India's domestic economic expansion depends heavily on its relationship with the United States, particularly in terms of attracting U.S. companies to invest in India with their advanced technology and capital. The economic success of Gujarat was undoubtedly a major factor for Modi's general election victory, and promoting India's economic development is thus the new leader's top priority. India is eager to introduce more foreign direct investment--to strengthen infrastructure construction and improve the investment environment, while also promoting industry development, boosting employment and stimulating economic growth. During his trip to the United States last year, Modi welcomed more U.S. companies to invest in India. As India actively seeks to develop renewable energy and its manufacturing sector, the United States is undoubtedly the ideal partner for India.

Developing relations with the United States is also instrumental in helping India to become a larger force in the Asia-Pacific region. The United States has long expected India to participate more in Asia-Pacific affairs. To this end, the two countries issued a joint statement on affairs particularly related to the Asia-Pacific and Indian Ocean region. The statement said that as the world's two largest democratic countries connecting the Asia-Pacific and the Indian Ocean region, a close U.S.-Indian partnership is indispensable for the peace, prosperity and stability of a vast proportion of the world stretching from Africa to East Asia.

The statement stressed that the two countries will cooperate to accelerate infrastructure interconnectivity and economic integration in South Asia, Southeast Asia and Central Asia. The statement also explicitly referred to the South China Sea issue. The Times of India, one of India's major media outlets, hailed that India needs no longer to hide its tilting in favor of the U.S. "pivot to Asia" policy.

Developing relations with the United States will allow India to have more leverage when dealing with other regional powers like China and Russia. In addition, India will likely need Washington's help if it hopes to fulfill its ambition to become a permanent member of the UN Security Council and to join the Nuclear Suppliers Group and the APEC organization.

Dim prospects

There are obvious barriers that may interfere with future U.S.-Indian relations. While India seems eager to work with the United States as long as it serves its practical interests, a strategic alliance between the two is unlikely. Meanwhile, Washington is pressuring New Delhi to become its partner in the Asia-Pacific. Though India may give a certain degree of support, India's stubborn national character and its non-aligned policy will temper any idolization of the United States.

As both Moscow and Washington cater to New Delhi, India must carefully play both sides. However, as the United States and its allies impose sanctions to weaken Russia, India could easily get caught in the middle. Before Russian President Vladimir Putin's arrival in New Delhi, the Indian Government publicly declared that it does not support the Western sanctions on Russia. Crimean leader Sergey Aksyonov was also included in the list of the Russian delegation, prompting U.S. State Department spokeswoman Jen Psaki to remark that the United States was "troubled" by his presence in New Delhi. She also mentioned India's new nuclear and defense agreements with Russia, saying, "Our view remains that it's not time for business as usual with Russia."

Meanwhile, New Delhi also showed dissatisfaction over Washington's closer relationship with Islamabad, claiming financial support to Pakistan casts a shadow over U.S.-Indian relations. In addition, large divergences loom over the climate change issue. India, a major carbon emitter, refuses to set a target for its total emission reduction, arguing that it has little scope to reduce its emissions as a developing country.

A top concern of U.S. investors is India's fragile investment environment and burdensome bureaucracy. In spite of the Indian Government's efforts, administrative inefficiencies will continue to plague the country's foreign business prospects. When it attempted to tackle inefficiencies in its coal industry, for instance, reforms were met with the largest industry strike since 1977, with nearly 50 million workers participating. To quell the protests, the Indian Government was forced to state that it has no intention to privatize the coal industry, and pledged to protect Indian state-owned coal companies and the interests of workers. The backlash that followed this reform and the government's response exposed weakness in the country's ability to reform its economy or effectively manage crises.

The author is an assistant researcher with China Institutes of Contemporary International Relations

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