US looks to India as alternative to China

United States Secretary of Treasury Janet Yellen in New Delhi to hold talks with government and business made clear that Washington wants more reliable supply chain networks and trade partners, implying that the US wants alternatives to the deep ties that exist between the US and China.

Yellen in her meetings with Indian Finance Minister Nirmala Sitharaman had talked of “friend-shoring”, a new term in international trade politics, which means America-friendly trade partners.

These include India, south-east Asian countries of the Association of South-East Nations (Asean), as well as South Korea, Japan and Australia. Yellen talked of shifting American businesses based in China to India and Vietnam.

This did not mean that the US would completely shift out of China, or boycott China. What America is looking for is a backup if tensions between the US and China get worse, especially over Taiwan.

The US has been making plans to create the Indo-Pacific network, bringing India into it for the first – earlier the Americans were focusing on Asean and the Far East – time. The creation of the Quad, which comprises the US, India, Japan and Australia, which is seen as a group to counter Chinese influence in south-east Asia and further east, but it is not an anti-China military alliance as yet.

American policy towards China has been hardening in the last few years. US policymakers had always emphasised that America did not want to contain China but it wanted to cooperate with China.

It looks like now the Americans do want to contain China and they want to cooperate less with China if they can help it.

It is against this background, Yellen’s remarks in New Delhi gain in significance. She said, “India’s membership in Indo-Pacific Economic Framework (IPEF) is in efforts to make our supply chains more resilient through what I call friend-shoring, are tightening those ties.”

The US government is providing $500 million to a private American solar manufacturer to set up the largest unit in Tamil Nadu in south India.

Yellen observed, “Technology companies like Amazon and Google are investing in India and Vietnam. Apple recently announced that it was shifting some iPhone manufacturing from China to India.”

In a joint statement issued on Saturday, India and the US declared, “We agreed that India and the US should work together with partners to pursue a broad mix of public and private financing to facilitate India’s energy transition in line with its nationally determined climate goals and capabilities.”

Though Indian policy analysts favour closer linkages with the US and the West in general to counter China’s tense equations with India, especially at the India-China border, India is not willing to toe the American line, especially its sanctions policy against either Iran or with Russia.

In the wake of the American and European Union (EU) economic sanctions against Russia in the wake of the war in Ukraine, India had been buying oil from Russia, as did many other Asian and African countries along with China.

The Americans had been trying to pressurise India from cutting its trade ties with Russia but the India government found it useful and necessary to continue its decades-old economic ties with Moscow. Even on the IPEF, India had kept itself out of the discussions on “pillars of trade” which would involve closer binding with America on specific trade issues. India is not willing to yield ground on its strategic autonomy.

India’s position on Taiwan is more ambiguous than that of the Americans because India fully supports the One China thesis of Beijing. Observers on both sides opine that as befits two democracies, there will always be differences between the two countries, but it does not mean they would not cooperate with each other.