Shift in US attitude puts India in the 'big league'

India is now the new China for high investment returns and the United States is beginning to see it as important an ally as Israel. That is the analysis by Dr George Friedman, chairman of Stratfor, the world's largest privately held intelligence company. In a recent investment report, Dr Friedman said the recent deal giving the Indians access to American nuclear technology for civilian uses, demonstrated a sea change in American thinking about India, despite India not being a signatory to the nuclear non-proliferation treaty. "This puts India in the 'big league'. Its nuclear status has been acknowledged by America and it can now receive the technology necessary for enhancing its nuclear energy potential," said Dr Kripa Sridharan, senior lecturer in political science at the National University of Singapore. Analysts say it shows that Washington is not merely trying to mollify Delhi over the question of the US re-arming Pakistan, but wants a durable strategic partnership. Its access to nuclear technology would have "palpable consequences for the pace of Indian expansion," said Mr Ashley J Trellis of the Carnegie Endowment for International Peace. And American businesses find India a useful place to be, to export and to invest in. "The US has been seeing a great potential in India — especially in the services sector," said Mumbai-based business strategist and former top banker Pradeep Saxena. "The difference now is that they are seeing it also as a base for manufacturing. That's the real story," said Mr Saxena. In 2004, US merchandise exports to India rose by 22.6 per cent over 2003, and imports by 18.4 per cent. More than 50 per cent of US Fortune 500 companies now outsource some of their information technology needs to Indian firms. Indian businesses, too, are increasingly investing in the US. The India-US economic relationship is beginning to look a little bit like the US-China one. Experts say it is in the economic area that India could be a counterweight to China. For a generation, China was where the smart money went. "It is no longer that place, except in the minds of the nostalgic and delusional. But India could well be," says Dr Friedman. With Sino-US relations deteriorating "fairly rapidly", having an economic alternative in India gives the US leverage with China on a host of issues, he says. But, foreign direct investments to India are nowhere near China's, which gets 13 times what India gets. An AT Kearney study showed that most multi-national corporations preferred China for its market size, government incentives, infrastructure and macro-economic climate. But unlike India, China's banking sector is in deep crisis. Calling it "technically insolvent", Professor Dr Yasheng Huang from the Sloan School of Management, and Professor Tarun Khanna, from the Harvard Business School, said in a joint research paper that it was "the biggest source of worry". Then there is the Indo-China border issue. "China does still intrude in India's strategic calculations very strongly," said Dr Sridharan. Recent events in Bhutan where China is trying to get it to cede some border territory area attest to this. But India is not likely to see this as a major setback in its warming Indo-China relations. Not when it is poised to gain the sort of material benefits from its US ties that could see it becoming a major world power militarily and economically. TODAY/rose