Outgoing US Ambassador lists trade, Russia, Atmanirbhar as friction points: ‘India must choose’

In a candid farewell speech, outgoing US Ambassador to India Kenneth I Juster on Tuesday talked about “frictions and frustrations” on the Indo-US trade and investment front, expressed Washington’s misgivings on Delhi’s decision to buy Russian defence equipment, and made a veiled critique of New Delhi’s Make-in-India and Atmanirbhar campaigns.

In an hour-long address at an event organised by the US Embassy and the Observer Research Foundation, Juster, who was appointed Ambassador in 2017, commented on the “growing restrictions” by India on market access for certain US goods and services, “increasing tariffs”, “new limitations” on the free flow of data, and a “less-than-predictable regulatory environment for investors”.

In a veiled reference to India’s purchase of the Russian-made S-400 air defence system, the Ambassador said that in this security environment, it is worth considering how effectively one piece of equipment will integrate into a broader system and strategy, and whether a particular purchase today will pave the way for — or preclude — future acquisitions of more sophisticated technology.

“… as systems get more technologically advanced, country A that does not get along with country B, will be less willing to sell technology that could potentially be compromised to country B,” Juster said. “And so, we haven’t hit that point yet, but that could come in the future … there are trade-offs India has to decide (as to) how much it matters to get the most sophisticated technology, to be as interoperable as it can be within its technology and potentially with other friendly forces, and to diversify its sources of procurement… (It) could be a constraint that ultimately affects the level of sophistication at the highest end of technology transfer and broader defence relationship,” the Ambassador said.

About the US CAATSA sanctions against Iran, North Korea and Russia, Juster said these were “never designed to harm friends and allies”. Rather than the lowest bidder for defence procurement, he called for “building closer operating relationships with a smaller circle of trusted, like-minded partners to best preserve India’s independence of action while protecting it from coercion”. “And, with which nations does India have the best chance of realising its own ambition of a vibrant, indigenous defence industrial sector?”

Juster counted Indo-US “coordination” at a time when Delhi is confronting “aggressive Chinese activity” as one of the achievements in defence and security in the past four years. “I believe that no country has as strong and robust a defence and counterterrorism relationship with India as does the United States. Simply put, no other country does as much to contribute to the security of Indians and India. Our close coordination has been important as India confronts, perhaps on a sustained basis, aggressive Chinese activity on its border,” he said.

However, the Ambassador said, there were frictions in the Indo-US trade and economic relationship. “Despite persistent efforts, we were unable to conclude even a small trade package.”

He added that Washington was also watching the Modi government’s Atmanirbhar campaign, to see how compatible it was with the US, and whether it leads to higher tariff and non-tariff barriers. “As the US and other companies find it increasingly difficult to operate in China… India has a strategic opportunity to become an alternative destination… But to fully seize this opportunity, the Indian government may well need to take further action,” Juster said.

Noting that the Make in India push comes as India is “seeking to be… an exporter to the world,” he said, “It will limit India’s capacity to truly integrate into global value chains and, in the process, raise prices for Indian consumers.”

Juster added, “East Asia’s success was driven by increasingly open markets at home and deeper trade relations with the West, especially the United States… India should seek to lock in the benefits of its economic relationship with America by negotiating a comprehensive trade agreement, in a fair and reciprocal manner, that ensures access to both markets.”

On the achievements in the relationship during the Trump Administration, Juster listed energy to health, and defence to counter-terrorism. “As democracies, our two countries are committed to a rules-based order, as well as to peace and diplomacy… But we know that not everyone thinks as we do, and some choose suicide vests or military incursions. That is why the United States and India are committed to strengthening our defence and security cooperation. In the words of Sardar Patel, ‘cultivating strength to challenge oppression’.”