MUMBAI, India — Can India be good for America's economy?
Will its relatively cheap, English-speaking work force siphon off too many U.S. jobs and force down American wages? Or can India's fast-growing wealthy and middle classes offset the downsides of their rising economy by creating enough demand for U.S. exports to benefit average Americans as well as CEOs and investors?
President Barack Obama must navigate this debate — and promote the more optimistic scenario — when he arrives here Saturday to kick off a four-nation visit to Asian democracies.
As the world's largest democracy, and the second-most populous country, after China, with 1.2 billion people, India is increasingly important to the United States on a number of fronts:
- How it chooses to balance against China militarily and economically.
Even as Obama's visit is welcome, expectations are modest, and the U.S.-India economic relationship remains a sensitive subject among Indians as well as Americans.
"More symbolism than substance?" was the teaser here Wednesday for a discussion on an Indian cable news program that featured skeptical representatives from industry and parliament.
On the streets of Mumbai, India's business and cultural center, Tarana Lalwani, a financial services consultant, said that some of Obama's stands on outsourcing and visas had seemed "a little anti-Indian or maybe a little closed. . . . If the U.S. is going to be so restrictive with India, then we should be doing the same as well. Everyone wants to come to India now. Now we have all these foreigners here."
Vijay Dave, a businessman, said he thought that Obama was "very keen for India" and anti-outsourcing rhetoric might be to appease U.S. voters. Dave said the United States and India had an interest in sticking together to keep China in line: "As far as China, I don't think people there are very trustworthy," he said.
Despite modernization, India retains some of the world's worst slums and poverty, remains beset by bureaucratic bungling and is saddled with an underdeveloped infrastructure.
Yet America needs India.
"The simple truth is that India's rise and its strength and progress on the global stage is deeply in the strategic interest of the United States," said William Burns, the U.S. undersecretary of state for political affairs.
India wants Obama to endorse its bid for a permanent seat on the United Nations Security Council. India opposes hikes in U.S. immigration fees, and it's asked the Obama administration to remove Indian entities from a list that limits their purchases of American defense technology.
U.S. companies want India to buy billions of dollars' worth of military equipment, which could create tens of thousands of American jobs. They also want India to water down liability laws to help American companies with projects that a historic 2008 U.S.-India civilian nuclear deal was to foster. The Obama administration wants India to expand markets for foreign investment and agriculture.
The president made clear at his Washington news conference Wednesday that this trip is all about stimulating American jobs.
"As I plan for my trip later this week to Asia, the whole focus is on how are we going to open up markets so that American businesses can prosper, and we can sell more goods and create more jobs here in the United States," Obama said. "And a whole bunch of corporate executives are going to be joining us so that I can help them open up those markets and allow them to sell their products."
In Mumbai, the president's rhetoric is likely to sound different.
Mike Froman, the White House deputy national security adviser for international economic affairs, rattled off positive trends ahead of the trip: India's economy will grow by at least 8 percent a year for the next several years. U.S. exports to India are now $27 billion a year, a quadrupling of goods and a tripling of services over the past seven years. Indian companies support at least 57,000 jobs in the United States.
Within hours of his arrival, Obama will meet with entrepreneurs and CEOs and address a capacity crowd at the U.S.-India Business Council summit.
"You're going to be selling a lot of power equipment into India. You're going to be selling locomotives into India. You're going to be selling Boeing aircraft into India, and you're going to see announcements of deeper and deeper defense collaboration," council President Ron Somers said.
He said that high-profile Indian-American CEOs including Vikram Pandit of Citigroup and Indra Nooyi of PepsiCo would attend the summit.
"This is to raise the profile across America in every boardroom where the question is, 'Why aren't we doing more in India?' "
In Mumbai, Obama also will speak about the deadly attacks by Pakistani-based radicals here in November 2008, and he'll visit the Gandhi Museum. He'll celebrate the Diwali holiday, observed by the majority Hindu population, and hold a town-hall style meeting.
The president won't stop at the Golden Temple in Amritsar, the Sikh pilgrimage site, despite earlier preparations. Aides have downplayed but not denied reports that they wanted to avoid Obama being photographed in the obligatory head covering. Sikhs aren't Muslim and neither is Obama, but a sizable minority of the U.S. population still insists that he is.
The president will spend the remainder of his India visit in New Delhi, meeting with Prime Minister Manmohan Singh and other officials, addressing Parliament, visiting the 16th-century tomb of former emperor Humayun and being honored at a state dinner.
The three-day India itinerary serves as the kickoff and the centerpiece for Obama's four-country Asia tour.
Other stops are Indonesia, where Obama lived for part of his childhood and where outreach to Muslims will be on the agenda; South Korea, for a G-20 summit of the world's major economies; and Japan, for an Asia-Pacific Economic Cooperation summit.
China, which Obama visited last year, won't be among the stops this time.
Obama's economic adviser Larry Summers said in a recent speech in India that perhaps the notion of a "Mumbai consensus" would replace a "Washington consensus" or a "Beijing consensus" over the next three decades.
Summers described such a consensus as neither laissez-faire nor authoritarian, but based on a growing middle class and "on the idea that through international integration, nations could diversify, pursue their strengths and realize together the benefits of larger global markets."
Some analysts caution that the promise of the U.S.-India alliance has been romanticized and oversimplified.
"India and the United States have very different interests on key short-term and medium-term issues," said George Perkovich, the director of the nuclear policy program at the Carnegie Endowment for International Peace.
India wants more access to the American services market, but U.S. politicians are worried about outsourcing American jobs to the subcontinent. The U.S. wants to sell Indians more agriculture, but "we forget that there are about 400 million Indian small farmers who don't have manufacturing jobs to go to. If they get displaced in the agricultural sector, there isn't another place to go find work, and those people vote," Perkovich said.
He also said that it was naive to see the U.S. and India as having one another's backs on China: "We're in a triangular relationship with China, India and the United States." India "will cooperate with China on a lot of issues, to the consternation of people in the U.S.," he said.
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