Bangalore plays a key role in India-US bonhomie

Streets that were once bordered by colonial bungalows are now lined with glass-panelled towers bearing the logos of US technology companies. On M G Road, young tech workers shop for bagels and Philadelphia cream cheese. In the city’s pubs, the talk is about venture capital, stock options and Silicon Valley-inspired compensation packages.

The Americanisation of Bangalore is a reflection of a more general rapprochement that has taken place in recent years between India and the US. For much of India’s post-independence history, the two countries were political and cultural antagonists. India was effectively a Soviet ally during the Cold War, and in its economic and public policy it espoused a straitened austerity that was sharply at odds with US materialism.
It wasn’t until the early 1990s, when India adopted something approximating a capitalist economy, that ties improved. In 2000, president Bill Clinton visited India — the first US president to do so since Jimmy Carter, in 1978 — and, in a speech to parliament, declared the two countries ‘natural allies.’

Eight years later, prime minister Manmohan Singh visited Washington and, thanking president George W Bush for pushing a landmark civilian nuclear deal between the two countries, told him that the ‘people of India deeply love you.’ Recent months have witnessed something of a cooling in that ardor. A series of events have contributed to the impression that the relationship is going through tough times.

In August, the civilian nuclear deal, a symbol of the two countries’ new closeness, came under strain when the Indian parliament passed a bill that would increase the potential liability of nuclear plant operators. The US expressed its concern and asked India to change aspects of the bill.

Also in August, the US Senate passed a bill that hiked fees for the H1-B and L visa categories used by skilled Indian technology workers. Indians were incensed by Senator Charles Schumer’s characterisation, during debate over the bill, of Indian businesses as ‘chop shops.’ (He later clarified that he meant to say ‘body shops.’)

Then, earlier this month, Ohio’s state government announced a ban on the outsourcing of state technology projects to offshore centres.

Media reports have accused the United States of ‘inventing a villain’ and setting India up as a ‘whipping boy’ to distract from domestic woes.

But how threatened, really, are ties between the two countries? Even as they protest, Indian businessmen concede that they are unlikely to suffer much. Devendra Saharia, an entrepreneur who runs a medical outsourcing company in Chennai, told me that while people were paying attention to what was being said in the US, the future of the outsourcing sector still looked bright. Business continues to grow, he said, “due primarily to a shortage of skills in the US.”

Unlikely damage

In addition to the limited impact on companies’ bottom lines, though, there is another, more structural and perhaps more significant, reason why the political and public jousting is unlikely to result in real damage.

Unlike many bilateral relationships, ties between India and the US are not, primarily, driven by politicians or the political process. The growing closeness of the last couple decades has had, rather, a distinctly grassroots character. It has been forged in thousands of interactions between individual citizens, many of them in the context of flourishing commercial and business transactions.

Between 1991, the year India began its economic reforms, and 2009, trade in goods between India and the US grew from $5 billion a year to nearly $38 billion. The US is now India’s second leading source of foreign investment.

It is this thriving commercial relationship, more than the official government-driven bilateral relationship, that has defined Indian-US ties in recent years. As Manjeet Kripalani, co-founder of Gateway House, a Mumbai-based research organisation, said: “Business has been leading diplomacy in India for 15 years.”

Many of India’s technology entrepreneurs were educated or worked in the US. The companies they founded upon returning to India are imbued with a US-style work ethic and office culture. They have served as crucibles not only for a new India, but also for a new attitude to the US.

In 2005, the Pew Research Centre conducted a survey to measure global feelings about the US. The survey, conducted in the midst of the US-led war in Iraq, found significant hostility around the world. But in India, 71 per cent of respondents — the highest number outside the US itself — had a favourable view of the country.

At the dawn of the Industrial Revolution, the French philosopher Montesquieu summarised his views on the potential of trade, writing that “the natural effect of commerce is to lead to peace.”

That maxim holds as true today, in an age of offshoring and e-commerce. Good relations between the US and India are built on foundations of shared commercial interests. Those foundations are by no means unshakable — but they are likely to prove solid enough to withstand short-term political positioning or economic saber-rattling.