With the end of the Cold War and the emergence of India's more outward-looking economic policies, the United States became increasingly important for India. In the mid-1990s, the United States was India's largest trading partner and a major source of technology and investment (see Aid Trade, ch. 6). Indian students more than ever sought higher education in the United States, especially in the areas of science and engineering. Moreover, the presence of the more than 1 million Indians and Indian Americans residing in the United States was a factor in the relationship. Some foreign policy makers also saw India's strong democratic tradition, although much younger than that of the United States, as an important ingredient in India-United States relations. Despite the asymmetrical relationship that had existed since 1947, the areas of common interest converged in the early 1990s as the benefits of good relations were perceived on both sides. Some Indian observers, however, felt that the United States had a "negative agenda" concerning India with respect to human rights, the nuclear program, and the pace of economic reforms. Furthermore, India's long adherence to the principles of nonalignment has had an inhibiting effect on its evolving relations with the United States. Nevertheless, some opinion makers believed that an India-United States strategic alliance later in the 1990s was a possibility.

Until 1971 nonalignment had a dual effect on United States policies in South Asia. On the one hand, Washington considered Indian economic and political stability necessary to prevent that important regional player from succumbing to communism and Soviet influence hence the United States gave economic assistance and support to India during its 1962 war with China (see External Aid, ch. 7). On the other hand, India's nonalignment had led the United States in 1954 to ally itself with Pakistan, which appeared to support Western security interests. The United States-Pakistan alliance was renewed in 1959, with accompanying assurances from President Dwight D. Eisenhower to Nehru that the arms supplied to Pakistan would not be used in any aggressive war. When Pakistan and India went to war in 1965, the United States government refused to support India and suspended military transfers to both countries.

In 1971 the intertwining of the United States-Soviet, Chinese-Soviet, and Indian-Pakistani conflicts dragged India-United States relations to the nadir. That year, while Washington initiated a new relationship with Beijing, New Delhi signed a friendship treaty with Moscow to counteract United States and Chinese influence in South Asia. As the situation in East Pakistan deteriorated, India was unable to convince the United States to cease arms deliveries to Pakistan and persuade Pakistan's leaders to reach a political settlement with East Pakistan's elected representatives. Indira Gandhi's November 1971 visit to Washington failed to alter President Richard M. Nixon's pro-Pakistan stance. When war formally began after Pakistani strikes on Indian airfields in early December 1971, the United States and C 2000 China voted for a cease-fire in the UN Security Council, but the Soviet Union's veto prevented any resolution from coming into effect. Washington's subsequent deployment of a naval task force to the Bay of Bengal left many in India convinced that the United States was a major security threat.

Relations between India and the United States verged on the antagonistic throughout the 1970s. After Nixon abruptly terminated US$82 million in economic assistance, India closed down a large United States Agency for International Development program. The Indian government also restricted the flow of American scholars and students to India. India's criticisms of United States policies in Vietnam and Cambodia increased, and it upgraded its representation in Hanoi. When the United States expanded its naval base on the island of Diego Garcia and engaged in naval exercises with Pakistan in the Indian Ocean in 1974, India saw its security further threatened. Both governments, however, attempted to limit the damage to bilateral relations. A 1973 agreement defused a dispute over United States rupee holdings by writing off more than 50 percent of the debt and directing use of the remainder to mutually acceptable programs. In 1974 the Indo-United States Joint Commission was established to insulate bilateral dealings in education and culture, economics, and science and technology from political controversy and to provide mechanisms for regular exchanges at high levels of public life.

Hopes for improved relations were expressed in 1977 when Jimmy Carter became president of the United States and the Janata Party government led by Morarji Desai took over in India (see Political Parties, ch. 8). These expectations came to an abrupt end two years later when the Soviet Union invaded Afghanistan. The promulgation of the Carter Doctrine, establishment of the Rapid Deployment Force (later called the United States Central Command) and an Indian Ocean fleet, planned expansion of the naval base at Diego Garcia, and arrangements to supply Pakistan with US$3.2 billion in military and economic aid over five years all appeared as direct United States intervention in the countries of the Persian Gulf and Indian Ocean. These actions fueled instability in the region and, in India's view, threatened India's security.

