“We don’t want to be part of arming you against India, so let me be very clear about that”, US President Barack Obama told Pakistan President Asif Ali Zardari a few days ago just as his plans to visit India on a business trip firmed up. There is much of agonizing heartache which Pakistan can’t hide, so much that the border districts of Jammu and Kashmir have been getting an artillery pounding from across the Line of Control.

But then, the biggest fear that Pakistan has is that the business emphasis of the US President’s visit can relegate its pet peeve Kashmir to the back-burner as India and the US warms up to better relations like no other President did in the past. President Barack Obama is slated to be in India for three days, which is by far his longest visit to any country yet.

Though there has been trouble on the outsourcing front as pointed out by this magazine a few weeks ago, the market size of India is the biggest draw for any US President. Coupled with that is the fact that the US will always look to India as a countervailing force to hegemony of China in the region.

The benefits for the US in dealing with India and its burgeoning market is that it can hugely affect US corporates, especially in the FMCG and retail sector. Wal-Mart CEO Mike Duke has repeatedly said that the direct effect of allowing FDI in organised retail will be in controlling inflation. Prices of agricultural commodities will plummet if organised retail sector gets the FDI fillip in expanding to rural unexplored areas, just as the farmers would get better realization on their produce.

President Obama is coming along with a high-powered business delegation which includes CEOs of many Fortune 500 companies. The delegation’s main agenda would be about outsourcing of information technology services, entity list, science and technology agreements, social security tax and aviation. The discussions will take place with Indian counterparts on November 6.

It is to be noted that Obama’s predecessors George Bush and Bill Clinton also addressed Indian industry leaders when they visited India during their tenure. The visit of President George Bush, whom Prime Minister Manmohan Singh once addressed as India’s best friend, had a better rapport with the Indians than Bill Clinton, though the picture of Clinton dancing with the tribals in Rajasthan is etched in the minds of Indians like none else.

Even if the agenda of the US President is quite a secret, news reports suggest that the US-India Business Council (USIBC) will jointly host a day-long seminar with the Confederation of Indian Industry (CII) and Federation of Indian Chambers of Commerce & Industry (FICCI).

It is also known that Terry McGraw, USIBC chairman would lead the US delegation. Just as in previous US President’s visit to India US secretary of commerce Garry Locke, treasury secretary Tim Geithner, and agriculture secretary Tom Vilsack are expected to be accompanying the delegation.

There is also speculation over `entity list’ which will figure in the talks between the US President’s delegation and their Indian counterparts. The entity list contains names of companies and individuals dealing in `sensitive’ areas.

The US Export Administration Regulations (EAR) put out by the US Bureau of Industry & Security (Department of Commerce) contain a list of names of certain foreign persons that are subject to specific licence requirements for the export, re-export and transfer of specified items. The list includes businesses, research institutions, government and private organisations, individuals, and other types of legal persons. It is this list which India would like to see altered.

Another area of contention is aviation. The penalty for late delivery of commercial aircraft to India could also figure in the talks. For many Indians visiting US on short term visa there is this crying need to alter the social security tax paid.

India is quite clear on what it wants on this issue – businessmen paying tax in India should be exempted from social security tax in the US when they are on a short-term visa. It is estimated that if India gets this leeway there could be an annual saving of $1.5-billion.

Beyond business, India is seriously concerned with the delay in full implementation of Indo-US civilian nuclear agreement. After the hype over the deal which was much to the chagrin of Pakistan, Obama Administration has been squarely blamed by Indian government for the delay.

But more than seen in the public eye about business and trade which can keep the constituencies in the US as well as India happy for US President Barack Obama and Indian Prime Minister Dr Manmohan Singh, the tenor of dialogue on various terror related issues would decide how life will be different in the near term for both countries.

Pakistan’s complicity in terror attacks in India is beyond doubt and the US President’s statements have increasingly been over the edge, almost as if there is an attempt to control his fury. And the US has every reason to be furious at the double game played in India’s neighbourhood in the name of freedom and azadi.

