India and US need each other, says Richard Verma , US ambassador to India in an exclusive conversation with Indrani Bagchi , as he looks back on 2015 and prioritizes an important checklist for 2016, spanning nuclear energy, defense cooperation on jet engines and aircraft carriers and a bilateral investment treaty.

We just had an instance of US and India working together for a global goal on climate change. When and how did the breakthrough happen?

It’s not a discussion that started two weeks ago. In New York in September, both leaders came together and said they wanted to be part of the solution. They didn’t need any convincing on the impact that climate change was having on the world.

The breakthrough was the acknowledgement that all countries would have slightly different responsibilities. This notion of differentiation was important. The president acknowledged to the PM, “Your 300 million people who don’t have access to electricity deserve that access to energy and in an affordable way.”

Our position was not fully losing the differentiation; it was about coming away from bifurcation, which was dividing the world into two camps. This is a 1992 construct, distinct from differentiation. Differentiation is built into the system by the INDCs, by the fact that every country was coming with its own plan. What we were saying was that when it comes to transparency and reporting every 5 years, we should all be on the same page. We were able to bridge that difference. We also came to an understanding on financing, the very aggressive $100 billion until 2020.

Bill Gates and other successful entrepreneurs came together to support clean innovation. We are proud of our Mission Innovation and Solar Alliance. I don’t know if you know this, but Mission Innovation got its name from PM Modi’s suggestion. These were two parallel efforts that came through in Paris which showed we wanted to be part of the solution, of the effort to drive down costs of energy and move to cleaner energy. On that there was no daylight between us.

What kind of a year has this been for US-India relations?

On the macro picture, I’d say 2015 was a year of consequence in our relationship. Not only were we able to sustain the momentum generated from PM Modi’s visit to Washington in September 2014 and then the President’s visit here on January 26, 2015, I think we were able to substantially build and deepen our cooperation across multiple domains. On the big issues of the day, we are aligned like never before.

Starting with defence and security cooperation – we are not just supporting the vision of cooperation in Asia-Pacific, but building on our naval cooperation, which aligns well with our rebalance and India’s Act East policy. We are also moving away from a buyer-seller relationship.

In the economic and trade areas, we have continued to exceed all our expectations, as we watch our companies increase their presence in each other’s countries. In the clean energy and climate area, who would have thought that India and US together would play such a leadership role, bringing in one of the most comprehensive landmark climate agreements, including agreeing to support aggressive renewable energy targets in India.

For us, 2015 represents the durability and maturing and resilience of our relationship. I can look back at the last three weeks of our relationship – our president and PM spoke to each other each of the last three weeks. Not to say we were in agreement on every issue, but they called each other to discuss the areas of disagreement. Now that is a sign of a different partnership.

Is the relationship between PM Modi and President Obama hype, or is there something to it?

The closeness between them is real. I think they both have a real understanding of each other, of our histories and the limitations of the democratic systems we work in, and what is top of mind for each other. When they went to Paris for the launch of Mission Innovation, they were late by 30 minutes, because they were talking to each other one on one. President Obama said, “I’m sorry we are late but we had a lot to discuss and the fact is, we need to address the prime minister’s concerns about 300 million people who deserve access to low cost and cleaner energy.” Its not just that the two of them are friends which they are, but there is a real reflection that we talk about these values between our countries which makes a difference in this era of tumult and stress on the international system.

Defense minister Manohar Parrikar’s visit was full of symbolism. What was the substance?

There were a lot of great firsts. It was not only Minister Parrikar spending 3 hours on an aircraft-carrier, but was the first defence minister to visit Pacific Command. We made real progress on joint production and co-development. We have further liberalized and changed our defense policies. Look at the decision taken on jet engine gas turbines, that will allow US to be more forward leaning on production of advanced jet engines and support India’s fighter development.

On your critical needs, carriers, fighters, across the board, we have been supportive of your efforts to develop capabilities in aerospace, cyberspace, maritime and space. We are talking about deepening our cooperation in a way that we haven’t seen before.

Is there a greater willingness in India to discuss the foundation agreements?

Yes. Absolutely. They are part of an effort to harmonize two systems that grew up during the Cold War. We had an export control system that was based on western systems and NATO countries that was different system for Eastern bloc countries. India was on a different track. What has happened in the last 25 years is this harmonization process. That involves different aspects – our militaries getting closer to each other, more interoperable and joint (a phrase we didn’t utter but now we do). There’s an effort on our export control system to take items that would have been restricted from exports, defence controls, moving them to commerce, and then to license-free, and we’ve done that. That involves certain agreements like logistics support and communication systems and we’re doing that. We’ve had more receptivity on that. I don't want to make the foundational agreements sound that they are everything. It’s one piece of a larger puzzle that brings us closer on jointness and interoperability.

When would you say we could see an Indian aircraft carrier built with US assistance?

It’s hard to put a date. We had an amazingly good interaction of our carrier working group in the fall in US where we went to US installations. We have an upcoming meeting of the carrier working group. In the past seven months I have been on three different US carriers with Indian naval officers, operators and aviators, in the Arabian Sea, Indian Ocean and Atlantic Ocean. We have to talk about all aspects – carrier cooperation and best practices, carrier development and we are looking at all aspects of carrier cooperation. Plans to develop indigenous capability here in India is well under way, and we’d like to be partners.