The personal rapport between Indira Gandhi and United States president Ronald Reagan, established during a series of meetings in the early 1980s, enabled the two countries gradually to begin improving bilateral relations. The Reagan administration reassessed its policy toward India and decided to expand areas of cooperation, particularly in the economic and scientific realms, as a means of counteracting Soviet influence in the region. Washington also regarded New Delhi's status as the major regional power in South Asia in a more favorable light. For her part, Gandhi realized that India was unable to block United States arms sales to Pakistan, but that improved dialogue with the United States could open other areas of interaction that could benefit Indian interests. Indira Gandhi's highly successful 1982 state visit to the United States was followed by a series of high-level exchanges, including the visits of Vice President George Bush and Secretary of State George Shultz to India. In addition, in 1982 the two sides resolved their dispute concerning supplies of fuel and spare parts for the nuclear power plant at Tarapur. In 1984 the United States decided to expand technology transfers to India.

The warming trend in relations between New Delhi and Washington continued with the 1985 and 1987 visits by Prime Minister Rajiv Gandhi to Washington. Furthermore, as the United States appreciation of India's role as a force for stability in South Asia grew, Washington supported New Delhi's moves in Sri Lanka in 1987 and in Maldives in 1988. In the mid- and late 1980s, visits exchanged by the United States secretary of defense and the Indian minister of defence symbolized a modest but growing program of cooperation in military technology and other defense matters. In 1988 Washington and New Delhi finalized an accord to provide United States technology for India's light combat aircraft program and also agreed to transfer technology for the F-5 fighter. Cooperation between India and the United States in a variety of scientific fields followed the signing of a bilateral agreement on scientific and technological exchanges in 1985. Nonmilitary technology transfers also accelerated, and in 1987 India purchased a Cray supercomputer for agricultural research and weather forecasting and accepted stringent United States safeguards to preclude military uses. Furthermore, economic liberalization measures paved the way for increased trade and United States investment in India. In 1988 the improved economic climate resulted in the conclusion of a deal for a Pepsi-Cola plant and the signing of a bilateral tax treaty. In 1989 United States investment in India reached US$1 billion.

In the 1980s, the Indian and United States governments had divergent views on a wide range of international issues, including Afghanistan, Cambodia, the Middle East, and Central America. Serious differences also remained over United States policy toward Pakistan and the issue of nuclear proliferation. India was repeatedly incensed in the 1980s when the United States provided advanced military technology and other assistance to Pakistan. New Delhi also found objectionable Washington's unwillingness to cut off military assistance to Islamabad despite United States concerns about Pakistan's covert nuclear program. For its part, Washington continued to urge New Delhi to sign the Treaty on the Non-Proliferation of Nuclear Weapons and, after the successful test launch of the Indian Agni intermediate-range ballistic missile in May 1989, called on New Delhi to refrain from developing a ballistic missile capability by adhering to the restrictions of the Missile Technology Control Regime. India rejected these appeals on the grounds that it had a right to develop such technology and that the Treaty on the Non-Proliferation of Nuclear Weapons and the United States-sponsored Missile Technology Control Regime discriminated against nonnuclear states.

Bureaucratic and private-sector resistance to foreign participation in the economy, infrastructure problems, bureaucratic red tape, and legal problems remained formidable obstacles to significant Indian-United States economic cooperation. In the late 1980s, India had differences with the United States over improving its legal protection of intellectual property rights, opening its markets to American service industries, and liberalizing its foreign investment regulations. In April 1991, the Office of the United States Trade Representative placed India on Washington's watch list over intellectual property rights issues. Six months later, the United States gave India a three-month grace period before imposing retaliatory sanctions against India's pharmaceutical industry for inadequate patent protection. India resisted United States pressure to adopt a less protectionist stance in the Uruguay Round of negotiations to renew the General Agreement on Tariffs and Trade (GATT).

In the early 1990s, economic reforms permitted a qualitative breakthrough in relations between India and the United States. Washington was instrumental in speeding a US$1.8 billion IMF credit that New Delhi obtained in January 1991 to deal with a severe external-debt-payments crisis. In 1990 India and the United States signed a double taxation pact designed to facilitate American investment in India, further breaking a thirty-year deadlock in economic relations. The United States provided only modest bilateral economic assistance in the form of food aid but was India's largest trading partner and an important source of investments and technology. In December 1990, the United States approved the export of a second Cray supercomputer for the Indian Institute of Science in Bangalore, Karnataka, although the deal fell through two years later because of India's unwillingness to 1d03 o accept safeguards to prevent the computer's diversion to military uses.