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Posted by Anil Nair at 6:21 PM

Updated: Friday, 5 November 2010 6:30 PM

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Mood:  incredulous

Slumdog Millionaire winning eight Academy awards has to be seen in a different light than just plain and simple quality of movie-making. The US has always had a way of winning markets through other means than the obvious. Beyond the glitter and the glamour of winning the Oscar there seems to be a concerted effort on the part of the US to reach out to India. And it is not just India that is suddenly on US radar, and also it is not just because of the on-going conflict in the Pakistan-Afghanistan border. The changing equations in the newest world order were reflected in Hillary Clinton’s first trip abroad as Secretary of State which created history of sorts. Her comments on choosing to travel to Asia was telling: "I have come to Asia on my first trip as secretary of state to convey that America's relationships across the Pacific are indispensable to addressing the challenges and seizing the opportunities of the 21st century”.

If North Korea was up to its usual bellicose self threatening the world with even more nuclear tests, the situation in Afghan-Pakistan border is precarious with a bought-out peace deal with the Taliban. To add to all these woes is the looming economic crisis in the US which only gets worse with ever passing day. The Indian economy, by far has shown resilience with a 5%+ growth, even as industrial production showed signs of recovery last week. “The deficit in infrastructure in India makes any fear of depression look unwarranted. For example, in the first 50 years after Independence we have built only 11 kilometers of highway every year. The NDA government emphatically rode the infrastructure story and now it is unstoppable. The GDP growth can be perked up to comfortable levels just by developing infrastructure and allied activities”, said a participant at the recently-held Essar Steel infrastructure conclave in Mumbai.

Interestingly, speaker after speaker at the conclave spoke of the success mantra of Narendra Modi government in Gujarat. It was not just about politics of business which has made Modi popular; the quality power situation, tendering processes, single window clearances, friendly bureaucrats and department officials, co-ordination between various ministries, all-inclusive growth pattern and the overall conducive nature of governance in the state came for industry appreciation. The best examples of good governance were reflected in the facilitation of mega projects like ports and SEZs. It wasn't that the industry representatives were trying to curry favour with the Gujarat government by such effusive accolades. The appreciation for Modi was genuine as there was no government representative other than Kirit Parekh, member of Planning Commission on the dais.

But for the US, more than conflicts and flash points around the world the government is consumed by the economic slowdown and its effects on domestic jobs. If Japan has a zero per cent interest rate regime and still witness growth sluggishness, India with 8 per cent PLR has yet to show any major slump in economic activity. It is not that the situation is comfortable in India, it is simply that Indian growth story is quarantined from the world’s financial market mess. Software industry and sectors dependent on it like real estate have taken a body blow in the global meltdown. The decision of the government this week to build one million homes for the poor is yet another of those measures aimed at stalling fall in growth rate, but how much will finally see the light of day is anybody's guess. Unlike China, whose dependence on the world markets has made most of its export units languish in ruins even while tens of thousands of factory workers have been laid off, the recent spate of stimulus packages announced by the Indian government in response to the demands made by industry bear testimony to the fact that if growth story is intact, the next government at the Centre will have some leeway in introducing measures to help the small and medium enterprises sector. The small and medium sector is the one which is hardest hit by the recessionary trend. The government is yet to come up with a bail-out package that can assuage the fears of the sector, especially when liquidity has been sucked out. The small industry is still looking expectedly at a interest rate correction by the central bank. One factory manager in Thane-Belapur belt told this reporter that in the US “the stimulus package was delayed by four days and that somehow was considered a blemish in President Obama’s management skills. Here in India the government takes months for crucial decisions and Indian industry bears it all with a grin”.

The attraction of Indian markets is not lost on US investors and industry. Young, prospective property buyers recently swarmed an affordable housing exhibition in Mumbai that took the organizers by surprise, which only brings out the pent up demand to the fore. If the Academy Award goes to Slumdog Millionaire, the US is just sending the right message to India about its keenness to engage this billion plus market. To take it as a front for Hollywood-Bollywood alliances alone will be a mistake. More than film makers, it is the large number of film watchers in this country that the US is trying to befriend. Also, as it happened with Russia, Iran and Venezuela the US knows that India is a perfectly decent country to engage with. The economic might does not raise the hubris of this country.

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Posted by Anil Nair at 11:20 PM

Updated: Monday, 2 March 2009 4:44 PM

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