Obama visit lends strength, depth to ties

US President Barack Obama has reason to feel satisfied with his India visit. Despite high-flown rhetoric and media hype, real significance of the visit lay in evolving a more realistic understanding of the issues of concern to each other.

By Virendra Parekh (India Monitor)

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Published: Wed 17 Nov 2010, 10:35 PM

Last updated: Mon 6 Apr 2015, 11:27 AM

Mr Obama came to India with a purpose which was explicitly and publicly stated: to open Indian markets for American goods and services so as to create jobs in the US.

The importance of the mission had been underlined by the severe drubbing that Mr Obama’s Democratic Party received in the US Congressional elections just a couple of days before his departure.

Given this background, Mr Obama showed a pleasantly surprising understanding of Indian sensitivities.

Consider, for example, the thorny issue of outsourcing. During his election campaign and later Mr Obama talked repeatedly of outsourcing, of the need to “say no to Bangalore and yes to Buffalo.”

Just recently, his administration raised taxes for US companies that indulge in outsourcing, and jacked up sharply H-1B visa fees, hitting hard Indian companies. And, unlike many other dignitaries, Mr Obama did not visit Bangalore during his long sojourn in India.

However, while in India, he said that an outsourcing-centric view of the Indian economy is a “caricature,” that outsourcing itself is a “bogey” that he has not raised.

In his address to Parliament, he also said he would not take any steps that targeted Indian firms. He did not join issue with Indian Prime Minister Dr Manmohan Singh when the latter said that “India was not in the business of stealing American jobs.

Nor did India give any indication of relaxing restrictions on foreign direct investment in sectors like retail trade, aviation or insurance.

The visit saw some meaningful exchanges. Americans clinched deals which will fetch them billions of dollars and thousands of jobs. India has indicated its “preliminary agreement” to purchase 10 C-17 cargo planes for its air force, which will support 22,000 jobs in the US.

This deal is part of the $5 billion worth of defence equipment that India is set to acquire, including C-17 transport aircraft, 150 ultra-light howitzers and Harpoon missiles. Besides, the US companies have sealed deals worth $10 billion that would create 50,000 jobs back in the US.

Very significant from India’s point of view is the US decision not only to change the membership rules of multilateral export control regimes, but also relax controls on export of dual-use technologies and remove Indian organisations from the Entities List.

As a result, Indian organisations like ISRO and DRDO will no longer need to have a licence for import of some hi-tech items.

What explains the bonhomie? One answer is: hard economic facts. In the last seven years, American exports of goods and services have grown from $7 billion to $27 billion. Further, the trade relationship is broadly balanced. And that’s not all.

Indian companies are now the second-fastest-growing investors in the United States and now support about 57,000 jobs in the US. In contrast, China has a massive trade surplus with the US and keeps its currency artificially low. These facts, known earlier, seem to have sunk in now.

Quiet work by Indian diplomats and relative decline of American power could be other reasons.

At a deeper level, India’s democratic traditions, talent and industry of its people and its vibrant economy make it an indispensable partner for any superpower.

Whatever the reason, Obama’s visit turned out to be better than expected for both the countries. The task now is to build on it.

Views expressed by the author are his own and do not reflect the newspaper’s policy.

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