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GORKHALAND: DEMANDS FOR ASTATE WITHIN A STATE

CHALLENGES TO KENYAN NATIONALSECURITY: AN ANALYSIS CHALLENGES TO KENYA'S

NATIONAL SECURITY : AN ANALYSIS

MODI-TRUMP MEET:TAKEAWAYS & CHALLENGES

TRUMP-MODI MEET: TAKEAWAYS & CHALLENGES

TABLE OF CONTENTSExecutive Summary

Challenges: Immigration & Ease of Doing Business

Commercial Trade & Investment

US-India Defense Relations

1

2

4

6

US Arms Sale & Make in India Initiative

Challenges

9

11

China & Pakistan: Rattled 12


EXECUTIVE SUMMARYOn June 26, 2017, Indian Prime Minister Narendra Modi embarked upon his first meeting with US

President Donald Trump. The meeting comes at a crucial juncture, where the United States and India are

faced with multiple strategic concerns involving defense and security, trade and commerce as well as

immigration.

The takeaways from the meeting depend largely on which aspect of US-India ties is focused upon. Credibly,

the visit was a reflection of Modi’s approach to diplomacy; establishing a personal equation with Trump

before engaging in discussions on outstanding issues, while laying emphasis on areas of common ground

and opinion. The meeting proved to be a starting point between Modi and Trump towards enhancing

cooperation on critical areas. Overall, the Indian intent can be summed up as aiming to preserve and

reaffirm strategic commitments between the US and India.

While India scored well on deepening security cooperation, including counterterrorism efforts, trade ties,

and its associated barriers, leave much to be desired. Amidst the backdrop of China’s push for its ‘One Belt

One Road’ initiative, setbacks to India’s IT industry, and the Modi government’s ‘Make In India’ initiative,

the meeting brought with it, a number of developments to take home. That being said, Modi’s avoidance of

addressing outstanding issues pertaining to immigration for instance, given the Trump administration's

conservative stance, was clear. More so, the meeting was characterized by a notable need to exercise hard

power, as opposed to India’s traditional emphasis on soft power. The US-India relationship has thus evolved

into a transactional one under Trump. Nonetheless, the meeting when examined in context with the

strategic aims of both the US and India offers a number of clues on what to expect from US-India ties under

Trump and Modi.

1


COMMERCIAL TRADE & INVESTMENT

Trump’s political rhetoric has thus far been consistently anti-globalisation with policy developments such as

that on the Paris (Climate) Accord, echoing the same. In stark contrast, India has been a notable beneficiary

of globalization. Bilateral trade between the US and India has witnessed growth over the past three years,

although there remains a gaping trade deficit. Trade between the two countries is reportedly at 115 billion

USD with 30.9 billion USD in India’s favor. Critical sectors including defence and energy as well as others

including IT, manufacturing, and the import and export of goods and services remain a priority but are

susceptible to persisting barriers to doing business in India, be it administrative inefficiency, overbearing

regulatory norms, infrastructure inadequacies, or inconsistencies in a broader political consensus on

economic liberalisation.

Following Modi’s visit, US Vice President Mike Pence identified defense, energy and civil aviation as three

critical industries for trade between the US and India, specifically with regards to US exports. In addition,

both governments prioritised a comprehensive review of trade relations, including addressing overcapacity

in industrial sectors involving the expediting of “regulatory processes; ensuring that technology and

innovation are appropriately fostered, valued, and protected; and increasing market access and subsequent

commercial trade in areas such as agriculture, information technology, and manufactured goods and

services.” Both countries’ leaders vowed to address issues and differences which existed prior to Modi’s

visit, which inhibits bilateral trade. As the US remains India’s largest export market, the US administration

remains convinced that India would do well to shed its traditionally protectionist approach where greater

market access to India would be of benefit to US products.

2

President Trump and Prime Minister Narendra Modi after their joint press briefing

MODI-TRUMP MEET: TAKEAWAYS & CHALLENGES

3

Examining the joint statement by President Trump and Prime Minister Modi, energy trade and cooperation

has been given a notable emphasis. Elaborating further, the Trump administration has expressed interest in

setting up smart grids and energy storage infrastructure in addition to clean fuel technologies, liquefied

natural gas (LNG) exports and fossil energy optimization. Civil nuclear cooperation although with great

prospects has faced hurdles. The issues in this regard have largely to do with US firm Westinghouse Electric

Co. which filed for bankruptcy this year, necessitating the renegotiation of their pact with India’s Nuclear

Power Corporation of India. Under this pact, an approximately 20 billion USD deal was brokered to build six

nuclear power units in the Indian state of Andhra Pradesh.

