[On paper, at least, India and the United States already have many shared interests and common goals. But Mr. Obama and his New Delhi counterpart, Prime Minister Manmohan Singh, have few significant bilateral achievements on economic issues. And one promising partnership, involving nuclear energy, may not even get off the ground.]
By VIKAS BAJAJ and HEATHER TIMMONS
MUMBAI, India — As President Obama pays his first visit to India this weekend, he may want to take his lead from Mary Kay.
Since Mr. Obama took office two years ago, America’s top economic policy makers have visited India numerous times but left with little to show for their long flights. This time, too, officials on both sides have tried to temper expectations, given the geopolitical and trade tensions between the two nations.
But, even without a big policy push from Washington, companies from both countries have already been forging deals at a fast and furious pace.
American brands as diverse as Mary Kay cosmetics, Harley-Davidson motorcycles and Cinnabon sticky buns have recently set up shop or expanded in India, often with local partners helping them navigate this country’s notoriously convoluted bureaucracy. Meanwhile, American corporate giants like General Motors and the drug maker Bristol-Myers are expanding factories, sales outlets and research laboratories in India.
As a result of such moves, American exports to India in the first six months of 2010 hit $14.6 billion, up 14 percent from the period a year earlier and nearly five times what it was a decade earlier.
Corporate America mainly hopes the visit by the president, with more than 200 American executives in tow, can help better define the common economic interests of the United States and India and build on the trade and investment foundations the business community has already laid.
“Business had been leading the way from the very beginning,” said Ron Somers, the head of the United States India Business Council, a business advocacy group. Now, Mr. Somers said, “we want to crown that with a genuine strategic partnership.”
Harold McGraw 3rd, the chairman of McGraw Hill and one of the executives in the Obama entourage, said the visit was “all about economic and job growth for both the U.S. and India.” India is America’s 14th-largest trade partner, he noted, but “should be a lot higher.”
For many American executives, India seems to have become the “new China” — a place where they feel compelled to do business, lest they miss getting a foothold in a nation with low-cost labor and a potentially billion-person consumer market.
But American government officials still seem to be struggling to define India’s role, beyond saying that “it’s not China.”
India, with its lively democracy and messy infrastructure, is certainly no China, with its forced-march development model. In fact, encouraging India as a counterweight to China — both economically and militarily — is a motive for President Obama’s visit, with potential sales of military technology high on the American agenda.
Compared with China, trade between India and the United States is relatively balanced. In 2009, America bought only $7.2 billion more in goods and services from India than it sold. Total trade between the countries was $60.2 billion. But that is just a small fraction of the $434 billion annual trade between China and the United States, which is lopsided $262 billion in China’s favor.
On paper, at least, India and the United States already have many shared interests and common goals. But Mr. Obama and his New Delhi counterpart, Prime Minister Manmohan Singh, have few significant bilateral achievements on economic issues. And one promising partnership, involving nuclear energy, may not even get off the ground.
In 2005, President George W. Bush and Mr. Singh announced what is considered the most ambitious agreement yet between their countries. The United States would remove restrictions on the export of civil nuclear technology to India and American companies would sell power equipment to India, which hopes to increase its nuclear power generation more than tenfold.
This past August, though, the Indian Parliament set that deal back by voting to make contractors and suppliers partly liable for any damages from nuclear accidents that might occur at the new plants. American companies say the new law deviates from international nuclear norms and would keep them from selling power equipment. Many economists and corporate executives say the power plant impasse and other tensions between the countries — most notably Washington’s continued, if wary, military embrace of Pakistan — suggest that Mr. Obama and Mr. Singh may be unable to reach any meaningful economic concord on this trip.
Both leaders face difficult economic and political realities at home. High unemployment, concern over the outsourcing of American jobs and the threat of a more confrontational Congress will limit Mr. Obama’s ability to strike deals with India.
Mr. Singh, meanwhile, is hemmed in by a coalition government that is conflicted about its relationship with the United States and is uncertain about the pace at which India should open its economy to the world.
“There is a limited amount that the visit can achieve,” said Arvind Panagariya, an economist at Columbia University and an India expert. “As long as they give a good communiqué and send some positive signals, that’s the best we can expect.”
Analysts say the more concrete results may come from corporate, not government, meetings. The chief executives accompanying Mr. Obama will include Jeffrey R. Immelt of General Electric and Indra K. Nooyi, the Indian-born head of PepsiCo. They will meet with the likes of Ratan Tata, chairman of the multinational conglomerate Tata Group, and Mukesh Ambani, head of India’s biggest company, Reliance Industries.
Various events will also give executives from smaller companies a chance to mingle.
“The most immediate benefit of the visit could be that another group of American industry executives become aware of the India opportunity,” said one of the scheduled attendees, Gunjan Bagla, the managing director of Amritt Ventures, which advises American companies coming to India.
Trade and investment between the countries has grown sharply since the Indian government began easing state control of its economy in 1991.
But disagreements between the United States and India have been a big roadblock in negotiations in the Doha round of global trade talks, which have been stalled since 2008. American officials have been pushing for India and other developing nations to open more industries like financial services to foreign competition, while the Indians are seeking reductions in American farm subsidies.
American jobs are also a sore point. In Washington, Democratic lawmakers earlier this year pushed through a $2,000 increase in fees for employment visas, writing the law in such a way that it primarily hurt Indian technology companies. Mr. Obama has also advocated changing tax law to make it more expensive for American companies to outsource work to India and other countries.
That is why President Obama will probably focus his talks here on securing deals for American companies that can demonstrably create jobs in the United States, according to administration officials. Some of those deals, which might include the sale of Boeing cargo planes to India’s military forces, have been in negotiation for some time.
American companies like Wal-Mart are also hoping that New Delhi will allow them to set up retail stores in India. Right now, foreign companies cannot operate retail stores that sell products from multiple brands. Indian officials have recently signaled that they might soon change those rules.
The Indians, for their part, have said they hope Mr. Obama will agree to ease export restrictions on so-called dual-use technologies, like cryptography, that can be used for both military and civilian purposes.