Look how far we have come in 12 months, when our teams are talking about carrier cooperation in a way we never have before. That the defence minister spent 3 hours on our aircraft carrier talking about advanced co-development of carriers is not a small deal.

We still appear to be far apart on trade. How will you prioritize what needs to be done in 2016?

On bilateral trade, we’ve done a remarkably good job. In 10 years, we’ve tripled two-way trade, from $30 billion to over $100. We’ve tripled bilateral investments. What will unlock greater trade and investments, would be continuing to increase sectors where we can operate defense or multi-brand retail, that's part of a continuing conversation. We’ve also talked about the need to encourage investor confidence – certain regimes like the bilateral investment treaty.

I understand there is little movement on that?

That’s not true. It took us three years to come up with our draft text of the BIT. I believe the Indian government is in the final stages of its new draft. We have to see how far apart we are. We are working on meaningful dispute resolution mechanisms so investors can be confident they can come here in India set up in a way that will inspire greater investments.

On the multilateral front, that's where we continue to have some sticking points. But even last year when we had disputes over food security and food subsidies we were able to work out an agreement that allowed the trade facilitation agreement to go forward and negotiate a peace clause for India on food security that remains in effect today. What we want to do is update our understandings so we can reflect these new realities, but also address concerns about ensuring that agriculture, for example, continues to be an industry that flourishes in these new industries and market conditions.

Why is the US rethinking its support to India on APEC? Will it ever support India on TPP?

India was not in the first round of TPP. We still have to clear it in our system, we’ll see what the second round brings. On APEC, I would say, the President’s visit in January acknowledged India’s interest in joining APEC. Over the course of the year, we have been building the roadmap for our cooperation in Asia-Pacific. We’ve made a commitment to engage India in consultations for APEC. I think 2016 will be an important year in advancing these discussions.

I was there for the Strategic and Commercial Dialogue where this subject came up with Secretary Kerry strongly encouraging further bilateral consultations. We have to have a process where we can continue consultations. But set APEC aside for a second. This has been a bit of a turning point in our relationship, in that where we have disagreements, we have put mechanisms in place to talk about these issues. I don't want to predict where the conversations are going to lead but the fact that we’ve gone from having no consultations to a commitment to engage in these discussions.

Are we any closer to closing the gaps on the nuclear issue. What are the next steps?

The contact group met in November 24-25 in Washington. We’ve been pleased with the progress. We look forward to India’s ratification of the Convention on Supplementary Compensation (CSC). We need to make sure the insurance pool is finalized and implemented the way it was envisioned and government-to-government understandings are in fact reflected in the commercial contracts and we can move forward. I think, I would expect the first half of 2016 where we can see considerable progress. It’s not just the big companies, there are smaller companies that are engaged in all elements of the decision to build reactors here. Our companies are involved in these negotiations.

There was a last-minute hurdle to India’s accession to MTCR. Do you think that can move forward. On a related note, why is the US contemplating a nuclear deal with Pakistan? Does it square with our discussions over the past decade?

We strongly support India’s membership in the four international regimes. We are disappointed we didn’t achieve in the last plenary session of MTCR, but confident it will happen soon. It’s the same with NSG. These are consensus organisations, we have to keep at it. We are going to play a leadership role, India will have to continue to work this as well.

Rumours about a civil nuclear cooperation with Pakistan have been addressed by our government, they are unfounded. Membership in all these groups come with very high requirements. It’s hard to get into these groups. We’re pleased to support India’s membership, given India’s record of non-proliferation. It would be premature to be talking about export control regime membership in another context with Pakistan. We are in a far different position with India.

Moving on, we have not moved far enough on education collaboration, while we are again getting hit on H1B visas?

It’s a subject I have some personal familiarity with. My dad went to the US in 1963 on an academic scholarship and spent his career as a professor and reminds me on a weekly basis that not enough is being done.

The number of Indian students in US had a 30 per cent increase last year and is at an all time high, higher than any other country, with 130000 students in the US. I know a number of universities there would love to have more formal relationships to provide instruction and services here in India. I hope that’s an area we can make progress. We need to do more in curriculum harmonization so students can do a semester in the US without losing ground or can do a degree here that is fully recognized as they go into a master’s program in the US.

Outside of higher education, we can do a lot more on skills education – not everyone wants or needs a four-year degree, but they need the skills to compete in this century. Some work has been done, but a lot more needs to be done. We need to be creative about how we provide the expertise and meet the demand in India.

On H1B, India continues to receive the lion’s share of H1Bs, some 110,000 visas were issued. Sometimes we have areas of disagreement, this is one of them.

What’s your big takeaway at the end of 2015?

India and US are aligned like never before. 2015 demonstrated that. Even when we have differences we sit down and talk in an honest and forthright way that we have never done before. Our president and PM have met 6 times in the past 14 months. They spoke to each other each other three times in past three weeks. They used their new secure lines twice even two days ago to wrap up discussions on the climate change agreement. This is the hallmark of the new relationship and an acknowledgment that US and India need each other economically, strategically and politically.

