Beyond the Pomp and Pageantry

Barack Obama was the first US president to attend India’s annual Republic Day celebrations – an invitation that undoubtedly will add to improving relations between the two countries while lending speed to domestic reforms urged by Indian Prime Minister Narendra Mod, explains Nayan Chanda, YaleGlobal editor, in his column for Businessworld. “The highly symbolic visit by a US President and the pressure to deliver concrete results seems to have pushed a reluctant and slow-moving Indian bureaucracy to adopt policies that will move the country forward,” Chanda writes. The two leaders have swiftly overcome political and historical differences to focus on common goals. India has agreed to reduce reliance on hydrofluorocarbons as required by the Montreal Protocol. India can expect more foreign investment in its nuclear-power industry with the help of a $250 million insurance pool that covers suppliers in the event of accidents. The two leaders also discussed climate change and the need to develop alternative energies like wind and solar to stem rising seas, fierce storms and warming temperatures. Chanda concludes strong ties, new commitments and enduring policy initiatives could emerge from this year’s Republic Day celebrations. – YaleGlobal

Beyond the Pomp and Pageantry

Obama and Modi work on common policy goals during Republic Day celebrations: hydrofluorocarbons, nuclear liability and investment in alternative energies
Nayan Chanda
Thursday, February 5, 2015

Diplomatic visits are made-for-television events, conveying to viewers in high definition just how important their country is. President Barack Obama’s attendance at the Republic Day parade on 26 January in New Delhi offered plenty of pomp and pageantry, but his visit may also enter the history books for more substantive reasons. It could open a new chapter not just in Indo-US relations but also for India’s domestic reform programme. The highly symbolic visit by a US President and the pressure to deliver concrete results seems to have pushed a reluctant and slow-moving Indian bureaucracy to adopt policies that will move the country forward.


Foreign pressure to reform is nothing new, but given the bitterness between India and the US around the time Narendra Modi came to power, the turnaround has been swift and dramatic. India’s desire to build stronger ties with the US led it to dismantle political and ideological obstacles that limited its engagement with the world and hurt its national interest.


During his first ice-breaking visit to Washington in September last year, Modi quickly shed his grudge (he is famous for holding on) about having been subjected to a US visa ban and struck a chord with Obama. He reversed India’s objections and agreed to start talks on a phase-down of hydrofluorocarbons (HFC) under the Montreal Protocol. After this meeting, India ended its objection to the signing of the WTO trade facilitation pact, which will help speed up commerce.


The Obama visit also provided impetus to repair the damage caused by the liability act which effectively barred western commercial investment in India’s nuclear power generation.  Ironically, Modi’s BJP bears some responsibility for creating the law. The then opposition leader and current finance minister in the Modi government, Arun Jaitley, took the lead in drafting the law, pooh-poohing concerns that it would deter foreign suppliers. With India seeking to buy 40 nuclear reactors, he argued, the character of the market would change. “It will no longer be a seller’s market,” he had said.


Facts proved otherwise but alas, the Civil Liability for Nuclear Damage Act of 2010 cannot be changed. Indian as well as Western firms like GE-Hitachi and Westinghouse, which are ready to build four 1,000–1,500 MW reactors, refused to undertake liability that exceeds international norms. The Obama visit provided the impetus to find a way around the legal obstacle. A $250-million insurance pool set up to compensate suppliers in case of a nuclear accident removed the hurdle. A legal memorandum was also provided to prevent tort claims against foreign suppliers by would-be victims of a nuclear accident. Unblocking investment in nuclear power is important as much for India’s own needs as for its position on climate change. Large-scale foreign investment would not only help to partially meet the government’s target of generating 63 GW of nuclear power by 2032, but allow it to show its seriousness about reducing carbon emission.


Modi launched his ‘Make in India’ campaign to turn the nation into a manufacturing hub while promising “no defect and no effect”.  No effect means no negative effect on the environment. To provide power for manufacturing without environmental damage, India has to step up solar, wind and nuclear energy sources. Obama held out the promise of official financing to help investment in the solar energy sector.

 

Obama staged a coup in November by persuading China to join the US in promising major emissions cuts, something that Beijing — and Delhi — had long resisted. The India visit gave him a chance to push New Delhi  to prepare a plan to cut emissions at the Paris summit:  “With rising seas, melting Himalayan glaciers, more unpredictable monsoons, cyclones getting stronger, few countries will be more affected by a warmer planet than India,” he reminded his hosts.


The televised extravaganza on Rajpath could yet be remembered for the enduring policy initiatives that came in its wake.

 

Nayan Chanda is the editor in chief of YaleGlobal Online, based at Yale University’s MacMillan Center.     
Copyright © 2015

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