Columbia International Affairs Online: Working Papers

CIAO DATE: 05/2013

India and the United States: How Individuals and Corporations Have Driven Indo-U.S. Relations

Swaminathan S. Anklesaria Aiyar

December 2012

The Cato Institute

Abstract

Foreign policy discussions tend to focus on government policies and diplomatic initiatives. But 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 quasimilitary 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. Individuals and corporations have also taken the lead in expanding India’s footprint in other countries across the globe. The India-based Tata group is now the largest private-sector employer in the United Kingdom. As in the Indo-U.S. case, Sino-Indian commercial and individual relationships have also grown despite cool governmental relations, and could one day lead to warmer political relations.