BANGALORE, India — When U.S. President Barack Obama lands in Mumbai this weekend, the city will be aglow with the colorful lanterns of Diwali, India’s festival of lights. And in true Diwali tradition, the American president will come bearing gifts.
He will also look to take some home.
So say many Indian businessmen who believe that economics will outshine politics on the presidential visit. India’s rising economy, they say, has never mattered more to the United States than now.
Obama's India trip, which begins, significantly, in the financial capital of Mumbai, is loaded with business meetings. A 215-person business contingent from the United States — consisting of executives from General Electric, PepsiCo, Harley-Davidson and Boeing — will arrive alongside Obama.
“India, with a population of 1.3 billion, is forecast to grow at close to 10 percent rates over the next 10 years,” said Venugopal Dhoot, chairman of the Mumbai-based consumer electronics firm Videocon. “It is unprecedented and a show of confidence in this economy that an American president is arriving here within two years of being elected.”
The results will neither be instant nor dramatic, said Snehal Mazoomdar, the Kolkata-based chairman of the Indo-American Society. However, the Obama visit will be the foundation for a "new phase" in the relationship between the two countries, he said.
For once, that tired diplomatic cliche could ring true.
As a precursor to the visit, White House economic aide Michael Froman said India was a "tremendous" market for exports of American goods and services. It was a source of investment back into the United States and together these could support the creation of American jobs.
For instance, U.S. exports have grown fourfold over the past seven years to hit $17 billion a year. Services exports have tripled in the same period to $10 billion a year. Indian companies supported 57,000 U.S. jobs, the second-fastest growing investors in the United States.
Kishore Biyani, CEO of India’s largest retailer Future Group, agreed. “There are a lot of interdependencies in this globalized world,” he said. “As the dominant American economy recalibrates and readjusts after recession, India can get a lot and India can give a lot.”
A surefire item on the American president’s economic agenda during the visit will be the opening up of India’s much-vaunted retail sector where the likes of Walmart are clamoring for freeing multi-brand direct retail to foreign investors. “India’s consumption is $30 billion every year so it is but natural that global retailers want to come in … and modern Indian retail needs such resources,” said Biyani.
Both Dhoot and Biyani will be in the Business and Entrepreneurship Summit organized by the U.S.-India Business Council in Mumbai on Nov. 6, where Obama will deliver the special keynote. According to the business council, the summit will highlight India’s rising economy, purchasing power and technology-led innovation, all of which could help revitalize American businesses.
Obama’s popularity rating in India is considerably lower than that of his his predecessor George W. Bush. But Obama has his share of admirers within the top echelons of Indian business.
“Obama is an incredibly intellectual world leader who is very aware of the cause-and-effect sequence of policy,” said GV Prasad, chief executive of Hyderabad-based drug multinational Dr. Reddy’s Laboratories. “Obama looks motivated to take the economic relationship with India to a higher plane.”
In his meetings, Obama is expected to discuss the opening up of sectors such as energy, banking, health care and insurance. Market access to these sectors is important to the growth of American businesses.
There is the also the sticky issue of the India-U.S. civil nuclear energy partnership that is faltering as American companies are wary of India’s newly imposed accident liability clauses. The United States is also looking to sell more than $6 billion worth of military transport aircraft to India and secure other major defense deals.
Indian business, meanwhile, is sour over the Obama administration’s recent anti-outsourcing crusade. Obama himself has repeatedly said that companies should create more jobs in Boston and not Bangalore. A recent U.S. law has doubled Indian technology workers’ visa fees, making many Indian businessmen cry "protectionism."
But India’s technology and back office companies are unapologetic about outsourcing. It is after all a practice makes Western businesses more competitive, they said. Will this subject be raked up during the various meeting with Obama? Unlikely.
In the words of Narayana Murthy, chairman of India’s second largest outsourcing company, the Bangalore-based Infosys Technologies, “The U.S. president is an honored guest of India. Since our culture preaches that ‘a guest is like God,’ we should ensure that the presidential stay is enjoyable and without embarrassments,” said Murthy.