Indians in large numbers are already working in the US in various spheres of technology. If the emerging Indian talent pool can be transferred to critical innovation projects under a specially created Indo-US Special Purpose Vehicle, it could go a long way in maximizing welfare in both societies.
US President Barack Obama has sent a strong political message back home that he was in India to do serious business, to help create more jobs in America which is suffering the gravest unemployment problem since the great depression. One picture of Obama’s carried by newspapers was particularly telling. It showed him sitting next to the global head of General Electric, Jeff Immelt, signing an agreement to sell $750 million worth of gas turbines to Reliance Power.
General Electric is America’s largest and most admired corporation and in many ways acts as a proxy for the United States’ economic power. GE sells everything from state of the art power turbines, aircraft engines, medical equipment, financial products and what have you.
So in some ways Jeff Immelt sitting next to President Obama perfectly embodied the core message the US President was trying to convey to America – it was about selling American wares and creating more jobs back home. Besides, the significance of Immelt sitting next to Obama was not lost on the discerning audience. The GE head has been very vocal about how American businesses needed to reinvent themselves and aggressively access markets in every nook and corner of the world. “These days Iam like a hustler trying to sell GE equipment in every corner of the world. Americans need to get off their butts and start working hard to export their way out of recession. If Germany can do it why can’t we”, he told CNBC sometime ago.
So how should India respond to Obama's eagerness to substantially enhance engagement with India, especially on the economic front? Indeed this is a rare opportunity for India to maximize economic welfare by engaging with the US as an equal partner. In this context, it is perhaps the most opportune moment for India and United States to fast track a comprehensive economic cooperation agreement ensuring free movement of goods and services across their respective borders. If there is enough will on both sides this can be done within a year.
In short, what the WTO has failed to achieve multilaterally since 2001, when the Doha development round was initiated, India and United States can do bilaterally if there is enough political will on both sides to create a win-win pact. India is in a position today to drive a hard bargain with the United States to access technologies across the board, whether for defence items, agriculture, space, or nuclear power. All this can be covered by a comprehensive FTA in goods and services which clearly demonstrates visible gains for both aides. Most significantly, this can transform Indian agriculture in way that had happened during the green revolution four decades ago. Prime Minister Manmohan Singh has been saying for sometime that India badly needed a second green revolution. A comprehensive bilateral agreement in trade and investment could cover all this and much more.
In fact the idea of a comprehensive free trade and investment agreement in goods and services was mooted some years ago by the business associations on both sides but it did not find much traction with the two governments for various reasons. Partly, the United States then was in no mood to lift all the severe technology export restrictions imposed after India had conducted the nuclear tests in 1998.
Even after signing the civil nuclear deal, the US was reluctant to lift such restrictions. It is only in the past year or so, post the global meltdown and its impact on US employment, that the State department has figured that technology restrictions imposed on India were actually hurting American businesses much more. India is still cruising along at 8% GDP growth, which by itself may not be optimal.
It can be said without a modicum of doubt that a comprehensive free trade and investment agreement with the United States, emphasizing tech transfer in defence, infrastructure and agriculture could easily enhance India’s GDP growth to 10% plus. More importantly, it will create higher incomes and jobs in agriculture, something that has seen stagnation over decades.
So it is somewhat myopic to ask Obama why he is only talking about jobs in the US. Isn’t it his job to talk about jobs in America? Equally it is our government’s job to explain how a higher level of strategic engagement could create more jobs in India too.
Mind you, even though India is growing consistently at 8% plus, the unemployment rate here is possibly slightly higher than that of the United States.Clearly, a more daunting task for a nation of a billion plus people. Without getting carried away too much by the India rising story, it must be conceded that our economy suffers from unemployment problems which are as structural in nature as it is in the United States currently.
A comprehensive economic cooperation agreement has another positive long term spin off. President Obama has been careful enough not to mention the C word in all his speeches during this visit. But if you listen carefully enough, you will understand what he has not stated explicitly. Rapid technology development in China has been worrying the US for sometime. More than ever before, the United States wants to work closely with India in technology development. The United States’ primary concern today is losing the technology edge to China which is spending massive resources on cutting edge research in green tech etc. Knowledge cooperation has to be the lynchpin of any strategic cooperation between India and US.
Indians in large numbers are already working in the United States in various spheres of technology. If the emerging Indian talent pool can be transferred to critical innovation projects under a specially created Indo-US Special Purpose Vehicle, it could go a long way in maximizing welfare in both societies. The possibilities are immense. All it requires is clarity of vision on both sides. Currently, relationship between India and US is still caught up in a lot of minutiae. There is an urgent need to rise above it. Basically, the mindset of India’s intellectual elite, especially the one that controls the vast defence and scientific establishment in the government must change. America of 2010 is not the America of 1990s.
Courtesy: Indian Express
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