The Soviet withdrawal from Afghanistan in 1989 had led Washington to reassess its relationship with Pakistan, with positive ramifications for New Delhi. Without containment of the Soviet Union as the driving factor behind close Pakistani-United States ties, and concerns mounting about Pakistan's nuclear weapons program, the United States suspended military and economic assistance to that country in October 1990. New Delhi appreciated this action and was relieved in summer 1991 when the United States Congress voted not to include India in the Pressler Amendment, which forbade United States assistance to Pakistan if it violated nuclear nonproliferation criteria. Washington also took a more evenhanded approach to the Kashmir problem in 1990, urging both antagonists to resolve their dispute peacefully under the terms of the Simla Accord. Furthermore, the United States began pressuring Pakistan to end its support for Kashmiri and Punjabi Sikh separatists. This pressure was in addition to efforts initiated in the 1980s to prevent assistance to Sikh terrorists from the Sikh expatriate community in the United States (see Rajiv Gandhi, ch. 1). In the wake of terrorist bombings in Bombay in March 1993--widely believed in India to have been instigated by Pakistanis--and stepped-up activities among Kashmiri militants, Indian politicians and the media reveled in the possibility that the United States might declare Pakistan a practitioner of state-sponsored terrorism. Washington's decision in July 1993 not to declare Pakistan a terrorist-supporting state displeased many prominent Indians, and Indian political analysts accused the United States of having a "double standard" in regard to specific states sponsoring terrorism.

Military cooperation also grew. Exchanges of senior military officials became frequent, a high-level bilateral conference on regional security affairs was held, and Minister of Defence Sharad Pawar journeyed to Washington in April 1992 to discuss arms supplies and military technology. Not only did United States navy ships make occasional ports calls in India, but the two navies conducted their first-ever joint exercise in May 1992. Indian officials came to have a greater appreciation of United States interests in maintaining a military presence on Diego Garcia and in the Persian Gulf.

In 1993, India and the United States appeared committed to improve relations and bilateral cooperation despite differences over India's refusal to sign the Treaty on the Non-Proliferation of Nuclear Weapons and to participate in discussions with the United States, Russia, China, and Pakistan on establishing a South Asian nuclear-free zone. Nevertheless, Washington directed its efforts to creating a climate of restraint between New Delhi and Islamabad in order to freeze or roll back their nuclear weapons programs. However, India and the United States remained wary of each other's long-term strategy regionally and globally.

Some Indian political analysts criticize the United States for following a "two-track policy." On the one hand, Washington has supported New Delhi's economic reform and has facilitated international loans to India, but, on the other, it has relentlessly pursued an agenda to force India's accession to United States nonproliferation goals and has used human rights issues to try to force India to meet Washington's political objections. Moreover, many Indians have expressed worries that, with the emergence of the United States as the sole superpower, and as the leader of a Western-dominated coalition after the Persian Gulf War, Washington might attempt to impose its own standards for democratic values, human rights, and free markets. India fears that a United States vision of a new world order not only would hurt the interests of Third World countries economically and politically, but also would damage India's drive to become a leading power in a multipolar system. Washington's decision not to place Pakistan on its list of nations that sponsor terrorism and its successful efforts in getting Russia to cancel the sale of cryogenic engines to India are seen as detrimental to good Indian-United States relations.

In the midst of increasing anti-United States political rhetoric and newspaper headlines, Indian and United States officials have seemed to agree on only one thing, that bilateral relations had reached their lowest point in two decades. Observers in both countries believe that the administration of President William Clinton places a low priority on relations with India despite the fact that the United States has become India's prime trade partner. Against this backdrop, Prime Minister Rao visited the United States in May 1994 for an uneventful round of talks with President Clinton, who encouraged India's economic reforms. Six memorandums of understanding were signed with the intent of expanding official contacts, reviewing and updating a 1984 understanding on high-technology transfer, enhancing defense cooperation, stimulating bilateral ties, and establishing a business partnership initiative.

High-level visits to India in early 1995 portended greater stability in India-United States relations. Secretary of Defense William J. Perry visited New Delhi in January to sign a "landmark agreement" on military cooperation that was seen by some local observers as a convergence in India-United States security perceptions after nearly fifty years of divergent viewpoints (see National Security Challenges, ch. 10). Following the Perry visit was a commercial mission led by Secretary of Commerce Ronald H. Brown that also occurred in January. Agreements signed by Indian and United States businesses during the visit resulted in US$7 billion in contracts and investments in the communications, health care, insurance, finance, and automotive sectors. Some of the deals consummated were intended to build the infrastructure needed by foreign firms to do business in India. In March 1995, Hilary Rodham Clinton, the wife of the United States president, toured India as part of an extensive South Asian goodwill tour. In April, Secretary of the Treasury Robert E. Rubin visited New Delhi to sign a bilateral investment protection treaty reflecting the substantial increases in United States investment in India since 1991 and Washington's encouragement to India to apply for Agency for International Development loans.

Data as of September 1995