Obama Drops the Ball on India


The White House took great pains to brand President Barack Obama’s 2010 visit to India as a jobs trip. At every turn, it seemed, the White House press machine rolled out a new advisor to speak about the president’s efforts to “expand U.S. export opportunities and jobs” for American workers. And Obama himself stated that: “As we look to India today, the United States sees an opportunity to sell our exports in one of the fastest-growing markets in the world. For America, this is a jobs strategy.”

Yet, when it comes to India, the administration is dropping the ball. Although trade between the United States and India has increased, the economic relationship hasn’t yet reached its full potential. To do so, the administration should finalize a mutually beneficial investment treaty with India, and move forward on steps to negotiate a comprehensive Free Trade Agreement. These pacts would link American companies – and American workers – to important opportunities presented by India’s growing economy. In turn, this would lead to new jobs, and further link the United States to a critical Asia-Pacific partner.

To be sure, trade with India is on the upswing. Bilateral trade reached $48 billion in 2010, according to data from the Commerce Department, and the United States has become India’s third largest economic partner. With the exception of the global recession in 2009 and the burst of the dot-com bubble in 2001, total trade between the two countries has increased every year since 1991.

Enjoying this article? Click here to subscribe for full access. Just $5 a month.

India’s economic transformation has been a boon for American companies and workers. In less than a decade, U.S. exports have quadrupled to $19 billion. While a broad array of American businesses now trade with India, few have benefited more from the relationship than U.S. manufacturers. The Office of the U.S. Trade Representative says that three manufacturing sectors – namely, machinery, electrical machinery, and aircrafts – account for three of the top five export categories to India. In the past two years, for example, India’s low-cost carrier, SpiceJet Airlines, purchased 33 new generation 737s from Boeing; India’s Ministry of Defense bought 10 Boeing C-17 Globemaster III airlifters; and Reliance Power ordered six turbines from General Electric Co. as part of a deal worth $750 million.

Equally important, yet seldom noticed, are the investments that Indian companies are making inside the United States. From 2000 to 2010, India was the United States’ second fastest growing foreign investor, with an annualized growth rate of 53 percent. In 2009 alone, Indian companies invested $4.4 billion into wide-ranging American sectors like pharmaceuticals, oil and coal, iron and steel, and telecommunications.

The tangible results of these investments can be seen across the United States. In Ohio, for example, subsidiaries of TATA, India’s largest company, employ over 1,200 people at diverse production facilities that manufacture steel products in Warren, and develop and deliver software technology in Milford. The same can be said in northeast Minnesota, where in 2008 India’s Essar Steal broke ground on a $1.6 billion steel plant on the state’s Mesabi iron range.

Sign up for our weekly newsletter
The Diplomat Brief