Among the most notable developments, was Prime Minister Modi’s meeting with twenty-one US CEOs

from across several leading businesses, including Google, Microsoft and Apple to name a few. While past

Indian governments have routinely stuck to a traditional government to government engagements, Modi’s

direct outreach to corporate America strikes an unconventional and welcoming note. A meeting of this

scale and significance between an Indian head of state and corporate leaders brings much to look forward

to, especially considering the positive momentum surrounding India’s scheduled rollout of the Goods and

Services Tax (GST) in July this year. In addition Trump’s endorsement of the GST, Modi’s meeting with

leading CEOs is indicative of enhanced investor confidence in India, which has witnessed considerable

progress during his term as Prime Minister. Enhancing commercial trade and investment prospects amidst

Trump’s anti-globalisation outlook, thus, warranted Modi’s engagement with business leaders.

Prime Minister Narendra Modi with Lockheed Martin CEO, Marillyn Hewson


4

Prime Minister Modi’s meeting with US President Trump and American CEOs brings much to the table on

bilateral relations between India and the US. That being said, the meeting lacked any substantial

agreements as much of what to expect was grounded in statements from both leaders.

Challenges to investment into India, particularly in the context of manufacturing, has more to do with

current conditions in India than American preferences. Legal processes, administrative processes, and

inadequate infrastructure remain persistent barriers which reaffirm American apprehensions to doing

business in India. More so, this hinders prospects for manufacturing, and thereby, India’s prospects as an

export hub. Although both governments have prioritized a review of bilateral trade, it remains to be seen

how quickly progress is made on the same, especially given Trump’s, albeit verbal, discouragement of US

investment abroad.

In the same context, Trump’s ‘America First’ approach enhances dependence on defense purchase and

procurement while manufacturing in this regard, has much progress left to be made. The challenges in this

sphere are centered on ambiguities in procurement and import procedures and processes as well as

questions over the ability of India’s arms industry to absorb advanced technology transfers and preserve

their integrity. As such, while Modi will seek to pull American investment into India, Trump will seek wider

market access, particularly with regards to expediting regulatory processes in exporting goods to India, and

thus, seek a concession.

CHALLENGES: IMMIGRATION & EASE OF DOING BUSINESS

President Trump during his election campaign with Shalabh Kumar, Chairman of the Indian American Advisory Council


5


6

The clear avoidance of critical issues regarding immigration and concerns over anti-immigrant violence

amongst Indian nationals and the Indian diaspora residing in the US, raises a number of questions. As will be

discussed later, the Trump administration’s crackdown on H1B visas, which permits non-US citizens to

work and reside in the United States, bears significant implications for Indian companies with a presence in

the country, particularly in the IT industry. Although India’s formal and symbolic entry into the

International Expedited Traveler Initiative was announced, this only makes transit into the US easier for

Indian travelers; the issue in concern here is obtaining a visa prior to travel.

A proposed hike in sponsorship fees and a reduction in the total number of global H1B visa applications has

raised concerns among Indian nationals seeking US employment as well as prospective employers which

sponsor the required fee to petition H1B applications. In addition to the fact that the IT industry is amongst

India’s predominant investments into the US, approximately 60 percent of the Indian It industry’s revenue

originates from the United States. Notably, much of the industry’s gains thrive on the employment of Indian

nationals, who tend to accept lower salary thresholds than their American counterparts. This additionally

falls in line with instances where comparatively expensive American workers have been replaced by Indian

nationals. Reportedly, approximately 70 per cent of H1B visas is annually granted to Indian nationals.

According to multiple sources, Indian IT companies tend to “flood” H1B visa applications, increasing

chances of granting visas to Indian applicants, for employment at their offices in the US. Such methods are

used to unfairly overcome difficulties in the H1B lottery-style system. As such, Trump has announced

executive measures to implement extreme vetting procedures for H1B visa applications, which now face

severe delays, and investigate applications for indications of immigration abuse.

As seen in countries such as the UK, a reversal of stringent norms for obtaining work permits remains an

unlikely concession from the Trump administration. More so, Modi’s ability to persuade Trump on critical

issues will be watched closely by Indian citizens and diaspora in the US, who in turn, function an influential

presence within political circles in the US Congress, and impact policy decision making, e.g. 1999 Kargil War

and the 2008 US-India Civil Nuclear Agreement.

Issues pertaining to trade and immigration overall, remain difficult to navigate. With Trump’s unlikelihood

to kowtow on stringent visa rules, how both the US and India progress forward, largely relies on how India

facilitates US exports to and investments into India following the rollout of the GST and additional reforms.


