The year 2013 will be remembered for the challenges it threw up for the ties between the world’s two largest democracies, including a row triggered by the arrest and strip-search of an Indian diplomat in the US. Prime Minister Manmohan Singh held a successful meeting with US President Barack Obama at the White House and Vice President Joe Biden made a rare trip to India, but the strain in bilateral relations was evident throughout 2013 especially over India’s nuclear liability act.

Also, over 200 American lawmakers made an unprecedented move to vent their ire against India’s economic policies. However, the events of the year were capped by the arrest of senior diplomat Devyani Khobragade, the Deputy Consul General in New York, on visa fraud charges. While the US asserted that by arresting her, it was enforcing the law of the land, India fought back by taking a series of reciprocal measures like withdrawing special privileges of US Embassy personnel in New Delhi.

Following the arrest, one of the rare occasions when an Indian diplomat was detained overseas, the India-US ties came to a standstill. Even earlier, many experts had said that it has plateaued. This was mainly because both the Congress and the influential American industry – the main drivers of India-US ties in the past decade – openly expressed their anger and anguish over India’s economic policies. Through a series of letters, more than 240 Congressmen and Senators and Corporate America sought Obama’s help to address what they described as policy paralysis in India.

But when Prime Minister Singh held his highly successful meeting with Obama in September, which was preceded by India visits by Vice President Biden and Secretary of State John Kerry, it looked like the two countries were working together to address their differences and take steps to strengthen bilateral ties. With Obama himself showing personal interest in deepening ties with India, which he considers central to re-balancing his policy for the Asia-Pacific region, the White House meet resulted in a US-India Joint Declaration on defence cooperation.

The joint declaration, a product of what is being called the “Clinton-Menon” initiative, put India at par with the closest American allies and paved the way for joint defence codevelopment and co-production. The year also saw for the first time visits by the heads of all the three wings of India’s armed forces to the US. The US Army Chief Raymond Odierno too made a rare visit to India. While defense cooperation grew by leap and bounds, sharp differences between the two sides on key economic issues gradually came out in the open.

The US raised the issue of foreign direct investment, intellectual property rights and taxation, and sought reforms in key sectors like insurance. India and Indian companies were upset over the comprehensive immigration bill, which they argued would be harmful to the Indian economy and badly hit Indian companies in the US. Despite repeated efforts, the US did not offer any concrete promise on the issue.

Also, the US lawmakers expressed their concerns over nuclear liability act. The act, passed by both houses of Indian parliament, aims to provide a civil liability for nuclear damage and prompt compensation to the victims of a nuclear incident through a nofault liability to the operator.