The keenly awaited visit of the U.S. President Barack Obama to India is expected to be more significant one politically as well as economically compared to his predecessors. Sending out a strong message of hope and change not only to the U.S. but also to the world, President Obama assumed office in January 2009, in the midst of the worst ever economic scenario the world witnessed since the Great Depression of 1930s.

Prime Minister Manmohan Singh was President Obama’s first official state visitor in November 2009. Mr. Obama’s visit to India in the first term of his Presidency marks the commitment of the U.S. administration towards India, the emerging economic power in the region. The President will spend three days in India.

Recognising India as a key to strategic U.S. interests, the U.S. has sought to strengthen its relationship with India, said a note of the U.S. Department of State on U.S.-India relations. The two countries are the world’s largest democracies, both committed to political freedom protected by representative governments. India is also moving gradually towards greater economic freedom. The U.S. and India have a common interest in the free flow of commerce and resources. They also share an interest in fighting terrorism and in creating a strategically stable Asia.

There were some differences, however, including over India’s nuclear weapon programmes and the pace of India’s economic reforms. In the past, these concerns may have dominated U.S. thinking about India, but today the U.S. views India as a growing world power with which it shares common strategic interests. A strong partnership between the two countries will continue to address differences and shape a dynamic and collaborative future.

Important signals

“There are four important signals that the President Obama is sending to the world which defines this visit in a unique manner,” says Amit Mitra, Secretary General, Federation of Indian Chambers of Commerce and Industry (FICCI).

President Obama is coming to India during his first term of office contrary to both President Bush and President Clinton. Both came only in their second term. He is not going to Pakistan unlike both Mr. Bush and Mr. Clinton. So the part hyphenation between India and Pakistan has been eliminated. This is the longest trip to India by any U.S. President; and a delegation of over 200 business leaders from the U.S. is accompanying him, half of whom are from small and medium enterprises with major technology capabilities.

“We are looking forward to taking the Indo-U.S. relationship to new territories,” Dr. Mitra adds. Another leading industry body, Confederation of Indian Industry (CII) is hopeful that the interaction with Indian businesses and President Obama will result in concrete decisions and actions, including joint collaborative work in agriculture, energy, education and infrastructure. Enhanced high technology cooperation is also expected through bilateral agreements in aviation, space, defence and biotechnology. CII is also optimistic that there will be movement in easing export control regulations, early conclusion of the proposed Totalisation Agreement as well as speedy negotiations of the Bilateral Investment Treaty.

“The U.S. has always been one of the leading investors in India. In recent years, Indian FDI in the U.S. has been growing at a much higher rate than U.S. FDI in India. In fact, Indian companies are investing immensely in the U.S., creating jobs, running training programmes, engaging in merger and acquisitions (M&A) activity, undertaking research and development (R&D) projects, and increasing their contribution across multiple sectors,” says Chandrajit Banerjee, Director General, CII, in a statement.

The fact that President Obama’s first public appearance in India will be at a business summit reaffirms that bilateral economic relations lie at the centre of the U.S.-India strategic partnership,” Mr. Banerjee adds.

Bilateral trade

One of the key issues President Obama wants to emphasise during his visit is U.S. exports. U.S. officials are projecting that the bilateral trade with India may touch a record level of about $50 billion this year. According to them, defence, climate change, science and technology, education, health, clean energy, trade, market access and high-tech exports were on President Obama’s agenda. He has pledged to double the bilateral trade within five years as a way to boost domestic growth and job creation

These are the times that the U.S. is having a strained economic relationship with China. The U.S. has major contentions with China on valuation of its currency yuan.

The U.S. leaders were accusing China for keeping its currency artificially undervalued to take advantage of export competitiveness. China is a major trade partner of the U.S. Other than software, India’s trade with the U.S. is lagging behind China in every area, especially in the manufacturing sector, where China is much ahead of India. In these trying times, the U.S. needed an economic ally that is India. India, on its part, should be able to channelise its trade ties with the U.S. for the benefits of its manufacturing sector.

Technology is the engine for India’s growth and trade ties. India is in competition with China in manufacturing as well as exports as both the nations are stimulating their growth processes.

The U.S. also sees a great potential for exports to India. With 1.2 billion people and an economy growing expected to grow at 8 per cent a year for the next several years, “we really see India as a potentially important market for U.S. exports,” says Mike Froman Deputy National Security Advisor for International Economic Affairs

U.S. goods exports have already quadrupled over the last seven years to about $17 billion. And service exports have tripled to about $10 billion a year.

“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 U.S. And they are creating they now support about 57,000 jobs here in the U.S. So it’s a great market for U.S. exports. It’s a good place source of investment for the U.S. There are lot of jobs in the U.S. tied to both of those things. And that’s the reason why the President will be in India, focusing, on the first day on the economic and commercial relationship,” says Mr. Froman.

Contentious issue

India’s trade relationship with the U.S. is broadly balanced, as acknowledged by U.S. officials. However, outsourcing of U.S. jobs to India would continue as a contentious issue.