7

Though no MoU or agreements were signed during the PM visit, defense cooperation and trade forms a

crucial component of the US-India strategic partnership. According to the Stockholm International Peace

Research Institute (SIPRI), India remained the world’s biggest arms importer over the past five years, and

increased its share of global arms imports from 9.7 percent in 2007–11 to 12.8 percent in 2012–16. The US

comprises 14.5 preceded of total defense imports preceded by Russia at 68.29 percent, which continues to

be a major player in the Indian defense market. However, since 2008, U.S-India defense trade has increased

from roughly 1 billion USD to over 15 billion USD as per the official US- India Defense Relations Fact Sheet,

released by the US Embassy in India, indicating a burgeoning defense engagement between New Delhi and

Washington.

The following are some of the upcoming defense deals and agreements that are in advanced stages of

development and are expected to be signed between US and India in the following months:

US-INDIA DEFENSE RELATIONS

SEA GUARDIAN UNMANNED AERIAL VEHICLES (UAV)

In June, IHS Janes reported of the US approving sale of 22 Sea Guardian UAV’s (a maritime version of the

Predator B UAV) to India under its Foreign Military Sale (FMS) at around 3 billion USD. Given India’s forays

into enhancing its maritime surveillance and reconnaissance capabilities, it remains likely that the deal will

soon see the light of the day in the upcoming months.

COMMUNICATION AND INFORMATION SECURITY MEMORANDUM OF AGREEMENT (CISMOA)

Following India’s signing of the bilateral Logistical Exchange Memorandum of Agreement (LEMOA) in

August 2016, which was preceded by the General Security Of Military Information Agreement (GSOMIA) in

2002. These agreements are two out of the four ‘foundational agreements’ that the US typically signs with

its defense partners. Communications and Information Security Memorandum of Agreement (CISMOA)

and Basic Exchange and Cooperation Agreement (BECA) for Geospatial Intelligence are the two pending

ones. These agreements are expected to facilitate innovative and advanced opportunities in defense

technology and trade cooperation. Reports indicate that CISMOA would allow the United States to supply

India with encrypted communications equipment and systems, which enables secure peacetime and

wartime communication between high-level military leaders as well as to Indian and US military assets

including aircraft and ships. BECA would set a framework which enables sharing of sensitive data to aid

targeting and navigation. A veiled reference to this was witnessed under the latest joint statement released

as part of the ‘white shipping’ data sharing agreement aimed at enhancing collaboration on maritime

domain awareness.


8


9

PM Modi’s US visit was preceded by signing of an agreement between US aviation giant Lockheed Martin

and India’s Tata Advanced Systems Limited (TASL). According to the agreement, Lockheed Martin has

agreed to transfer its F-16 manufacturing plant in Texas to India and is considered to be economically

beneficial and at the same time majorly support the ‘Make in India’ initiative launched by the incumbent

Narendra Modi-led BJP government aimed at boosting the manufacturing industry in general and

strengthening the Defense Industrial base in the country in particular. However, there continues to be

multiple economic, political and operational challenges that impinge upon the successful implementation of

the deal that continues to persist at the time of writing.

Furthermore, in 2012, TASL and Lockheed Martin established a joint venture to produce C-130J Super

Hercules airframe components. The 50th empennage was delivered in September 2016. TASL also has a

joint venture with Sikorsky, established in 2011, to co-produce S-92 helicopter cabins. In June 2016, TASL

and Boeing announced a Hyderabad-based joint venture to manufacture components for Apache

helicopters and collaborate on integrated systems development opportunities in India.

US ARMS SALE & 'MAKE IN INDIA' INITIATIVE

F-16 PRODUCTION LINE IN INDIA

M777 HOWITZERS

In December 2016, the United States and India signed a deal worth approximately $732 million to provide

the Indian Army with 145 M777 Howitzer guns out of which 120 guns will be manufactured indigenously by

Mahindra Defense. The company is expected to conclude an offset agreement which is estimated to be

worth 200 million USD.

US-INDIA DEFENSE TECHNOLOGY & TRADE INITIATIVE (DTTI)

The DTTI was launched in 2012 aimed at deepening collaboration on defense co-development and co-

production. Furthermore, the India Rapid Reaction Cell (IRRC) has been implemented in 2015 focused

exclusively on advancing the DTTI. There are seven DTTI Joint working groups that continue to work

discuss a range of technologies and platforms for potential co-development including participation in the

Future Vertical Lift Programme as well as the advanced ground combat vehicle The latter is under review

and is expected to be a trilateral programme worked in close coordination with the US, India, and Israel. The

DTTI has also facilitated an acquisition of the Mobile Electric Hybrid Power source and the Nuclear-

Biological-Chemical (NBC) gear.


