Clinton’s India Sojourn – an Ecopinion

Clinton’s India Sojourn – an Ecopinion

President Clinton’s India visit may go down as one of the most significant diplomatic base-works by the Indian government to address the country’s political and economic concerns in the new millennium. ” For the past decade, India’s business relations with the west, particularly the US, have been improving slowly but steadily. The visit of President Clinton should provide the impetus for a quantum leap forward not just in dollar inflows for investment, but also in attitudes towards doing business here.” (Card Andrade, quoted in Economic Times ) In the reforms regime beginning early nineties with opportunities for development of infrastructure and technology in Indian business of environment, the seer size of the domestic market for consumer products , and opening up of the services sectors, US interest in India has undergone a paradigm shift. This shift need not necessarily be construed as one from being pro-Pakistan to pro-Indian even though there can hardly be any comparisons between the two on many important economic and parameters that determine pattern of movement as well as flow of international investment capital. Islamabad can offer a Kahuta to Trombay or show case a Chagai Hill to Pokhran, but it has no answer to India’s Bangalore or Hyderabad, nor can it match its sustainable democratic traditions and democratic institutions. In real terms, India has an edge over Pakistan and other south Asian countries as a trading partner and investment destination for the US. Over the years therefore, there have been perceptible efforts at governmental level to steer India’s approach away from decadent principle of adherence to dogmatic ideology and political experimentation with economic confusion towards substantive engagement with US for long term growth. Open economic cooperation and growth has replaced cold war suspicions and restrictive trade regimes of the bloc-politics era as the real points of convergence between the two countries, even with occasional hiccups preempted by India’s Pokhran-II adventure, disagreements in trade related issues involving WTO and western impatience with the slow pace of reforms in India. This sentiment was echoed in President Clinton’s speech which was suggestive of change in US vision towards India- a dispersed image often through the prism of cold war, Washington’s geo-strategic concerns in South Asia and nuclear non-proliferation issues to that of a new bullish economy exulting the growl of a proverbial caged tiger. In the Presidential address to the people’s representatives in Indian Parliament, Washington sought to recognise and reinforce :

– India’s potential as one of the fastest growing economies in the world with the possibility of multiplying its living standards ‘500’ times in just 20 years hence,

– India’s potential for emerging as world leaders in information technology in the 21st century,

– Its confidence in democracy, tolerance for diversity, willingness to embrace social change,

– Its efforts at opening up the economy and commitment to a new wave of economic reforms and the determination to bring the fruits of growth to all its people,

– India’s commitment for global economic growth along with its commitment to democracy, decentralisation and its capacity for balancing out the challenges of development with environmental security concerns.

With the background that old barriers between nations and people, economies and culture are being replaced by vast networks of cooperation and commerce and the fact that US and India share open and entrepreneurial societies, the Presidential visit visualises, as a remarkable departure from the traditions of the past, to expand the networks and set mutual economic relationships right, and “give a profile to… market opportunities..”( Tarun Das; The Pioneer; 14 March 2000 ).

Visualisation often however, forms the glossy cover page. The reality, in terms of a brief prelude over the 50 yester-years, represent, what may be termed as ‘missing the bus’ syndrome. India’s obsession with socialism and bureaucratic red-tappism, matched, US administration’s eagerness to further its own trade standards and regulations without any apparent care for ground realities embedded in India’s diversity, cultural heritage and domestic compulsions. The net result has been mutual distrust. Ironically though, India, even with professed leaning towards socialism and a socialistic pattern, has never insulated itself totally from the global economic environment ( unlike China ), be it Brettonwoods Conference, IMF and IBRD, collapse of Goldstandard and introduction of SDR regime, the OPEC initiated crisis in Oil prices or even the Black Wednesday stock market crash of September 1987. Yet, India could never assume the significance USA attributed to other developing nations in South- East Asia or even China- the country behind the communist ‘Bamboo Curtain’ till mid eighties. The key issues that have been keeping both the countries apart are :-

1. Intellectual Property Rights,

2. Linking environment with trade,

3. Trading in financial services,

4. Linking in labour standards with global trading.

Similarly, Indian mistrust on USA has genesis in :-

1. Linking humanitarian aid such as PL 480 programs with sanguine political objective,

2. Linking exchange rate adjustments from IMF and developmental aids from IBRD or ADB with subtle penetration into Indian market without revoking its own tacit protectionist measures,

3. Attaching lower priority to Indian goods in US market access system- particularly below NAFTA, Caribbean Islands, Israel, Africa and China,

4. Closing of GSP ( Generalised System of Preferences) under Trade sanctions like Super 301 and Special 301 ( which hit Indian exports below the belt)

All these explains why Indian exports to USA has been hovering around an average of US $ 6.2 billion over last decade which is less than 1% of total US imports and Foreign Direct Investment of US $ 3.2 billion per year over last 8 years. ” there is more US investment going into Shanghai City than the whole of India and bilateral trade between two countries is less than that between the city of Toronto and USA.”(Joydeep Mukherjee, ‘ Standard and Poor’, in India Today) It is in this context that President Clinton spoke about looking forward to “better” and “stronger” partnership with India after “50 years of missed opportunities” on the basis of “common values and common goals”.( Clinton’s editorial distributed by the Los Angeles Times, reported in the Hindu, 21st March 2000.)

