Technology Agreement between India and the US: A New Era in Relations in Light of a Strengthening China

A technology cooperation agreement was signed in January 2023 between India and the U.S. despite ideological differences, with the intention of the U.S. both to deepen its influence in the Indo-Pacific and to weaken relations among India, China and Russia. It was implemented within the framework of friendshoring: the reliance on production of critical technology components in friendly countries. This agreement serves India’s desire to expand its influence in the geographic area between Western Asia and the Middle East as well, and to deal with the challenges facing India as a rival of China’s.

In January 2023, after joint dialogue between senior Indian and American officials led by American National Security Advisor Jake Sullivan and his Indian counterpart Ajit Kumar Doval, an extensive cooperation agreement was signed that addressed various areas of technology. In this context, it was agreed not only that information related to critical and developmental technologies would be transferred, but also that technologies would be jointly developed and regulatory hurdles for technology trade would be removed. The agreement covers a wide range of technologies, including chip supply chains, the supply of airplane engines from the U.S. to India and the joint development of important dual-use technologies, including artificial intelligence and quantum technologies.

The agreement focuses on the technology sphere and is described by Sullivan as the most significant milestone in relations between the countries since the nuclear cooperation agreement signed in 2016 — the first between the countries since that time. After the Cold War, the ideological dispute between them derived from India’s principle of “non-identification” — the desire to maintain relations with countries with ideologies different from those of the U.S. — as well as India’s closer relations with China. From the U.S. perspective, the agreement both strengthens India and serves its own geopolitical and strategic interests in the Indo-Pacific region; it attests to the importance the U.S. ascribes to India as a potential partner for advancing substantive interests, including competition with a China that is growing stronger in military-technology and economic spheres. From India’s perspective, the agreement offers operational space within which it can advance its industries, its attractiveness to foreign investment and its technological capabilities, specifically those that can strengthen its military capability to contend with foreign challenges.

Therefore, the rapprochement between the countries that led to the agreement is the outcome of joint geostrategic interests linked, among other things, to actions by China in the international arena, particularly in the Indo-Pacific region. Although the agreement deals primarily with bilateral cooperation, Sullivan said that there is a challenge to both countries apparent in China’s actions that include the movement of weapons to the India-China border, attempts to control the technology supply chain and efforts at domination in technology industries in general. The agreement is particularly relevant to the following issues.

First, strengthening defensive and military capabilities in the face of China’s growing strength in the Indo-Pacific region, which poses a threat to India, given their border dispute: One of the signed projects deals with the development and production of jet engines that can power military aircraft operated and produced in India.

Second, strengthening the critical supply chains to produce and develop technologies aimed at preventing significant dependence on specific countries and expanding options for other countries: This comes in light of events such as the COVID-19 crisis and the Russia-Ukraine war, which have disrupted the supply chains. The agreement includes the intent to apply standards for the use of technology — specifically, artificial intelligence — that will be based on democratic principles in order to prevent ill use by China.

Regarding the U.S., the agreement is intended to serve two security-strategic interests.

The first is to expand its influence in the Indo-Pacific region by strengthening those countries considered part of the liberal-democratic bloc; officials in the U.S. identified this as one of the central motivations for the agreement, despite the ups and downs in relations between the U.S. and India over the years. The lack of connection has resulted from India’s desire for neutrality, depending on the issue, in order to maintain its relations with a variety of countries — including its close and special connection to Russia due to India’s dependence on Russian oil and weapons. (Thus, India has not expressed an opinion on the war in Ukraine.)

Through its rapprochement with India, the U.S. is endeavoring to discourage India from drawing closer to China and Russia; it is also encouraging a reduction in its dependence on trade and weapons with these countries. Therefore, in light of this rapprochement, the U.S. has refrained from demanding that India express criticism of authoritarian states or take a side in the Russia-Ukraine war. Given the tensions with China and Russia, the U.S. is looking to bring India’s strategic and ideological interests closer to the West.

And second, the U.S.’ rapprochement with India is occurring because of the supply chain crisis in technology — a crisis resulting from the COVID-19 pandemic and U.S. and Indian desire to control advanced technologies. This has led to a mutual understanding that development and production of chips must be done in the U.S. and India; therefore, the agreement is an expression of a joint desire to develop and produce chips in both countries, with American companies transferring activities to India.

In the context of cooperation, the U.S. is endeavoring to strengthen the existing expertise found in factories in India and attempting to bridge regulatory gaps. At the same time, the agreement strengthens India’s interest in making itself more attractive to foreign investment. On the American side, the intention to remove regulatory blocks is good news for private business: It will ease restrictions on the private technology sector and strengthen relations with India. In fact, the agreement is a test of the friendshoring policy led by the Biden administration that relies on the production of critical technology components by friendly countries.

India considers cooperation with the U.S. to be important also because of its desire to strengthen its geostrategic position, primarily in the technology and economic sectors, for China is gaining strength in these fields. China and India have the fastest growing economies in the world; their accelerated growth is increasing the tension between them. Added to that is the dispute between China and India over their joint western border in the Himalaya area of Aksai Chin. Although China controls the area, India is demanding ownership of some of the territory. Another expression of aggressive Chinese behavior, according to India, is China’s rapprochement with Pakistan, India’s rival. This rapprochement is part of China’s Belt and Road initiative, through which China is trying to expand its activities in the Euro-Asia region — and which India has refused to join. Despite the existing relations between India and China and the attempts to solve their disputes, China is seen in India as challenging its advancement in strategic and technological status. Therefore, the agreement with the U.S. represents an opportunity to strengthen India’s position and technological and military capabilities.

Another major subject in the agreement is the environment initiative. The agreement includes plans for cooperation in developing technologies, such as quantum computing and artificial intelligence. These technologies are important because of their dual-use character; their production and joint development will help both countries. For India, its status as a technology superpower would be advanced in the Indo-Pacific region and in the global arena; it would be an important step for the U.S. toward creating standards for the use of these technologies in line with its economic, security and ideological interests. As the Biden administration emphasized in the strategic national security framework, preventing the use of these technologies against democracies, including by means of monitoring the spread of disinformation on the internet, is an important security requirement.

Despite the common interests of the U.S. and India, there are possible obstacles to advancing joint relations. The U.S. administration has been critical of Prime Minister Narendra Modi’s violation of human rights, while emphasizing — in the context of a national security strategy — the importance of cooperation based on liberal-democratic values, primarily in the face of challenges to a liberal global order coming from China and Russia. The paragraph in the agreement concerning development of technologies on the basis of democratic values does not necessitate the desire to impose democratic values on India, but seeks only the common goal of strengthening standards on a global level. That said, for India to downgrade its relations with Russia and China and its reliance on their resources in the areas of oil and weapons, the U.S. is seeking to present a tangible alternative: It wants to supply India weapons to include combat aircraft and jet engines to replace the warplanes previously supplied to India by Russia.

In conclusion, the technology agreement between the U.S. and India is intended to increase the influence of India and the U.S. in the Indo-Pacific and to weaken the influence of China. This rapprochement grants validity to the growing importance of this region to the U.S. and provides a golden opportunity for India to expand its zone of influence between Western Asia and the Middle East. While ideological disagreements between India and the U.S. remain, the rivalry with China strengthens ties between them and creates an opportunity to realize their joint geostrategic interests.

About this publication

About Charles Railey 61 Articles
I recently retired from the federal government, having worked for many years on Middle East issues and regional media. My fascination with the region has never changed and this is one reason why the work of Watching America caught my eye. I live in the DC area with my wife, two grown children, and three cats.