Special to ‘Tehelka’, 2 November 2010

by Praful Bidwai

President Barack Obama comes to India without a big “deliverable” even remotely comparable to the US-India nuclear deal which dazzled our elite largely because of the symbolic but unique exception it made for India in the global nuclear order. But that does not mean that Washington does not have a broad-based economic agenda to transform the India-US relationship to its own advantage. It does, and it is related to the global economic conjuncture.

The US has still not emerged from the Great Recession; nor has Western Europe. US unemployment runs at 10 percent. Relations between the US and China, its largest trading partner, which holds $2 trillion-plus of US bonds, are strained. Beijing has ticked Washington off over revaluing the yuan. In these circumstances, the US is looking for an ally which could provide a sizeable and growing market, help relieve its enormous trade deficit to some extent, and above all, create jobs in America. India is puny beside China as a manufacturing power, but it could potentially, eventually, become a source of support—despite US discomfort over outsourcing.

Obama wants to push India-US relations structurally in that direction. That’s why he’s starting his visit with a huge business delegation and a high-profile meeting with top industrialists in Mumbai. This is meant to discuss a range of issues, including liberalised trade; opening up of India’s retail, insurance and arms production sectors; collaboration in agriculture, science, energy, education and infrastructure; easing of US export control regulations; and bilateral agreements in aviation, space, defence and biotechnology.

India-US bilateral trade may only clock $50 billion this year. But it is growing rapidly and Obama wants to pledge to double the volume in five years, with an emphasis on boosting US domestic growth and job creation. Exports of US goods have already quadrupled over seven years, while services exports have tripled.

As Mike Froman, Deputy National Security Advisor, puts it: “So it’s a fast-growing economic relationship. And it’s a two-way street as well. Indian companies are the second-fastest-growing investors in the US. And … they now support about 57,000 jobs here …. So it’s a great market …. It’s a good … source of investment for the US. There are lots of jobs in the US tied to both of these things. And that’s why the President will be in India, focusing on the first day on the economic and commercial relationship.”

Indian investment in the US is rising much faster than US investment in India. Indian companies also run a range of activities in the US, such as training programmes, research and development, and mergers and acquisitions.

However, as important as the benefits from trade and investment is the bonanza US corporations hope to reap through three kinds of opportunities: liberal terms for investment in areas which were hitherto closed, like defence production and retail trade; intensification of private-public collaboration in education, health, infrastructure, scientific research and the Knowledge Initiative in Agriculture; and last but not least, “new” businesses like climate change-related “clean energy” and “green” production technologies.

Recent Planning Commission and Finance Ministry reports have already laid the ground for opening up retail trade to foreign investors. This potentially creates huge opportunities for Walmart and other mega-retailers. No less important is the likely raising of the foreign investment ceiling in defence production and insurance.

As US involvement in India’s arms purchases grows—with six C-130J Super-Hercules aircraft worth $1 billion on order, talks in progress for $5.8 billion worth of 10 Globemaster transporters, and the lure of a possible $10.2 billion deal for fighter planes—so will opportunities for ancillaries and spares production and maintenance contracts. In the next couple of years, India’s arms market could grow by $50 billion—a huge profit opportunity.

The US is keen that India opens up its public laboratories to US private corporations in seeds, biotechnology and vaccine development, and deepens collaboration in the health sector through “public-private partnership”, which favours private corporations. There is a strong lobby within India which wants to see such “partnership” grow, with closer “cooperation” between Indian and US universities, especially in the natural sciences and some engineering fields, where India can supply skilled personpower at a fraction of the US cost.

The US is also keen to involve India in its own climate-related agendas. It is trying to do so in four ways: by getting India to drop its insistence on multilateral United Nations-based climate negotiations and agreements; by subjecting India’s emissions mitigation and adaptation measures to the MRV (measurable, reportable and verifiable) criteria through external security; by jettisoning the principle of North-South differentiation of responsibility for fighting climate change; and finally, by agreeing to collaborative projects on clean energy production and other green technologies where the US sees a big market developing in the near future.

The US is alarmed at China’s attempt to seize the lead in renewable energy and would like to rope in technologically capable Indian government and private agencies to counter China. This idea is not innocuous. Apart from being Sinophobic, it comes attached with strict intellectual property rights—patents and monopolies which would work against the overwhelming global public interest, which lies in promoting climate-friendly low-carbon technologies on an “open access” basis.

Loosening of export controls on “dual-use” items for the Indian Space Research Organisation and Defence Research and Development Organisation will also help US corporations find new lines of business in India, in which they hold near-monopoly power.

The US is using its leverage over India to promote its corporate interests even more narrowly than it did a decade ago when it forced New Delhi to open up 700 lines of trade. This adversely affected livelihoods then, particularly in agriculture. It will do so now, especially if the agenda is pushed in respect of milk products, on which millions of Indians, including some very poor and largely landless people, depend.

This should induce some sobriety amidst euphoric celebrations of a “higher-level” US-India partnership and growing US recognition of India as an “indispensable” ally. —end--