WASHINGTON – Secretary of State Hillary Rodham Clinton welcomed tentative progress in U.S. efforts to invest in India's civilian nuclear power industry, but said more action is needed to translate improving ties into economic benefits.
The two governments held their annual strategic dialogue in Washington on Wednesday, seeking to boost relations that have blossomed in recent years but have yet to meet U.S. hopes for greater market access for American companies.
"It's not enough just to talk about cooperation on issues ranging from civil nuclear energy, attracting U.S. investment to India or defending human rights or promoting women's empowerment," Clinton said, alongside India's foreign minister, S.M. Krishna.
"We have to follow through so that our people, citizens of two, great pluralistic democracies, can see and feel the benefits," she said.
Krishna said India plans to invest $1 trillion in infrastructure development over the coming five years, offering enormous business opportunities for U.S. companies. He offered assurances to prospective investors that there will be "a level playing field and total transparency."
Two years ago, President Barack Obama declared that the U.S.-India relationship would be a defining partnership of the 21st century. Security cooperation and defense sales have grown rapidly, and Washington looks to New Delhi as a partner in the economic development of Afghanistan. But some analysts say the relationship is being oversold.
Clinton said two-way trade and investment has grown 40 percent since 2009 and is set to exceed $100 billion this year, but there is "a lot of room for further growth." She said the U.S. looked forward to advancing negotiations on a bilateral investment treaty to reduce barriers.
She welcomed the signing, announced Wednesday, of an agreement between Westinghouse Electric Co. and the Nuclear Power Company of India Ltd. allowing preliminary site development for future construction of nuclear power plants in western India.
Clinton said it was a significant step toward the fulfillment of a 2008 India-U.S. civil nuclear agreement. That landmark pact, negotiating by the administration of President George W. Bush, allowed India access to technology from international suppliers it had been denied since it conducted its first nuclear test explosion in 1974.
Krishna said it should "put at rest" confusion surrounding the agreement.
"I'm glad that nuclear commerce is now beginning to expand itself," he said at a news conference, expressing hopes that more Indian and U.S. companies would become involved in the months ahead.
Clinton said she looked forward to additional deals with other American companies, including General Electric. But she said there was still a lot of work to be done to address the implications of Indian nuclear liability legislation that effectively has blocked U.S. suppliers from capitalizing on the agreement.
Scott Shaw, a spokesman for Westinghouse, said by email those issues will need to be addressed before signing any final agreements for the project in India's Gujurat state.
The Obama administration has invested considerable diplomatic capital in promoting ties with India, but New Delhi has struggled to deliver on the kinds of economic changes that Washington wants. In November, Prime Minister Manmohan Singh's government backtracked on plans to allow foreign investment by such companies as Wal-Mart in its supermarket — or "multibrand" — retail sector after it ran into domestic opposition.
Another area of intense commercial interest to the U.S. is India's defense sector, with sales exceeding $8 billion in the past five years, reflecting growing ties between the two militaries. Clinton said the U.S. was convinced that in the future, it can conduct with India joint research, development and co-production of defense systems.
One obstacle to improving ties was lifted ahead of the Washington session when the U.S. on Monday dropped the threat of penalties against India for its large yet declining oil imports from Iran. That is one of various diplomatic issues on which the U.S. and India have not always seen eye to eye, despite their shared strategic interests in areas such as fighting Islamic militancy and managing the rise of China.
Clinton said India understands the importance of denying Iran a nuclear weapon, and credited New Delhi's efforts to diversify its sources of crude oil to rely less on Iran.
The U.S. increasingly looks to India as a partner in developing Afghanistan, where New Delhi has provided some $2 billion in assistance. Washington also wants India to play a more active role in training Afghan security forces as the U.S. and its NATO allies plan to withdraw combat forces by 2014.
India wants reassurance that the U.S. will retain a substantial presence in Afghanistan beyond 2014 because of concerns for that country's stability as Western forces withdraw after a decade of fighting the Taliban and al-Qaida.