Presently, the open areas for dialogue between India and USA include military issues related to combating terrorism and missile defence; developmental issues related to science and technology; information technology; cyber security and biotechnology; and other issues like health; environment, and energy. However, India and USA belong to different geostrategic contexts and different stages of economic development, which leads to occasional differences in perspectives.

“Our relations with the United States have entered a phase of unprecedented improvement. Besides the regular political dialogue, India and the United States have established over 15 institutional forums that meet regularly. Notwithstanding the chill of May 1998, dramatic progress has been seen in security and defence cooperation, and trade and investment-the US is one of our largest trading partners, the predominant destination of our IT services exports, and the major source of foreign investments. Yet, the challenges remain for better management of relations, given the different geostrategic and economic contexts, and occasional differences in perspectives. The investment that both sides have made in the relationship is predicated as much on mutual benefit as on its global significance.”

Historical Background

• Pre-Independence US supported the Indian Freedom Struggle and the Indian constitution had inherited many principles from the U.S. constitution.
• Over five decades, the relationship between the world’s two largest democracies has witnessed periods of ups and downs. Successive American Administrations concerned with the need to contain communism did not view India’s leadership of the Non-aligned Movement very favorably. The US alliance with and military support to a country hostile to India was also a cause of friction. The dominance of the state sector in the Indian economy was viewed in the US as inefficient and wasteful, and detrimental to its own interests. The Indian economy nevertheless benefited considerably during this period from US food aid (PL-480) and economic, scientific and technological assistance that, among others, made the Green Revolution in the mid-1960s possible.
• The dynamics of the Cold War the U.S. alignment with Pakistan and China, the Indian ties with the Soviet Union, conducting of nuclear tests in 1974 by India strained Indo-U.S. relations. The end of the Cold War and the collapse of the Soviet Union raised the prospect of the two countries exploring a new relationship. The end of the Cold War in the 1990s, coinciding with the liberalization of the Indian economy, saw a steady improvement in India-US relations with the Clinton Administration identifying India as one of the 10 major emerging markets. The last few years have witnessed a number of high-level exchanges, unprecedented in the history of bilateral relations, as well as a commencement of a “strategic dialogue”, which was expected to culminate in a US Presidential visit to India in 1998.
• The nuclear difference came to the fore over the Comprehensive Test Ban Treaty (CTBT), which the Clinton administration wanted so keenly and India, after initial support, rejected it. As he began his second term in January 1997. Clinton made a renewed bid to engage India and initiated a strategic dialogue. Plans were afoot for Clinton’s visit to the subcontinent in 1998.
• As the U.S. reacted bitterly to the nuclear tests of May 1998, the relationship seemed to head for a tailspin. Ironically, the nuclear tests opened the door for a new dialogue, the most intensive and sustained in the history of Indo-US relations.9/11 attacks changed the whole geopolitical scenario and USA became dependent on Pakistan for supporting its ‘war on terror’ in Afghanistan. India fully supported the US War on Terrorism and offered all possible assistance. Pakistan’s ‘double standards’ on terrorism became obvious and the USA developed a new sensibility for India’s problem with terror exported by Pakistan. India started to play a constructive role in Afghanistan, which was strategically important to Indian interests.

Mutual Interests

• India is a huge and growing market for global commerce, a leading player in the knowledge economy with demonstrated soft skill potential. India’s accelerating economic growth has attracted huge investments from major U.S. corporations.
• U.S. companies see huge potential in goods and services needed to upgrade and build India’s railroads, airports, power plants, fiber optic cables, health care, and energy production.
• India’s critical role as part of a “New Silk Road,” concept based upon the revitalization of trade and transit linkages between South, Central, and West Asia is also another important area of global interest.
• India and US share an interest in promoting regional and global security by combating terrorism, promoting democracy, and economic prosperity through trade, investment, and connectivity through the vital sea lanes of the Indian Ocean, preventing nuclear proliferation.
• India is of immense strategic importance to the United States in coping with a more powerful China and as stabilizing force and critical partner in South Asia and could help manage China's unpredictable rise and counter global threats such as terrorism and nuclear proliferation.
• Both countries need stronger economic ties having the world's largest economies and fastest-growing middle class. What binds the two countries together far exceeds the differences that drive them apart.
• In a recent visit to India in 2014 US Secretary of state lauded the Indian effort of promoting the inclusive growth slogan 'Sabka Saath, Sabka Vikas' as a ''great vision'' and said Washington would approach the Modi government in a way both the countries could be indispensable partners in the 21st century.

