US-India Diplomatic Row could impact economic ties

Incident with Diplomat could impact trade

Incident with Diplomat could impact trade

The Devyani Khobragade incident has enraged India. However, the group that is enraged the most is the IFS and IAS fraternity. The IAS/IFS perspective in India is that even if you leave alone the reasonableness of diplomatic immunity and privileges and choose to overlook the Vienna Article 40 of Vienna Convention which speaks of ‘protection of consular officers’ and intents to mean that the receiving State “shall treat consular officers with due respect and shall take all appropriate steps to prevent any attack on their person, freedom or dignity.” They believe that Devyani was not afforded due courtesy like the US diplomats receive in India. Coming on the back of the Snowden leaks about the US spying on world leaders, its snub to India’s PM Candidate CM Narendra Modi, US is not earning too many friends in India especially with its very powerful bureaucracy.

One of the key pillars of the US-India relationship is trade and a lot of it is driven by approvals by the Indian bureaucracy i.e. environmental clearances, tax approvals, land clearances, M&A approvals, and Defence deal selection. I am not sure that these bureaucrats are going to be anxious to move on American companies’ applications for doing business. Business in India to a large part is conducted by relationships and right now the key drivers of that relationship in the Indian Government are in no mood to work and appease the Americans. The result will be felt in several areas in terms of US investment in India, US-India energy and defence cooperation.

Your thoughts are welcome.

Sanjay Puri

Sanjay Puri has been working on Indian-American issues and facilitating stronger US-India relations through USINPAC (US India Political Action Committee) and AUSIB (Alliance for US India Business), two bipartisan organizations that he chairs.

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