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- India is worried about US popular backlash as more American jobs are ‘Indianized’
- New Delhi’s weapons purchases from US are dwarfed by Saudi and Gulf arms orders, Indian clout goes only so far
- The Indian IT bubble is largely Call-Center based. American states are increasingly banning outsourcing of jobs to India
- Chinese IT industry easily beats Indian IT but it’s not as externally focused as Indians are
- Obama is opposed to unlimited H-1 visas to Indian nationals and others
With its generally low purchasing power, India is not that much of a long term market for the US. The Obama visit is more about resolving Kashmir which could help facilitate a US safe exit from Afghanistan.
MOIN ANSARI | Thursday | 4 November 2010 | RupeeNews.com
WASHINGTON, DC—The hullabaloo about the Obama trip to (1) has caught headlines all over the world. The Bharatis see this as a move towards superpower status. America sees it for what it is –a means to sell American products and services to Bharat.
While Bharat heralds its clout in defense procurement as proof of the leverage it has over American business, this has to be seen through the prism of major defense contractors. Let’s benchmark other countries to see what their clout is.
Saudi Arabia is buying $60 billion’s worth of arms from America. The Gulf States are purchasing $130 billion of arms from America. These colossal purchases dwarf the Bharati purchases and dilute the Indian plan to get clout in the US Department of Defense.
From defense deals to outsourcing and trade, the tenor of the visit is to focus on job creation and business for US companies. A top US official said one of the ‘major themes’ that Obama will emphasize is India as a ‘tremendous market’.
Bharat’s economy is smaller than the GDP of the Benelux countries. So why doesn’t President Obama lead a team of CEOs to Benelux countries or to the Gulf States which are purchasing billions of Dollars of US equipment and merchandise?
The Indian Express describes the salient features of the Obama trip.
In the run-up to President Barack Obama’s visit next week, the US has made it clear that it is looking at India as a larger export destination and that the President will emphasize the nation as a potential market for exports by American companies.
On the nuclear front, while welcoming the signing of the Convention on Supplemental Compensation by India as a ‘positive step’, a senior US administration officer has said Washington is seeking a ‘level playing field’ for their companies.
The IT industry of India is really a Call Center industry which does not have many barriers to entry. Nor does it have any impediment to new players into the field. Already the Philippines is a destination of choice for many companies because they offer better labor rates and a superior work ethic. Ohio is the first US state that has banned Outsourcing. In this era of high unemployment other states are emulating the same laws. At least a dozen states are considering laws against outsourcing, and others are looking to see how the laws fare. Even President Obama has stepped back from his rhetoric of open markets and does not espouse unlimited H-1 Visas. He is now on record on limiting Outsourcing. All this will severely hamper the IT industry, and impact the growth rates of Bharat. Delhi cannot stay oblivious to the economic downturn in America and Europe.
The Chinese IT industry today rivals the Bharati industry; however it is not externally focused. The Chinese IT industry is creating electronic products that rival Apple, and Motorola. In fact Zong and other Chinese Telecom industries are now ahead of European and American telecom giants. Zong and its partners like Warid offer Wimax and LTE technology which is only now beginning to seep into America. Chinese has reached technological independence. The Chinese infrastructure rivals American infrastructure, and its Aerospace industry is producing commercial and military aircraft. In fact most of Boeng and Airbus planes will be produced in China. China holds a trillion Dollars worth of US T-Bonds. Its trade surplus according to some estimates is about half a trillion Dollars per annum. This buys serious clout for China.
The Bharati IT industry does not produce cell phones or software that can be sold in the US or European market. The Indian industry excels at providing cheap skilled manpower to European and American companies doing that. [That’s what is happening in Pakistan too. The only edge India has is size, there are more such skilled Indians as percentage of population than there might be Pakistanis or Malaysians, or Irish].
In sharp comparison, the Chinese have produced all sorts of technologies and have even sued Apple for copyright infringement.
In effect, Bharat does not offer a huge market for America. Its purchasing power is limited.
What does all this have to do with Obama’s trip? President Obama is making a trip to Bharat to pressure Bharat to resolve Kashmir so that it can make a face saving exit from Afghanistan. Those external factors will help Obama in his next elections.
(1) Bharat is the native name of the country known today as India, the name given to it by its last colonizers: the British. Before that, and for almost ten centuries, it was known as Hindustan, the name given to it by its previous colonizers: the Muslims of Central and West Asia.
Originally published by Reach Mr. Ansari at
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