Policy Analysis No. 713.
from CATO Institute,
Relations between India and the United States have been driven substantially by corporations and individuals, with the two nations’ governments trailing behind and catching up only now. During the Cold War, India’s quasi-military relationship with the Soviet Union led to cool Indo-U.S. governmental relations. Despite this, Indian citizens went in droves to the United States for education and employment, and the United States became India’s largest trade partner. After India’s economic reforms in 1991, two-way flows of individuals and corporate activity greatly accelerated. U.S. corporations became an important foreign policy lobby for India in the U.S. Congress. The Indian diaspora in the United States grew rapidly to 3 million, and these people are among the richest, best-educated ethnic groups in the United States, and hence politically influential, too.
The Indian and U.S. governments, far apart during the Cold War, have now started building on the solid foundation created by individuals and corporations. The George W. Bush–Manmohan Singh nuclear deal of 2005 was a landmark event. Later, President Obama backed India for a permanent seat in the United Nations Security Council.
There are several other factors that strengthened relations between the United States and India.
- First, India became a major software producer, especially when it came up with software to solve the "Y2K" problem.
- Second, India has become a high-tech exporter of goods in many fields such as automobiles and pharmaceuticals.
- The rise of the Indian diaspora in the United States increased the clout these wealthy immigrants had on Congress.
- Even businesses used their clout to lobby Congress for Indian interests because of the interdependence between the two countries.
- As contact between the two nations increased, the United States saw it could use India as a role model for secularism and democracy in an increasingly volatile region of the world.
The lesson is that good economic policy is good foreign policy, too.
Read the Analysis report.