Why India Still Can’t Let Go of Its Cold War Friend

Indian president Pranab Mukherjee was in Moscow this weekend to join the grand parade marking the seventieth anniversary of the Allied victory over Nazi Germany in the Second World War. This high-profile visit was both timely and significant. India demonstrated a camaraderie with Russia at a time when most Western leaders boycotted Vladimir Putin on account of what they consider his aggressive, destabilizing policies toward Ukraine.

Since the end of the Cold War, when India, despite professing nonalignment, leaned more toward the Soviet Union, the country has gradually shaken off its ideological inhibitions in favor of better relations with the United States. The last two decades have witnessed a cooling in Indo-Russian relations. From India’s point of view, there is no downgrading of its traditional ties with Russia and there are significant overlapping interests that bind the two countries regionally as well globally. But Russia’s inability to alleviate India’s security challenges vis-à-vis China and Pakistan has been one of the crucial factors in moving the latter closer toward the United States. Read more “Why India Still Can’t Let Go of Its Cold War Friend”

Former Ruling Party Blocks India Tax Overhaul

India’s former ruling party on Tuesday blocked tax reforms that would have made business easier in the country of 1.2 billion. The delay is the first major setback for the conservative prime minister, Narendra Modi, since he won the election last year.

Modi’s Bharatiya Janata Party commands an overall majority in the lower house of parliament but not in the upper chamber where the leftist Congress has most seats.

On Tuesday, the upper house referred back legislation that would have merged various local and state-level taxes into one national goods and services levy — an overhaul Congress previously supported.

Economists say the change could boost India’s economic output by up to 2 percent per year. It would reduce compliance costs for companies and make the transit of goods across the country easier. Now trucks must be stopped and taxed whenever they cross state lines.

The Bharatiya Janata Party has long championed tax reform but refused to support it when Congress was last in power. Now the roles are reversed. Read more “Former Ruling Party Blocks India Tax Overhaul”

India to Rationalize Taxes, Boost Infrastructure Spending

Arun Jaitley, India’s finance minister, unveiled a series of tax reforms and infrastructure initiatives on Saturday in the conservative government’s first full budget since Narendra Modi came to power last year.

Jaitley said a national sales tax would be in place by April next year to replace a complex regime of local fees that hampers business growth.

He also announced a reduction in the corporate income tax rate from 30 to 25 percent and a simplification of the code.

Both measures should help Modi meet his campaign promises to liberalize the world’s tenth largest economy and boost growth rates. Read more “India to Rationalize Taxes, Boost Infrastructure Spending”

Obama Needs India to Make His Asia “Pivot” a Success

Barack Obama Naredra Modi
American president Barack Obama speaks with Prime Minister Modi of India during a state dinner at the presidential palace in New Delhi, January 25 (White House/Pete Souza)

If Narendra Modi can convince India to break with its nonaligned past and ally with the Pacific’s democracies instead, American president Barack Obama may yet succeed in counterbalancing China’s rise.

Since it was announced in 2011, the American “pivot” to Asia appears to have done little to affect Chinese behavior. Rather, the military component of what was later renamed a “rebalancing” strategy exacerbated China’s fears of encirclement. By raising troop deployments in the Western Pacific, the United States inadvertently confirmed the Chinese in their worst fears: that America intended to block their reemergence as a great power.

China has since pressed its revisionist maritime border claims in the East and South China Seas and bullied its neighbors. Read more “Obama Needs India to Make His Asia “Pivot” a Success”

Structural Impediments to Closer Indo-American Relations

Barack Obama Naredra Modi
American president Barack Obama speaks with Prime Minister Modi of India during a state dinner at the presidential palace in New Delhi, January 25 (White House/Pete Souza)

American president Barack Obama’s recent visit to India supposedly saw the conclusion of some far-reaching agreements, including on defense cooperation, specifically missile defense, technology transfer and the operationalization of the dormant nuclear agreement Obama’s predecessor, George W. Bush, negotiated with India in 2005.

All of this cements the image of India’s new prime minister, Narendra Modi, of being both a strategic thinker and a doer.

But this is at the political level. At the operational level, things are controlled by a bureaucracy that remains deeply anti-American and is ingrained in leftist nonaligned thought. It may well fail to implement or even block the implementation of the latest agreements.

