The Obama administration likes to describe India as its country’s indispensable partner in the 21st century. This still remains as much hope than fulfillment in Washington’s case. India remains marginal, partly by choice, to the US’s key immediate overseas challenges like the terror problem in Afghanistan-Pakistan and the Chinese yuan exchange rate. President Barack Obama’s $10 billion-worth of deals is a symbolic sop for his electorate. Their insignificance is evident when you consider the US’s 2009 trade deficit in goods was $519 billion.
While India has seen its overseas economic links diversify tremendously over the past five years, the truth is that its economic relations with the US dwarfs all others in terms of its importance to India’s economic emergence. The US is only the third largest source of foreign direct investment and goods trade. However, toss in the other financial figures such as private equity, institutional investments and, often the largest single chunk of capital coming to India, individual remittances. At this point the US leaves all other countries in the shade. But it is the quality as much as the quantity of the economic relationship that matters. Here again the US is indispensable. At the heart of the Indian growth story is its private corporate sector. This sector remains highly dependent on foreign capital, foreign technology, foreign management lessons and the ability to buy assets overseas to maintain its phenomenal growth and competitiveness. Though India Inc now looks for best practices around the world, the US remains the most favoured nation for all these inputs.
Until the global financial crisis, polls showed Indians as being among the few nationalities who rated Americans higher than Americans rated themselves in terms of innovativeness and work ethic. While the Indian elite mimics all global chattering classes in Yankee-bashing, the US has emerged as a mansion on the hill for the aspiring Indian middle order.
This is because, unlike say the Persian Gulf, America has developed an image larger than just a place to make money: democratic model, benchmark for an open society, a technological wonderland and home to the most successful Indian immigrant population in the world. Even the many in India who rail against the US, whether over fears of its supposed ideological influence or its inroads into Indian sovereignty, are effectively accepting that it is as the only country that actually matters to them. Even in the throes of economic recession and self-doubt, America continues to enrich and engage. More importantly, as it reminded everyone by electing Mr Obama to its highest office, the US inspires the Indian mind more than any other nation in the world.