The U.S. President is concerned about outsourcing U.S. jobs as the unemployment level in the U.S. is at historically alarming levels. The U.S. officials say that President is likely to emphasise that while that is part of the relationship, India is also a potential market for U.S. exports and a source of investment back in the U.S. And so it’s more than a unidimensional relationship and it’s a tremendous opportunity for goods, services, agriculture that “he’ll be pursuing while he’ll be in India for supporting jobs back here in the U.S.”

Unlike his predecessors, President Obama’s visit to India is likely to take the Indo-U.S. economic relationship to new territories.

Source:http://www.hindu.com/biz/2010/11/01/stories/2010110152292000.htm

Presidential biographer William Chafe believes Barack Obama may talk tough in the United States about clamping down on outsourcing jobs to India, but the president’s international upbringing and perspective make it extremely unlikely he’ll ever actually walk the walk.

Mr. Chafe, who is finishing a biography of Bill and Hillary Clinton and has also authored a series of essays on how personal crises affected the public decision-making of eight American politicians, says Mr. Obama’s background makes him unique in the history of American presidents.

Not only is Mr. Obama the only president who spent his childhood years in an Asian country—Indonesia —but he’s also the only one known to be of a mixed racial background and whose seminal political experience involved working as a community organizer in a slum.

“So unlike Ronald Regan who saw Russia as the ‘evil empire,’ or George Bush, who spoke of the ‘axis of evil,’ Obama doesn’t deal in binary terms,” says Mr. Chafe, a longtime American history professor at Duke University who is now vice provost for undergraduates at the school. “Obama wants to engage the rest of the world on its own terms, in a dialogue of respect.”

As India prepares for Mr. Obama’s visit later this week, there has been speculation about the dialogue that will take place between him and Indian Prime Minister Manmohan Singh on sensitive topics such as U.S. companies’ outsourcing jobs to India. With the American economy still struggling with high unemployment, the exporting of jobs to India—a hot topic during Mr. Obama’s election campaign—remains a sensitive subject.

Mr. Chafe spoke to India Real Time Friday in Mumbai before he delivered a talk at the Trident hotel in the Bandra Kurla complex, entitled, “Barack Obama: The Historical Challenges He Faces.”

Where President Clinton “grew into an international role” in his second term, becoming obsessive about trying to win peace in the Middle East, Mr. Obama started his presidency with a strong international understanding, Mr. Chafe says.

Because of his background, Mr. Obama will likely be even more pro-India than Mr. Clinton, according to Mr. Chafe.

“Obama recognizes the 21st century is in India and China—not in Europe,” says Mr. Chafe. “Obama is going to be more open in recognizing the power of India and the power of the Indian economy.”

But Mr. Obama will arrive in India at a difficult time in his own life, likely having suffered a serious political defeat in the Congressional elections in the days before his visit, Mr. Chafe says.

Because of his stable temperament, Mr. Obama likely won’t be thrown into a funk by the defeat, Mr. Chafe said. His confidence in Mr. Obama’s stability comes from the “remarkable discipline and steadiness” Mr. Obama showed during the presidential campaign.

Mr. Chafe said Mr. Obama “is not going to interfere with companies doing what they need to do to be competitive.”

“He’s too smart,” Mr. Chafe says of the president. “Obama may make rhetorical gestures to those who want him to be more protectionist, but he won’t do it because it would set off a cycle of retribution that is not in America’s best interest,” Mr. Chafe said.

“Mr. Obama understands what he really needs to do—which is create a more stable global community–to push for a truly global economy and to address serious global concerns like climate change.”

Source:http://blogs.wsj.com/indiarealtime/2010/11/01/why-obama-wont-walk-the-walk-against-outsourcing/

The White House has revealed how President Barack Obama will address the sensitive issue of outsourcing when he undertakes his visit to India between November 6 and 9.

The basic message, it appears, will be that the outsourcing of U.S. jobs that has resulted in Indians doing customer support and software services for myriad U.

S. corporations, is part of a broader economic tradeoff with India.

The US in return will gain access to a vast market with a fast-growing middle class and a huge amount of inbound Indian investment that is creating jobs at home, the president’s aides said.

While the outsourcing dynamic is one aspect of the U.S.-India commercial relationship, “India is also a tremendous market, potential market, for U.S. exports and a source of investment back in the U.S. And so it’s more than a uni-dimensional relationship,” said Mike Froman, Deputy National Security Advisor for International Economic Affairs.

Froman trotted out some figures to back up the point that the U.S. trade relationship with India isn’t a one-way street.

U.S. goods exports to India have quadrupled to 17 billion dollars over the last seven years and services exports have tripled to about 10 billion dollars.

“With 1.2 billion people and an economy…expected to grow at 8 percent a year for the next several years, we really see India as a potentially very important market for U.S. exports,” Froman told reporters, according to a transcript of his remarks.

Froman said Indian companies now support 57,000 jobs in the U.S. He also noted that Indian companies are the second-fastest-growing investors in the U.S., behind only the U.A.E.

“So it’s a fast growing economic relationship,” he said.

The White House hopes to be able to announce some big commercial deals in defense, aviation and other sectors during Obama’s visit to underscore its point.

Source:http://www.newstrackindia.com/newsdetails/187562