Obama's Mumbai stay recognition of India's economic power

Obama's Mumbai stay recognition of India's economic power

It would also be recognition by the US – the only superpower of the world – of the emergence of India as an economic power, which unlike China has reached this stage through a democratic pluralistic society.

Beginning with Dwight D Eisenhower, Obama would be the sixth US President to visit India – but the first one to start the tour from Mumbai.

This is reflective of the significance being attached to the economic ties between the two countries, by the Obama Administration, said an Indian diplomat who is closely involved with the preparation of the tour of the US President.

The official requested anonymity as the trip has not been announced yet, but did confirm that Obama would start his India journey from Mumbai.Last week, White House spokesman Robert Gibbs told reporters that economic dimension of the relationship would be the focus of the trip and Obama would concentrate his trip on Mumbai and New Delhi.

Choosing Mumbai as the point of entry, Obama would also indicate the growing economic ties between the two countries.

Noting that US is India's key trading partner, the official said between 2004 and 2008, Indo-US trade in goods more than doubled to USD 44 billion.

While trade dipped in 2009 because of the global economic crisis, the first six months of this year have seen it rebound with a growth of over 30 per cent. The total trade for in January-July 2010 stands at USD 27.96 billion. Two-way trade in services has also shown a steady growth, increasing from USD 18.4 billion in 2007 to USD 22.6 billion in 2008.
This is fairly evenly balanced with US services exports being USD 10.5 billion (2008) and Indian services exports-USD 12.1 billion (2008), the official said.

The official said America is one of the major source of investment in India though there is scope to do much more. Cumulative FDI inflows from the US from April 2000 to July 2010 amounted to USD 8.86 billion constituting nearly eight per cent of the total FDI into India.
Indian direct investment into the United States has also been growing rapidly. Between April 2008 and September 2010, FDI flow from India to the US has been USD 2.1 billion.

According to a study, Indian companies have invested USD 5.5 billion in green field ventures in the US and over USD 20 billion in mergers and acquisitions between 2004 and 2009.

According to industry estimates, Indian investments have created several thousands of direct and indirect jobs in the US. As the Indian economy continues on its high growth trajectory, we expect that our economic ties will further strengthen.

As many as 239 India companies have invested about USD 21 billion in the US through 267 acquisitions during 2004- 2009, the official said, adding that this is spread over a wide spectrum including manufacturing; IT and ITes; chemicals; biotechnology; pharmaceuticals; automotive; and telecom.

Further Indian Companies are present in over 35 states in the US and have contributed to the competitiveness of the US Industry. They have connected with the local communities, and have been responsible for creation and support of, according to some estimates, thousands of jobs, the official said.

In fact, in his speech at the Asia Society in Mumbai, Obama's top economic advisor Lawrence H Summers recognized India's emergence on the global stage as an economic power.

"Perhaps in 2040, the discussion will be less about the Washington Consensus or the Beijing Consensus, than about the Mumbai Consensus – a third way not based on ideas of laissez-faire capitalism that have proven obsolete or ideas of authoritarian capitalism that ultimately will prove not to be enduringly successful," he said.

"Instead, a Mumbai Consensus based on the idea of a democratic developmental state, driven not by a mercantilist emphasis on exports, but a people-centered emphasis on growing levels of consumptions and a widening middle class," he said.

"A consensus based globally not on the idea that competitiveness was in service of a nation trying to win a zero sum game, but rather on the idea that through international integration, nations could diversify, pursue their strengths, and realize together the benefits of larger global markets," Summers said.

"I think it is fair to say that the US-India relationship would not be considered the most important aspect of foreign policy in either or our countries during the last two centuries. It is, however, my confident expectation – and more importantly it is the expectation of the President of the United States – that matters will be very different in the 21st century," he said.

"Two of the world's three largest economies. The world's two largest democracies, linked by a common language and an affinity based on common values and common challenges in the global arena, driven not by their desire to dominate, but by their desire to innovate, are natural allies," he said.

"As President Obama has said, India is an indispensable partner for the United States and the US ought to be an indispensable partner of India," Summers said.

Get a round-up of the day's top stories in your inbox

Check out all newsletters

Get a round-up of the day's top stories in your inbox