh visited the Pacific command
at Hawaii for greater cooperation. In support of Indian military’s expanding
operational reach and emerging opportunities for cooperation in the Indian
Ocean and the wider region, the ministers welcomed regular bilateral logistics
operations such as replenishments at sea, air-to-air and ground-refuelling and
committed to increasing such cooperation, including through the Logistics
Exchange Memorandum of Agreement (LEMOA).
Both sides also reaffirmed the importance of
regular bilateral and multilateral exercises, including the Malabar exercise
with the inclusion of Australia, the tri-service Tiger Triumph exercise, the
multilateral Milan naval exercise, the bilateral Yudh Abhyas and Vajra Prahar
Army exercises, the bilateral COPE India air exercise, and Indian participation
in Red Flag. They supported increasing the scope and complexity of these
exercises and emphasised on deepening cooperation between the Special Forces of
both countries.
India has separately entered into a nuclear
deal with Westinghouse and other firms committing to invest $30 billion in nuclear,
space and cyber security. They applauded the ongoing development of the
NASA-ISRO Synthetic Aperture Radar (NISAR) satellite, planned for launch from
India in 2023. The NISAR mission will collect data vital to tackling the
climate crisis. The space ventures would have $5 billion or Rs 38,000 crore investments.
The ministers also looked forward to the convening of the next India-US Civil
Space Joint Working Group in 2022.
Westinghouse is keen on setting up six
nuclear power reactors worth Rs 60,000 crore. It will also invest Rs 10,000
crore for developing exportable mini-modular reactors. Under South Asia
Regional Energy Partnership, USAID and private American firms to build Smart
Grid Knowledge Centre for Rs 3800 crore. The US would invest $2 billion or
about Rs 15,000 crore in the clean energy agenda.
The US International Development Finance
Corporation (DFC) will invest $500 million in debt servicing for integrated solar
photovoltaic plant in Tamil Nadu under Modi’s International Solar Alliance with
annual capacity of 3.3.gigawatts. Bill Gates’ Breakthrough Energy
Ventures-backed 1366 Technologies plans to invest $300 million to set up a
2-gigawatt (GW) solar wafer and cell manufacturing facility in India under
production-linked incentive (PLI) scheme. The DFC will also invest $350 million
for multiple projects in India in financial services, health infrastructure,
renewable energy and food security. These businesses are projected to generate
billions of dollars in profits to the US firms.
Virtually all US majors are making a beeline
to India. The US aerospace company Lockheed Martin is open to setting up a
maintenance, repair and overhaul facility in India for F-21 to sweeten its bid
for the 114 fighter aircraft for the Indian Air Force. Meanwhile, US-based
Fisker Inc sets up its India headquarters in Hyderabad for electric vehicle
manufacturing.
The summit is beneficial to the US. While it
proposes to invest large sums in multiple projects and many of these very
strategic as the US tries to capture the Asian market. It saves huge sums as
India is cost-effective and provides easy access to the Asia market at low
cost. The South Asia and Southeast Asian economies as per the US perspective
have hefty foreign exchange reserves, stronger financial systems and
unassailable place as the world’s manufacturing powerhouse. Their stock markets
like those in the developed world have posted gains during the pandemic while
other emerging regions lost.
This strategic interest makes the White House
ignore India’s deals like oil and other purchases from Russia. It is as per
their estimate not more than 2 per cent of overall Indian engagements. The way
the US intends to proceed is expected to give it a wide leeway and boost a
sagging economy. The Indian soft push helps the US gain in monetary terms and
India develops a manufacturing Asian export bazaar in a span of over a decade.
---INFA
(Copyright, India
News & Feature Alliance)
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