10

Most of the US defense supplies to India have been through the FMS route. This includes the C-130J

Hercules transport aircraft, M 777 howitzer as well as the AH-64D block III Apache attack helicopters and

allied equipment. Though this procurement cycle is comparatively less cumbersome and is best suited for

meeting requirements of the armed forces as it involves direct negotiations between the two governments,

there continues to remain some issues and certainly not the best means for the Indian industry in the long

run in terms of developing a stable indigenous defense industrial base.

Given the nature of the procedure, the FMS does not involve a multi-vendor participation and thus it does

not necessarily guarantee the benefit of a competitive contract and the resultant price. Furthermore, the

receiver, in this case, India is liable to adhere to stringent end-use monitoring agreements, which is an

integral part of most of the agreements. Finally, except in the case of M 777, the FMS route is also

unsustainable for long-term, as it involves a one-time purchase and typically does not add any significant

technological know-how to the Indian industry. Transfer of technology (ToT) is important for Indian

industries to kick-start the much-needed defense industrial base and generate economic spin-offs.

CHALLENGES

American M-777 Howitzers in action


11

Furthermore, despite the opportunities, certain challenges continue to remain in terms of investments in

the Indian defense industry. In this regard, as precedently suggests, defense procurement timeframes take

a longer duration of time to fructify and are typically measured in years. Lack of transparency in the

procurement process and offset regulations coupled with red tapism also pose a set of serious challenges.

Moreover, poor infrastructure and skills gaps add difficulties in the manufacturing sector, which is further

augmented by substantial payment delays.

Keeping these challenges in mind and with the aim of getting a larger share of the Indian defense market,

coupled with the growing strategic partnership between US and India, American defense companies are

more likely to engage Indian vendors as has been witnessed in the aforementioned cases. Though no

significant transfer of sensitive technology remains possible at this point in time. However, prospects for

joint research and development of military equipment between India and US, especially in the private

sector domain remains likely in the following months.

Former US Defense Secretary Ashton Carter and former Indian Defense Minister Manohar Parrikar on the signing of the DTTI


12

The meeting between US President Trump and Indian Prime Minister Modi, caused a level of concern

between bilateral allies, China and Pakistan. Although their bilateral relationship can be described as a

marriage of convenience, the unwillingness of the Trump administration to reign in Pakistan through

incentivising measures such as economic aid or otherwise signifies a departure from the approach taken by

previous US governments.

While the two leaders’ joint statement relayed a stern warning to Pakistan on terrorism, the US designation

of Hizbul Mujahideen chief Syed Salahuddin as a global terrorist comes a symbolic blow to Pakistan’s

diplomacy efforts. This is especially so given previous US governments’ relative compliance with Pakistan.

Chinese state media pieces critiquing India’s economic engagement in South Asia and its enhanced

cooperation with the US, can also be attributed to Trump’s notable shift in tone.

The Chinese media reaction in particular stems largely from frustration at the country’s inability to deter

India’s regional economic and security engagement, and keep its rival in check through its support to

Pakistan. However, this compels further thought, in the context of the South China Sea dispute.

Symbolically, the joint statement outlined Trump’s support of India and enhancement of maritime defense

cooperation includes the sales approval of surveillance drones, to monitor movements in the Indian Ocean;

Chinese Navy submarines for instance. This is the first such approved purchase by a non-NATO country.

More so, the sale marked a sharp contrast to objections from previous US governments. Sale of sensitive

military hardware for surveillance purposes has traditionally faced apprehensions, vis-a-vis stability in

South Asia, considering territorial disputes between India and its neighbors, Pakistan and China. China is

thus left ruffled at the prospect of continued US presence in what it attempts to view as its geopolitical

sphere of influence. With regards to Pakistan, Trump’s endorsement of India’s increasing engagement in the

land-locked country drew the ire of sections of Pakistan’s political opposition and local media.

Beyond bilateral ties, the meeting between Trump and Modi sets the tone for India as a US partner for its

strategic objectives in Afghanistan and the wider region, vis-a-vis China. As both heads of state continue to

manage domestic pressures and carve out their geostrategic goals in their spheres of influence, much of

what the US and India will get out of each other, economically and strategically, will function pragmatically

towards mutual need and necessity, and seek to move on from one-sided dependence.

CHINA & PAKISTAN: RATTLED

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