Home arrow Archives arrow Economic Highlights arrow Economic Highlights 2015 arrow Obama-Modi Talks:MAY CHANGE WORLD DYNAMICS, By Shivaji Sarkar, 30 Jan, 2015
News and Features
INFA Digest
Parliament Spotlight
Journalism Awards
Obama-Modi Talks:MAY CHANGE WORLD DYNAMICS, By Shivaji Sarkar, 30 Jan, 2015 Print E-mail

Economic Highlights

New Delhi, 30 January 2015

Obama-Modi Talks


By Shivaji Sarkar


The 2015 Republic Day parade was a global event. Rarely an event or a visit to India draws such attention of the western media. Prime Minister Narendra Modi and US President Barack Obama made it to the headlines all over. It promises to the recession-hit world – not just the two countries – a change.


Possibly the only other visit that had drawn such mileage was the visit of Soviet Prime Minister Alexei Kosygin at the 1968 Republic Day. It was three years before the historic 25-year treaty with the Soviet Union and the war for liberation of Bangladesh in 1971. Kosygin visit was a media event in the US and Europe, as it came shortly after the 1965 Indo-Pak war that saw the triumph of Soviet system owned by India over state of the art US Patton tanks deployed by Pakistan.


The other supposedly significant Republic Day visits of UK Queen Elizabeth II in 1963, UK Prime Minister John Major in 1993, South African President Nelson Mandela in 1995, Russian President Vladimir Putin 2007 and Shinzo Abe in 2014 had caused some ripples but mostly in localized terms. Putin certainly reminded the days of Kosygin but it did not raise waves that Kosygin visit had caused.


Kosygin visit changed the geo-politic. Will Obama visit also change the course of the world? The US and the UK media expect a lot. India might change the fortune of the US energy and nuclear industry, create jobs and even may bring good luck to the sinking UK economy, the western media hopes.


That is the change apparently Prime Minister Narendra Modi has brought. The mighty US (yes, it remains so till now) and fledgling UK have started viewing India as almost equal.  They see a rising India as insurance for their progress despite significant difference in the level of wealth they possess through control of the global system.


They are hopeful that $4 billion investment promised by Obama to pep up solar, nuclear, defence and allied industries would generate more jobs in the US. Their major gain is seen to be in ‘Making in India’ the equipment for generating 1 gigawatt (1 lakh megawatt) solar power and almost 60,000 mw of wind power. The financial package announced by Obama comprised $2 billion US Trade and Development Agency commitment for renewable projects in India.


If it succeeds it may change the dynamics of world energy. No country, not even China with its initial success, has set such an ambitious solar power target in a short period of about five years. 


It may also end the charm of the nuclear energy, which is neither cheap nor clean. It may clean up Indian politics as not much muck could be raked up on liabilities. The present promised Rs 1500 crore insurance liabilities in the case of an accident are to be borne by the public sector insurers. They would be reinsuring with global insurers. The premium payment itself is a big business. If solar succeeds, which in all probability it should, the thawing of nuclear power projects is a great possibility.


Those accusing Modi of resuscitating the gasping nuclear industry in the US and Europe, possibly may end up praising him for causing its likely end.


Indian technological development needs are likely to be taken care of by the US. But some concerns remain. The US had earlier dumped on India not only junk technologies but even junk food like PL 480 wheat.


While fears always remain in global politics and trade, it is also a fact that over the past three years, between 2011 and 2014, the US surpassed Russia as the largest supplier of military equipment to India. It is possibly an indicator that both sides are overcoming their mutual suspicions.


It has sold India $10 billion worth of military gear, mostly via the foreign military sales route - a government-to-government transaction overseen by the US Defence Security Cooperation Agency. It includes Firefinder artillery locating radar, Apache helicopters, Lockheed Hercules and Boeing C 17 planes for army, Neptune long-range maritime patrol aircraft, Longbow Apache and Chinook heavy helicopters for the Navy.


These and similar other deals in the offing would form part of the $1 billion US Exim Bank finance to small and medium sized enterprises in exports of ‘Made in America’ products to India.


Obama banks heavily on India for creating jobs by setting a target of rise in trade from the $ 100 billion ($ 96 billion in reality) to $500 billion. But does he want to reduce his ties with China with which even today it has $560 billion trade? May be. It creates more jobs in China. Obama wants a shift in that paradigm!


Some benefit that has come to India is seen in the Indian engineering industry, expecting to double its exports to the $15 billion in the next three years, says Engineering Export Promotion Council (EEPC). It has risen by 30 per cent to $5.8 billion in 2014-15 over $4.45 billion a year ago. It goes beyond to agriculture, pharmaceutical, free trade agreement – may be in the second phase of engagement, import of US light natural gas (LNG).


The US industry is concerned about IPR issues in India, its core sector and infrastructure growth and retrospective taxation uncertainties. Modi has tried to dispel these by saying: “We will guide you and walk with you in projects You will find a climate that encourages investment and rewards enterprise. It will nurture innovation and protect your intellectual property. It will make easy to do business.”


India is opening up its doors. But the US is still not that open. Despite the Obama sops, it is not a total free entry for Indian goods to the US. American industries during interaction were vocal about barriers in India, but the US government has not promised to dismantle its own walls.


India need not be euphoric despite Obama saying he wanted to see more trade between the two countries. He also says: “Modi and I are interested in ‘smart’ regulation”. Thus it would be a regulated entry to the US market for India though the US wants a free walk. Despite some normal apprehension as was also in the follow-up of Kosygin visit, Obama-Modi talks instill confidence for boosting the world economy. ---INFA


(Copyright, India News and Feature Alliance)

< Previous   Next >
  Mambo powered by Best-IT