Diplomacy is the art of letting other people achieve your ends. Barack Obama’s visit seems to have achieved that with deals for American companies valued at approximately $15 billion, which will help create over 72,000 jobs back home. After his Democratic Party was drubbed at the midterm polls, creating jobs when unemployment is nearly 10 per cent is critical to political survival. His appeals to Indian companies to invest in the United States of America and to buy US exports — India runs a trade surplus of roughly $7 billion — were the highlights of his public speeches and his discussions with the prime minister, Manmohan Singh, implying bilateral trade between the two countries could double to $100 billion in five years. The IT companies’ concerns over US government policies on outsourcing appear to have been given short shrift, as was the question of access to US markets. True, Mr Obama made clear that the thorny issues surrounding technology transfer would be reviewed; he also announced the removal of several Indian defence labs and the department of space from the US blacklist that prevents the transfer of sensitive, dual-use technologies related to the nuclear energy industry. But the Indian business establishment is not too unhappy with the results. Has Mr Obama given too little in return? Maybe not.
Take outsourcing. Mr Obama’s healthcare bill, which is awaiting passage in the US Congress, will result in more contracts for India’s business process outsourcing industry. The National Association of Software and Services Companies is working on changing the politically-charged use of outsourcing to ‘global sourcing’, as with any supply chain. The US Border Security Act that increased H1B visa fees also seeks to diversify the countries from which BPO services might be used by American companies; leading Indian IT companies are setting up shop in neighbouring countries (even China) and supply their services from outside India. What America exports are not commodities, but technology that Indian companies seeking to build India’s physical and energy infrastructure desperately need. Access to American technology and the lowering of barriers to it augur well for India’s ambitions of rapidly becoming a global economic power.
More American companies are shifting their manufacturing bases to India, most visibly in the automobile industry; GM’s production facilities may be leveraging the Indian consumer’s buying power, but they are also developing India as an export hub. What is happening in the auto sector could extend to aerospace in the next decade or so — recognition of India as a rising technology and manufacturing power. Mark Twain said that the principle of give and take is the principle of diplomacy: give one and take ten. Perhaps, that is what India should do.