These criticisms culminated in the United States imposing economic and Defense sanctions on India. On May 13, 1998, President Bill Clinton reported to Congress that he had imposed sanctions on India under Section 102 of the Arms Export Control Act, otherwise known as the Glenn Amendment.
General terms, the sanctions forbid US support for International Monetary Fund co-operation with India and on ‘international bank loans too, except those earmarked for humanitarian purposes. In imposing these sanctions US sought to send a strong message to would-be nuclear testers to minimize the damage to other US interests, halt further nuclear testing and to compel India to sign the CTBT immediately and without conditions.
However, by the end of one year of imposing sanctions on India, US realised that these sanctions were proving to be self-defeating. It was reported that US lost over tens of millions of Dollars in sales due to trade sanctions. What’s more, European and Asian competitors were cashing in on the sanctions by supplying equipment that US-based companies are prohibited from selling to Indian manufacturers.
In fact, sanctions proved to be beneficial for India in forcing us to achieve a certain degree of technical self-sufficiency in arms production. Huge losses to US economy, the Indian attitude towards sanctions, and her growing importance in global economy, anti-sanction stand taken by other countries like Japan, Canada, US Opposition and even the common American forced the US government to re-think on sanctions.
Finally on December 17, 1999 the Clinton administration set in motion the process of lifting the sanctions against India, by ordering removal of 51 Indian entities from the list of over 200 entities, which the US had originally sanctioned.
There was a change of guard in the US with Republican George W Bush assuming the mantle. The Bush government wants to further improve ties with India and has assured that it would lift all sanctions by the end of 2001. Whether these promises materialise remains to be seen. One might even say that the future Indo-US ties depend largely on how US handles the sanctions issue.