Nevertheless, private initiatives in economic cooperation have sustained the missing link which now has grown into a massive launch pad for the joint economic agenda to leap-frog from. The indications are that between the two Presidential visits (1978 and 2000), Indian exports to USA jumped by over 800% (175% since reforms era beginning 1991) and US originated Foreign Direct Investment inflow into India grew at a rate of about 975% (365% since 1991). The sectors showcased in the process relate to Fast Track Power Production, Electrical and Electronic equipment, Oil refineries, Hotel and Tourism and above all the Information Technology. 38% of internet and e-commerce start-ups in the Silicon Valley belong to Indians and as admitted by Clinton himself at Mumbai, about 750 top companies in Silicon Valley, are being controlled by Indians.( “when Americans and other big software companies call for consumer and customer support, they are just .. likely to find themselves talking to an expert in Bangalore…” { Clinton’s address to Indian Parliament}). The Y2K puzzle led software scenario was dominated by around $5.5 billion worth of exports from India to USA. MNCs based in the Silicon Valley are seen persuading the US administration to allow more H-1B visas to enable increasing number of Indian professionals to come to USA. USA firms have been engaged in about 44% of global joint ventures operating in India. In fact, the knowledge based industries i.e. information technology, telecommunication, bio-technology, pharmaceuticals and basic research provide the biggest ever opportunity for both the countries to formulate joint agendas in the new millennium, a fact corroborated by the ‘Vision’ statement, speeches of the leaders and, signing of business deals worth over US $ 1.4 billion during the visit. This gives India a clear lead over its geographic neighbors in the new era of economic bonhomie with equitable and transparent multilateral global trading system. Further, the NASDAQ listing of 3 Indian companies led by Infosys is bound to prove to be the vital catalyst for Indian business leaders to re-enact their technical capabilities and futuristic vision on international platform. The positive policy formulations that gave multilateralism a firm leg to stand on are:-

– commitments to conform to global standards on intellectual property rights through revised enactment of Patent laws,

– progress towards a zero-tariff regime on information technology related international trade ( vindicated by this year’s budget speech ),

– gradual conformity to WTO maxims on Tariffs and Quantitative Restrictions

– support to stand on removal of agricultural subsidies and

– support to US led stand on ‘Seattle Agenda’ i.e., inclusion of question of market access in WTO format.

Thus, with ADRs( American Depository Receipts) floated by Indian Companies being no more a Latin word to average reader of business economics in India, it logically follows that a sort of cataclysm has started in bilateral trade and the euphoria that was associated with the reception to the visiting President amply reflects the ambiance for the cataclysm to grow into a chemical chain reaction. In the long term interests one has to forget the skeptics and professors of doom.( The hidden agenda for Clinton’s visit … is to make India safe for American products as well as provide Indian resources cheaply to American producers; Romesh Diwan in The Statesman; 16 March 2000). In the context that foreign policy is an advancement of national interest on global platform, it will be too optimistic to expect that USA would redesign its policy to suit Indian interest alone. Certainly not in the unipolar world order where US interests override that of the others( the continuance of sanctions against Iraq at the cost of higher crude prices world wide, bombing of Kosovo can be cited as examples). US needs India now that it has rejuvenated from old ideological hang-ups as a symbol of growing economic efficiency and as a new land of opportunities. ( Prof. Jagdish Bhagwati in India Today ) India on its own must grab the opportunity created by US vision of Pakistan as a failed economy with failed roots (in terms of ruined HRD framework) crippled by religious fundamentalism of the worst kind. ( An indication in this regard was inherent in the veiled threat given to Pakistan by National Security Advisor Sandy Berger prior Presidential Islamabad stop over.) India stands alone in the region as a country where general perception is that business lobbies often set the tone for diplomacy. President Clinton’s visit provides the platform for India to address its socio-economic inequalities in terms of investments in areas of primary health, education and environment. This shall justify the optimism that Indo-US relations can grow faster than the Sino-US relations.

Thus Cliton visit should result in India and the States becoming partners in progress There should not however, be any indication of surrender on the part of India while furthering its interests. India should resist ‘Basmati’, ‘Neem’, or ‘Haldi’ to be patented by US multinationals, but at the same time must not blink at e-commerce portals with NewYork origin. Clinton spoke of India and USA entering into growing intersection of interests and visualised the emergence of a new India on the platform of information technology and knowledge based industries. This depicts the contour of future agenda of Indo-US relationships and puts India in a position to take a lead in defining its economic security issues vis-à-vis its neighbors in the region.

By Arabinda Acharya:

Adjunct Research Associate with the University of Toronto, York University Joint Center for Asia Pacific Studies, Toronto, Canada. and Tarun Kanti Mohanty;
Center of Conflict and Peace Studies, Bhubaneswar, Orissa, India.