Come Saturday, November 6, 2010, the United States President, Barack Obama will be in India - his first official trip to the country. Expectations are running high over his visit and the Indian govt. made it clear not to expect any big bangs or breakthrough deals. I expect that this trip is going to be a consolidation of all gains obtained in the past decade or so in the US-India relationship and finding ways to increase this positive momentum built over the decade and push the relationship forward. Here are a few issues that will possibly come up in discussions and questions asked to the leaders of the two countries:
UNSC Permanent Seat: It has been India's long-held desire to get a permanent seat in the United Nations Security Council (UNSC) and almost all major powers seem to support an extended UNSC, with India as a new permanent member - except two "hesitant" countries - China and the United States. And the Indians ask: Well China, it is expected, but why US? Yesterday when this question of whether US would support India's bid to become a permanent member in the UNSC was asked to President Obama, he said that it is "complicated". During this year's World Economic Forum gathering, a poll conducted by India's TV channel NDTV and Facebook on "What does India expect from the world?" - showed that the majority expected the world to support India's bid to a permanent seat at the UNSC. This issue has been close to Indians' heart for sometime. So this question is definitely going to come up and I hope that President Obama makes it clear that though there are "sensitivities" on the US side on this issue and some unfulfilled expectations on India from a "US perspective" remain, the US would like to see India being an important part of any reformed international institution. But also, such words are uttered almost everyday by someone in the US administration but some kind of credible action would calm India's anxiety about how America envisions a future India - a credible action like that did by former former President George W Bush on the civilian nuclear program that brought the two countries closer than any other time in history.
Civilian Nuclear Deal:
The passage of a Civil Nuclear Liability bill by the Indian Parliament that holds the suppliers of the nuclear equipments liable, in addition to the operators, for any nuclear accident involving a faulty equipment, has become a thorny issue in this matter. US companies say that this is not in sync with international norms. But in a country where one of the world's disastrous industrial accident (Bhopal gas tragedy) happened and where people are still affected by this accident, both mentally and physically, this was the least the people expected from the Indian govt. and which the govt. had to oblige. When US companies say that such an inclusion of supplier-liability is out-of-sync with international norms, I would like to question who influenced the international norms? It's going to be a vain-effort if President Obama tries to push India for an amendment in the bill. While French and Russian nuclear companies are okay with this bill since they have state-backing to support them for any liability claims, amending the law just for US' request will not go favorable among Indian people. India has invited the US Nuclear companies to visit and get all clarifications - including what kind of suppliers would be held liable and under what circumstances. I hope the US companies understand the extreme sensitivity involved in this issue and I hope that all the hard-work done by both US and India on this deal do not go vain.
Economics:
i) Outsourcing: President Obama is sometimes seen as anti-outsourcing and protectionist by the Indian business community. But so be it - I strongly support President Obama on his decision to provide incentives to companies who invest in US (and this has to be done by cutting back incentives to companies who invest outside US or outsource jobs). Few things that we have to note here is - these are tough times in the US economy and it is nothing wrong in US policies to support investments in US. While I strongly denounce any protectionist policy, I also don't believe that all so-called "protectionist" polices are actually protectionist (Admission: Though I also noticed some clear protectionist policies by the US during the course of the last year). Secondly, the Indian IT companies have actually moved up the value-chain and most of them are no more just call centers or business process outsourcing centers, but are actually involved in research and development and other value-added services. Bottom line: Outsourcing is not going to stop and the Indian IT companies are not going to be drastically affected (we only have to look at the profits reported by some of these companies in the recent quarter) but atleast Obama's strict words and real-incentives would encourage investments in US. Infact, if someone had noticed closely, then they can see the investments by the same IT companies in US recently. And currently the private sector in US is not investing and so atleast the public sector can (actually should) invest through any additional resources obtained this way.
ii) Financial Services: US has been pushing India to open up their financial and banking sectors further. But the with the "credibility" of the US banking and finance industry is not-so-good condition, India is wary to oblige to any American request in this matter - especially feared of the thinking of how the "common-man" would view this in a country with a large number of "socialism-influenced" voters.
iii) Retail Industry: Now from the Indian side, opening up of the retail sector is not just a politically sensitive issue but also a confusing one. Retail industry is one of the largest employer in India and with 90% - 95% being in the unorganized sector (mom-and-pop shops), it has really been a tough time to analyse the positive and negative implications on the hundreds of millions of people (and most of them are poor). But India has to make it clear to the visiting US President that it has launched a serious study on this issue and is positive on opening this sector - though the time and pace remains largely undecided. One assurance India can give is to soon relax some FDI rules in the sector for greater foreign participation.
iv) Agricultural Sector: We all know that one of the contentious issue holding back Doha Agreement is developing countries' (read: India) stubborn position to not open this sector fully to foreign produce/commodities while developed countries (read: US) having political problems in cutting back farm-subsidies. I hope the two countries don't waste time in talking about opening this sector - since the answer is going to be a clear "NO" from both sides to any request by the other.
But the two countries should talk on forging closer ties on agricultural-related technologies and research (this also includes co-operation in space programs for activities such as weather-forecasting). India should give clear signs on how its going to formulate the public sector investment policy and the related procurement policy in irrigation related technologies (so far, India doesn't have clear policies in this regard but giving an assurance that it is serious about formulating a long-term agricultural policy involving greater foreign participation in related technology areas will be good.) Such policies will help the hundreds of millions of desperately poor Indian farmers, with increased business opportunity for US.
v) Export Control Restrictions: Any clue that US would ease restrictions on exports of high-tech and dual-use technologies will make Indians happy to the core - for, a message will be derived from such an action - that US sees India as the most important Asian "strategic" partner and not just as a business partner. But again, the sensitivities of US are understood but gradual reduction in restrictions will be a very good signal. There have already been improvements in this area of discussion and it would be great to see more.
vi) Infrastructure: This is an area where great co-operation could be achieved, not just in words but in action. India is in desperate need for foreign capital and technology to build infrastructure such as roads, ports, highways, bridges etc. We have the right demand in one hand and the right supply in the other, its just a matter of time before the two hands could be brought together for a business handshake.
Climate Change:
US and India almost stand on opposite sides on this issue - especially the argument that both sides put forward - one blaming the other of not doing enough. But discussion should instead be on co-operation in climate research and how the scientists could come on a common platform for the better benefit of mankind. India has made clear that for foreseeable future, fossil fuels are going to be the ingredient in the development of its economy. The reasoning behind this - extreme levels of poverty - needs to be recognized by the US, and America can come forward to initiate a consolidation and augmentation of resources by offsetting the weaknesses of one with the strengths of the other.
Geo-Politics:
Sorry this blog stays away from sensitive and complex geo-politics but one thing I can say is that when looked on a longer-term, the aspirations, goals, interests and values of the two countries remain aligned, though the degree of alignment varies currently. But I am very confident that the two countries would become the 21st century best-friends.
I wish President Obama a safe and successful trip. And Happy Deepavali friends! :)
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