Little is expected of Barack Obama’s visit to India

The Economist

Oct 28th 2010 | delhi

BARACK OBAMA is expected to arrive in India next week in time for Diwali, the subcontinent’s festival of light. In Delhi and Mumbai a machinegun racket of firecrackers and joyful whooping will enliven the night, and Mr Obama should make the most of it. Nothing in his official business looks likely to set the sky alight.

Under his predecessor, relations between India and America improved hugely. George Bush saw democratic India as a counterweight to China; India’s prime minister, Manmohan Singh, also wanted closer ties. The result was a 2005 civil nuclear co-operation agreement, which conferred longed-for respectability on India’s hitherto pariah nuclear programme. That is a lot for Mr Obama to live up to.

To the disappointment of many in both countries, moreover, this budding friendship has failed to kick on. The 250 investors travelling with Mr Obama will make much, in public, of flourishing commercial ties. Bilateral trade is expected to be worth more than $50 billion this year and is just about in balance—despite American fears over the outsourcing of low-skilled jobs to India. But barriers on both sides ensure that big opportunities are being missed.

 

Indian businessmen grouch about difficulties in getting American visas and the protectionist urges of Mr Obama’s Democratic allies. Americans lament India’s slow pace in opening its retail, insurance and banking markets. On a recent trip to India, Mike Duke, Wal-Mart’s boss, said that if India scrapped its restrictions on foreign retailers it could create 3m new jobs, cut food inflation and boost productivity. Nothing suggests that will happen soon.

India’s government also looks askance on Mr Obama’s wider Asian strategy. It fears the superpower relies too much on Pakistan for its operations in Afghanistan; pundits in Delhi point to a $2-billion package of American military aid to Pakistan announced on October 22nd. Above all, India fears a withdrawal of American troops from Afghanistan—promised by Mr Obama to begin in July 2011—would free the way for the Taliban, Pakistan’s sometime proxies, to return to power.

It also frowns on Mr Obama’s efforts to improve ties with another Indian neighbour and erstwhile enemy, China. On a visit to Beijing last year America’s president urged it to play a greater role in South Asia. That appalled many Indians, who are already concerned by China’s close alliance with Pakistan and perceived meddling in Nepal, Sri Lanka and other areas of traditional Indian sway.

America has toughened its approach to China recently. To placate agitated Indians, American officials also insist they want India to take a bigger role in East Asia. Indeed that is slowly happening. Under Mr Singh, India has forged several trade and other agreements with countries there—especially Japan, which also sees India as an important potential ally against China. India’s prime minister was in Tokyo this week to sign an agreement to boost (currently puny) bilateral trade. Yet India devotes most of its limited diplomatic means to its messy region.

For a Diwali gift, Mr Obama will be hoping to conclude a mooted defence deal, under which American firms would supply India with 126 fighter planes. That would be only a taster of India’s rich defence pickings. Ron Somers, president of the US-India Business Council, says he expects India to spend $45 billion on military goods and American defence firms are hungry for a slice of that. Yet they are currently stymied by their own country’s restrictions on high-tech exports to India. And despite Mr Bush’s munificent gesture, American firms may also miss out on the coming boom in India’s civil-nuclear industry. It requires imports of nuclear fuel and technology worth billions of dollars. But a recent law lumbers firms supplying them with stiff liabilities, and America’s private nuclear firms say this hands a big advantage to their state-backed French and Russian rivals. Tough, say India’s rulers, the law can’t be changed.

Comments

comments