Thursday, June 18, 2009

US and India : Ready for a slow dance number?

US and India : Ready for a slow dance number?

The US India Business Council’s “Synergies Summit” held June 16-17, 2009 occured at a time when significant changes have occurred in both the US and Indian polity : election of Democrat Barack Obama as President in the US and the re-election of the ruling Congress Party in India but this time without the stranglehold of it’s traditional Leftist allies.

The two dance partners have danced an amazing tango over the last few years and it would be interesting to see which foot they put forward as they step onto the dance floor again this time for a more slow and intimate number. The relationship had blossomed during President Bush’s tenure and there were expectations that with Secretary of State Hilary Clinton and Secretary of Commerce Gary Locke slated to attend; this summit might be used by the Obama Administration to spell out its policy for India .

The US is increasingly viewing India as a “deep” strategic partner while India too has found itself more closely aligned to the US on several issues. However US should realize that given the often contradictory pulls of the many factions within India’s democratic polity and it’s vast diversity, India will always be a “quirky” partner more in the mold of France than the always-toe- the- line UK. Multi-nuanced relationship is how some commentators are wont to describe it.

Right now, India might be ready for some self-righteous gloating, India ’s mixed economy has weathered the economic crises much better than the free or unregulated markets of other countries and it is on track to achieve growth in the 5-6% when rest of the global economy is shrinking. To many in India , US steps like “nationalization” or “state ownership” of banks, Insurance companies, auto companies and protectionist trade measures would seem to be a vindication of India ’s own economic policies which have included such features. Though the Left is no longer part of the ruling coalition in India , trend for economic liberalization,Free market reforms etc. may slow down as the policy wonks there try to figure out the causes of the US meltdown and try to ensure that it is not repeated there.

The flavor of the summit may also be different this year as while in the past it may served more as an opportunity for US companies looking for partners in India this time it will be equally matched by Indian corporates with fat wallets and hearty appetites looking for pickings from the aftermath of the economic maelstrom. While Hummer may have been picked up by a Chinese firm, I am sure there are sizable chunks of GM, AIG, Hollywood etc. which are being eyed as investment opportunities by Indian companies.

On the US side, despite many years of engagement in India most companies still do not have their act together. European, Korean, Japanese companies have proven to be more nimble and more adept to realize profits from what C.K. Prahalad has described as the “Bottom of the Pyramid”. Making profits selling chocolates for a few cents each or cell phones for a few dollars still seems to be like the proverbial Indian Rope trick :”Is it really happening” to many. The Business Process Outsourcing market may lose some of its sheen because of the protectionist measures in the US and the overall state of the US economy but most Indian BPO companies have climbed up the value chain to emerge as Knowledge Partners. Collaborating for technical and scientific innovation should be an important item on the agenda during the summit

As always, from a US perspective any conversation about India is not complete without bringing up the P-word. Pakistan is now more on the front-burner of US security policy discussions then ever before. India may find itself increasingly drawn into those discussions, though it is too soon for it to be considered a honest broker given it’s long history of discord with Pakistan and the still unresolved Kashmir issue. However the realization has slowly emerged in Washington that India is a responsible player with much at stake and is a strong stabilizing force in a region plagued with turmoil. Nobody knows the region better than India and as the stakes are raised with the US presence in Afghanistan and anti-terror actions in Pakistan , security collaboration with India is only going to increase.

Let the slow dance begin!!

Hillary Clinton's Remarks at the Summit

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