Obama's meeting with Modi: Five key agreements

US President Barack Obama and Indian Prime Minister Narendra Modi have unveiled a deal aimed at unlocking billions of dollars in nuclear trade and deepening defence ties, steps which both sides hope will help establish an enduring strategic partnership.

Here are five key agreements and points of discussion during Mr Obama’s visit to New Delhi:

1. Nuclear cooperation

Both countries struck a deal that could open the door for US companies to build nuclear reactors in India by promising insurance cover to US companies that had shied away from an Indian law placing liability on suppliers in case of an accident. The US also softened its demand for tracking of the whereabouts of material supplied to India. The US president used his executive powers to waive away the measure and agreed that from now on, inspections of India’s use of fissile materials by the International Atomic Energy Agency (IAEA) will suffice.

With the 1984 Bhopal gas tragedy still fresh in India’s mind, parliament five years ago passed a law that makes equipment suppliers ultimately responsible for an accident, a deviation from international norms that companies found hard to swallow. The liability issue blocked progress in nuclear commerce worth billions of dollars that was meant to be the centerpiece of a bilateral nuclear deal signed in 2006.

Details of the new plan were sketchy, but Indian and US diplomats said the idea was to transfer the financial risk to insurers in case of an accident. “The India nuclear insurance pool is a risk transfer mechanism which is being formed by GIC Re and four other public sector undertakings in the general insurance business in India,” foreign ministry joint secretary Amandeep Singh said. But it remains to be seen whether the new pact will satisfy companies such as GE and Toshiba-owned Westinghouse, who had stayed away.

2. Closer strategic partnership

India and the US have announced a closer partnership covering a wide sphere of influence that would extend from Africa to the far reaches of East Asia. A US India Joint Strategic Vision for the Asia Pacific and Indian Ocean Region released on Sunday (Jan 25) noted that "a closer partnership between the United States and India is indispensable to promoting peace, prosperity and stability" in the Asia-Pacific and Indian Ocean regions.

"From Africa to East Asia, we will build on our partnership to support sustainable, inclusive development, and increased regional connectivity by collaborating with other interested partners to address poverty and support broad-based prosperity," said the document.

“We call on all parties to avoid the threat or use of force and pursue resolution of territorial and maritime disputes through all peaceful means, in accordance with universally recognised principles of international law, including the United Nations Convention on the Law of the Sea,” the two countries said in a veiled reference to China, which is asserting territorial claims in the region.

3. Defence

The two countries finalised a defence framework pact for 10 years. Four deals were unveiled, including joint production of Raven drones and systems for Lockheed’s C-130 transport planes. The two countries will also explore jointly developing jet engine technology.

The United States overtook Russia as the biggest weapons supplier to India, the Indian government said in August. India is the world’s biggest weapons importer.

4. Renewable and climate change

The US will provide funding assistance to boost India’s solar energy capacity that can help the country lower its carbon emissions. India wants to ramp up its solar capacity by 33 times over seven years, an ambitious plan that requires investments of US$100 billion (S$134 billion).

Obama, who said “India’s voice is very important” in climate change negotiations, sought support to achieve a global climate deal later this year in Paris. Modi, however, made it clear that India did not feel pressure to commit to a peak year for emissions as done by the US and China in an agreement signed in November. India is the world’s third largest carbon emitter but has always been reluctant in committing to emission cuts by saying it needs to focus on growth to alleviate poverty.

5. Economic ties

Both leaders said they will establish several bilateral mechanisms to identify opportunities to boost business, trade and investment ties. Last year they targeted a five-fold increase in annual trade to US$500 billion. But US business leaders have been frustrated by limits on their access to the Indian market, and battles over intellectual property protection. Both the countries have also filed several cases against each other at the World Trade Organisation over protection of their domestic steel, poultry and solar industries.

(SOURCE: REUTERS, THE STRAITS TIMES ARCHIVES)