Global Business

Obama to Visit India, and Both Sides Hope to Expand Ties

Kainaz Amaria for The New York Times

American imports to India have nearly quintupled in a decade, helped by brands like Harley-Davidson setting up shop.

MUMBAI, India — As President Obama pays his first visit to India this weekend, he may want to take his lead from Mary Kay.

Namas Bhojani for The New York Times

Shoppers in an upscale mall in Bangalore, where Levi’s jeans are available for purchase on an interest-free installment plan.

Or Harley-Davidson, Cinnabon or Bristol-Myers Squibb.

Since Mr. Obama took office two years ago, America’s top economic policy makers have visited India numerous times but left with little to show for their long flights. This time, too, officials on both sides have tried to temper expectations, given the geopolitical and trade tensions between the two nations.

But, even without a big policy push from Washington, companies from both countries have already been forging deals at a fast and furious pace.

American brands as diverse as Mary Kay cosmetics, Harley-Davidson motorcycles and Cinnabon sticky buns have recently set up shop or expanded in India, often with local partners helping them navigate this country’s notoriously convoluted bureaucracy. Meanwhile, American corporate giants like General Motors and the drug maker Bristol-Myers are expanding factories, sales outlets and research laboratories in India.

As a result of such moves, American exports to India in the first six months of 2010 hit $14.6 billion, up 14 percent from the period a year earlier and nearly five times what it was a decade earlier.

Corporate America mainly hopes the visit by the president, with more than 200 American executives in tow, can help better define the common economic interests of the United States and India and build on the trade and investment foundations the business community has already laid.

“Business had been leading the way from the very beginning,” said Ron Somers, the head of the United States India Business Council, a business advocacy group. Now, Mr. Somers said, “we want to crown that with a genuine strategic partnership.”

Harold McGraw 3rd, the chairman of McGraw Hill and one of the executives in the Obama entourage, said the visit was “all about economic and job growth for both the U.S. and India.” India is America’s 14th-largest trade partner, he noted, but “should be a lot higher.”

For many American executives, India seems to have become the “new China” — a place where they feel compelled to do business, lest they miss getting a foothold in a nation with low-cost labor and a potentially billion-person consumer market.

But American government officials still seem to be struggling to define India’s role, beyond saying that “it’s not China.”

India, with its lively democracy and messy infrastructure, is certainly no China, with its forced-march development model. In fact, encouraging India as a counterweight to China — both economically and militarily — is a motive for President Obama’s visit, with potential sales of military technology high on the American agenda.

Compared with China, trade between India and the United States is relatively balanced. In 2009, America bought only $7.2 billion more in goods and services from India than it sold. Total trade between the countries was $60.2 billion. But that is just a small fraction of the $434 billion annual trade between China and the United States, which is lopsided $262 billion in China’s favor.

On paper, at least, India and the United States already have many shared interests and common goals. But Mr. Obama and his New Delhi counterpart, Prime Minister Manmohan Singh, have few significant bilateral achievements on economic issues. And one promising partnership, involving nuclear energy, may not even get off the ground.

In 2005, President George W. Bush and Mr. Singh announced what is considered the most ambitious agreement yet between their countries. The United States would remove restrictions on the export of civil nuclear technology to India and American companies would sell power equipment to India, which hopes to increase its nuclear power generation more than tenfold.

This past August, though, the Indian Parliament set that deal back by voting to make contractors and suppliers partly liable for any damages from nuclear accidents that might occur at the new plants. American companies say the new law deviates from international nuclear norms and would keep them from selling power equipment. Many economists and corporate executives say the power plant impasse and other tensions between the countries — most notably Washington’s continued, if wary, military embrace of Pakistan — suggest that Mr. Obama and Mr. Singh may be unable to reach any meaningful economic concord on this trip.

Both leaders face difficult economic and political realities at home. High unemployment, concern over the outsourcing of American jobs and the threat of a more confrontational Congress will limit Mr. Obama’s ability to strike deals with India.

Vikas Bajaj reported from Mumbai and Heather Timmons from New Delhi.

This article has been revised to reflect the following correction:

Correction: November 4, 2010

An earlier version of this article misspelled the surname of Indra K. Nooyi, the chief executive of PepsiCo, and the given name of Gunjan Bagla, managing director of Amritt Ventures.

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