The clearest sign of the Indian bureaucracy’s ingrained anti-Americanism came from the visible euphoria of officials who were part of the negotiations. This in spite of the fact that no public announcements were made. Read more “Structural Impediments to Closer Indo-American Relations”

India’s Modi Relaxes Labor Inspections, Reduces Compliance

India’s conservative prime minister, Narendra Modi, introduced a new system for labor inspections on Thursday that he said would be the first step in liberalizing the country’s notoriously inflexible jobs market.

Under the new regime, a computerized system will randomly select companies for inspections. Labor monitors will no longer be allowed to check on businesses at their own discretion, a procedure that is vulnerable to favoritism and abuse.

Inspectors, moreover, will have to upload their reports within three days and will not longer be able to modify their findings thereafter.

Companies should also soon be able to submit a single compliance form for sixteen separate labor laws — online.

“Let’s start with trust,” said Modi in New Delhi where he unveiled the measures. “Ease of business is the first and foremost requirement if ‘Make in India’ has to be made successful.” Read more “India’s Modi Relaxes Labor Inspections, Reduces Compliance”

Shared Values Don’t Make an Indo-American Alliance

India’s new prime minister, Narendra Modi, is confident his country can deepen ties with the United States, given the cultural and political similarities that exist between the world’s two largest democracies. But after more than a decade of trying, it should be clear to strategists in both countries that shared values aren’t enough to make an alliance.

In an interview with CNN’s Fareed Zakaria that was broadcast on Sunday, Modi said, “America has absorbed people from around the world” while “there is an Indian in every part of the world. This characterizes both the societies,” he said. “Indians and Americans have coexistence in their natural temperament.”

Modi, who took office in May after his conservative Bharatiya Janata Party won an absolute majority in parliamentary elections earlier this year, admitted that the Indo-American relationship had seen its “ups and downs” through the last century. But “there has been a big change” in the last twenty years, he said. “Our ties have deepened. India and the United States of America are bound together, by history and by culture. These ties will deepen further.”

In what way, Modi didn’t say. Read more “Shared Values Don’t Make an Indo-American Alliance”

Putin at Ease in Asia’s Power Politics

There is an expression in Japan: kumo o tsukamuyou. It translates roughly into “like grasping a cloud.” We might call it “wishful thinking.” The proverb springs to mind when reading Japan’s former defense minister Yuriko Koike’s recent commentary.

In it, Koike presents her perspective of the challenges Japan has to face in East Asia. She believes these challenges are easy to enumerate for they all depend on one factor alone: liberal democracy. Those closest to it are under pressure by those farthest from it. China, Russia and North Korea are problems, Japan, the United States and their allies are the solution.

Koike’s is an ideal world in which the leader of the world’s biggest democracy could only possibly choose to ally with likeminded democratic powers and thus India’s new prime minister, Narendra Modi, is dutifully expected by Koike to team up with the alliance being formed to contain China’s assertiveness in the East and South China Seas.

Yuriko Koike, though, might have another thing coming. Not only is Modi not the obvious ally she believes him to be; the government in Tokyo itself may very well have other plans. Read more “Putin at Ease in Asia’s Power Politics”

India’s Modi Wins Decisive Mandate for Economic Reform

India’s conservative opposition decisively ousted the ruling Congress party in an election that concluded on Monday, results released on Friday showed. Narendra Modi, the chief minister of the western state Gujarat, won an absolute majority of the seats in the lower house of parliament for his Bharatiya Janata Party, giving him a clear mandate to push through economic reforms.

With most of the votes counted, Modi’s party had crossed the 272 seats needed for a majority in parliament. His alliance, which includes smaller right-wing parties, won almost 38 percent of the votes, giving it 318 seats.

Congress, by contrast, looked set to win less than fifty seats of its own, down from 206. Its United Progressive Alliance got less than 24 percent support nationwide. Read more “India’s Modi Wins Decisive Mandate for Economic Reform”

India’s Modi to Unseat Congress, Exit Polls Show

Four exit polls released on Monday showed India’s conservative leader Narendra Modi on track to become the country’s next prime minister. The ruling Congress party, by contrast, could post its worst result in decades.

India’s staged election concluded on Monday with voting in the states of Bihar, Uttar Pradesh and West Bengal.

A CSDS poll conducted for the CNN-BIN television network put Modi’s alliance at 270 to 282 seats while giving between 92 and 102 to the coalition that is led by Congress.

A Nielsen poll for ABP News had the right at 281 seats while a third, by Cicero for the India Today group, predicted Modi and his supporters would take between 261 and 283 seats. 272 seats are needed to form a government. Read more “India’s Modi to Unseat Congress, Exit Polls Show”