Contentious Issues

Several differences have emerged between the two countries, including a multitude of increasingly acrimonious trade disputes, the adequacy of New Delhi's current patent protection regime, the impact of India's nuclear liability legislation, proposed changes to U.S. immigration rules, and the impending withdrawal of American troops from Afghanistan. Some other areas are

• The US insistence on India signing the CTBT;
• India’s minimum credible nuclear deterrent which the Americans wanted India to quantify;
• India’s missile development programme and its future;
• Fissile material production cut-off on which the US wants India to impose a voluntary moratorium and engage in ongoing international negotiations at Geneva on the Fissile Materials Cut-off Treaty (FMCT); and
• Strengthening the Indian export control regime to prevent the export or proliferation of nuclear technology to any other country.
• India’s effort for a permanent membership in UNSC to which the US has not given full support.
• Afghanistan: Pakistan’s growing influence in Afghanistan and its efforts to exclude India completely on which the United States has not given much support, even though it may agree that India has a positive role to play there. India fears that Afghanistan could once again turn into a safe haven for non-state actors, which may result in the rise in insurgencies in Kashmir.
• Iran: India's ties with Iran have become an irritant in the India–US relationship with perceptible US influence on India's Iran policy, and the US the stand as India-Iran pipeline.
• Recent reports of the National Security Agency conducting surveillance of communication by Indian government agencies, including several Indian diplomatic posts in the United States, have also contributed to the lack of trust between the two governments.
• India’s stand at WTO, in light of the Food Security Act has also been criticized by the US in the 2014 meeting.

India-US Nuclear Deal

• Talks were initiated in 2005 when India's PM Dr. Manmohan Singh visited the US.
• On July 18, 2005, Dr. Singh and the then US President George Bush, in a joint statement, announced their agreement to enter into a civil nuclear deal.
• US imposed sanctions on India in 1974 after India conducted a nuclear test in 1974. 
• This occasion is considered important because this was the first time that India was recognized as a nuclear-weapon state.
• The agreement accorded India the same status as signatories of the Non-Proliferation Treaty (NPT) although India was not the one.
• The deal ended India's isolation on the civil nuclear front.

Features of the deal

• The agreement is between two states possessing advanced nuclear technology.
• The deal enables full civil nuclear energy cooperation between both countries.
• The deal covers nuclear reactors and aspects of the nuclear fuel cycle like reprocessing and encroachment.
• The agreement provides for the nuclear fuel strategic reserve to hedge against any break in the supply over the lifetime of India's reactors. 
• The agreement provides for the transfer of nuclear material, nuclear trade, equipment, components, and related technologies and cooperation in nuclear fuel cycle activities.
• The agreement provides for the application of IAEA safeguards to transfer material and equipment.

Common points

• The two countries have entered into a global strategic partnership.
• Both are committed to democracy and upholding the rule-based international system.
• They have a shared interest in promoting global security, stability, and economic prosperity through trade, investment, and connectivity.
• The US President and India's PM Modi held in-person bilateral meetings during which they reaffirmed their commitment to a resilient, rule-based international order that safeguards sovereignty and territorial integrity, upholds democratic values, and promotes peace and prosperity for all.
• The US supports India's emergence as a leading global power and a vital partner in efforts to safeguard the Indo-Pacific as a region of peace, stability, and growing prosperity.
• India and the US cooperate closely at multilateral organizations, including the UN, G-20, ASEAN Regional Forum, IMF, World Bank, and WTO.
• Together with Australia and Japan, the US and India convene as the QUAD to promote a free and open Indo-Pacific and provide tangible benefits to the region.
• India is one of the twelve countries partnering with the US on the Indo-Pacific Economic Framework for Prosperity (IPEF) to make our economies more connected, resilient, clean, and fair.
• India is a member of the Indian Ocean Rim Association (IORA), at which the US is a dialogue partner. 

Recent Development

• The two countries started an initiative called 2+2 Ministerial Dialogue in 2019. The 4th edition of dialogue took place in April 2022.
• In addition to 2+2 Dialogue, the two countries cooperated in dozens of bilateral dialogues and working groups, which span all aspects of human endeavor from space and health cooperation to energy and high technology trade. These include - the US-India Counter Terrorism Joint Working Group, Strategic Clean Energy Partnership, Climate Action, and Finance Mobilization Dialogue, Cyber Dialogue, Civil Space Working Group, Education and Skill Development Working Group, Trade Policy Forum, etc.
• In 2021, overall US-India bilateral trade in goods and services reached a record $157 billion. The US is India's largest trading partner and most important export market. India's balance of trade with the US is in India's favour.
• In June 2022, the QUAD countries concluded recruitment for the inaugural QUAD fellows, an opportunity for 100 students, 25 each from Australia, India, Japan, and the US to pursue a master's or doctoral studies in STEM in the United States.
• In 2021, the United States joined the International Solar Alliance (ISA) headquartered in India.
• In 2022, the United States Agency for International Development (USAID) Administrator Samantha Power became co-chair of the Governing Council of the Coalition for Disaster Resilient Infrastructure (CDRI) where India is a permanent co-chair.
• In 2021, a revamped version of the US-India Strategic Energy Partnership (SCEP) was announced. India and the US engage across five pillars of cooperation - power and energy efficiency, responsible oil and gas, renewable energy, sustainable growth, and emerging fuels. 
• A new India-US Task Force on Biofuels was also announced