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How serious is Obama about India?

Nayanima Basu/New Delhi 25 Nov 12 | 12:33 AM

Though US President Barack Obama yesterday said India was a major part of his plans, experts and economists in India take the comment with a pinch of salt. China and other geopolitical concerns, not India, would play an important role in Obama’s scheme of things in his second term as president, they say. Besides, it is expected outsourcing would be hit and the World Trade Organisation (WTO)’s Doha round of talks wouldn’t make much headway with Obama as US president.

“Now, India is not as important to him (Obama) as China, where the change of leadership is being keenly watched by the US," a senior Commerce Department official told Business Standard.

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“India-US economic relations are somewhat at crossroads, as India doesn’t seem to be figuring in the list of countries with which the US is keen to increase its engagement. Currently, the trans-Pacific partnership agreement is on top of the priority list," said Biswajit Dhar, director general of Delhi-based Research and Information System for Developing Countries.

Dhar added on Saturday, the US administration, be it Democrats or Republicans, was guided by two concerns — domestic economic compulsions and geopolitical ambitions. The domestic economic compulsions were such that the US would want to target its larger partners to secure market access for its goods and services, he said. “On geopolitical ambitions, the US seems to be keen to create a trading bloc in the Asia-Pacific region, which could be an effective counter to Chinese expansionism," he added.

Manoj Pant, professor at the Centre of International Trade and Development (School of International Studies), Jawaharlal Nehru University, said Obama’s return would hit the information technology sector the most. “He (Obama) is committed to curbing outsourcing. He would impose taxes on software companies; he would make it difficult for American companies to outsource to India. On a larger perspective, be it under Democrats or Republicans, the US foreign policy is not going to change towards India," he said.

In the first term of the Obama administration, India and the US have fought bitterly over trade disputes at the World Trade Organisation (WTO). The issues included poultry imports, steel import duties and rise in visa fees. Each side accused the other of being protectionist. Officials in the Ministry of Commerce and Industry, however, believe the US president’s second term wouldn’t see such disputes. This is because due to Obama’s domestic compulsions, now, the US is more focused on gaining access in the Chinese market.

Pant, too, said, “I don’t see any escalation in the trade disputes."

The commerce ministry officials added the multilateral dialogue under the WTO’s Doha round of talks to create a global trade deal would see another setback, as the trade agenda would be the same. “Under the Doha round, we might see an early harvest emerging, but a larger multilateral process is still on their agenda. The new Obama administration would have the same viewpoint on Doha," they said.

However, with Obama at the helm of affairs in the US again, exporters are upbeat shipments to that country would rise. Exports to the US rose 15 per cent to $19.61 billion in the April-September period, compared to the corresponding period last year. The share of the US in India’s exports rose to 13.88 per cent. This led to the US surpassing the UAE as India’s top export destination, according to the Federation of Indian Export Organisations.

“We have to see the economic reality. Obama’s return has been for good. India and the US need each other and this is the best time to take the relationship to the next level; the economic requirements of both the countries are such," said Sanjay Budhia, managing director and chairman of Kolkata-based Patton Group. Budhia, also chairman of the export council of the Confederation of India Industry, believes if Republicans would have been at the helm of affairs, the situation would have been tough for Indian exporters. In that case, exporters would have to rebuild market strategies, he said.

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