Geithner India trip gets mixed reviews: Some decry lack of specifics but U.S. business group upbeat
By Greg Robb MarketWatch
WASHINGTON MarketWatch — Early reviews of Treasury Secretary Timothy Geithner’s quick trip to India this week were mixed with some seeing a lost opportunity to build momentum but with a U.S. trade group content believing the sojourn may be a prelude to a visit from President Barack Obama later this year experts said Tuesday.
What pops up is a lack of concrete goals or substantive ideas or a concrete plan. I am sure it was a useful visit. I also think it was lost opportunity to do more said David Karl president of the Asia Strategy Initiative and former project director of the Joint Task Force on Enhancing India-U.S. Cooperation in the Global Innovation Economy. On the other hand Ron Somers the president of the U.S.-India Business Council was enthusiastic. Geithner’s trip was a preamble and prelude to creating a partnership that is going to shape the economic destiny of the 21st century Somers said.
The Treasury secretary’s trip isn’t over. He will meet with U.S. and Indian business leaders in Mumbai on Wednesday. However his talks with Indian government officials have finished and some experts found the public results wanting. This is still very much at the level of atmospherics. It doesn’t look like this visit will pick any locks that keep the two economies apart said Uri Dadush director of the international economics program at the Carnegie Endowment for International Peace.
U.S. Treasury Secretary Tim Geithner sees huge opportunities. Geithner met Tuesday with Indian Prime Minister Manmohan Singh and held meetings and a press conference with Finance Minister Pranab Mukerjee. The formal aim of the visit was to launch the U.S.-India Economic and Financial Partnership which will feature annual meetings among Cabinet officials and regular working groups focused on critical issues. The two sides focused on the global economy financial market stability and infrastructure spending U.S. officials said.
Our economic relationship presents huge opportunities for both India and the United States Geithner said. See full story on Geithner’s comments in India. Experts said there is enormous potential for bilateral trade but that the U.S. and Indian governments can’t seem to get out of the way. At the moment less than 2% of waterborne imports to the U.S. come from India according to data compiled by Panjiva an independent research firm. U.S. foreign direct investment in India pales in comparison to that in China. And disagreements between the U.S. and India over agricultural goods have hampered efforts to widen global free trade in the Doha round.
But while everyone’s back was turned information technology companies in both countries have developed deep ties analysts said. This has happened almost in spite of government policies and has raised hopes from other sectors of better ties.
And governments are now scrambling to catch up Somers of the U.S.-India Business Council said. Somers said India will need an estimated 1 trillion in infrastructure including new roads ports and airports. About 600 billion of this will come from the private sector both in India and foreign countries Somers said.
Obama coming?
Somers said there had been no formal announcement of a trip to India from the Obama White House or Indian officials But Somers said that he has seen an increase in interest in India across federal agencies indicating that preparations may be underway.
Still Karl said Geithner did not take any bold steps to bridge the gap between the two sides. India wants the U.S. to relax its export controls over high-tech products. The country also would like the U.S. Congress to give work visas to more Indian high-tech workers. And in the U.S. business leaders want India to open up its defense banking and retail sectors. A bilateral investment treaty should also be a high priority Karl said given the ramshackle nature of Indian tax and investment regulations. Analysts did not blame Geithner alone for the lack of strong progress during his visit.
Dadush said that India remains a country where protectionist interests are playing a very important role. I don’t think they’ve really managed to get necessary breakthrough on critical questions said Dadush. Many in India continue to believe that Obama is less supportive to India that his predecessor was Bagla said. President George W. Bush pushed through an agreement to give India access to civilian nuclear technology. At the same time U.S. officials have nagging doubts that Indian politicians would be able to deliver on any big initiatives Karl said. As a result maybe this was the best that could be done Karl said.
Gunjan Bagla managing director of Amritt Inc. and author of Doing Business in 21st Century India said it looks like Geithner’s efforts to increase bilateral partnership has gotten off to a slow start. Bagla said Geithner’s statements seemed designed for the U.S. Congress and Wall Street and were too vague to impress his Indian hosts.
Further east
The U.S.-India conversation also suffers from comparison to China. Unfortunately many in America insist on looking at India through the lens of China and not surprisingly continue to produce sub-optimal results in their Indian efforts Bagla said. In contrast to China Google Inc.’s NASDAQ:GOOG search engine is not censored in India and Hollywood can sell as many movies as it likes Bagla said. Arvind Subramanian an Indian national and senior fellow at the Peterson Institute for International Economics said the U.S. and India also share a desire to see the yuan strengthen.
Indian manufacturers are in direct competition with Chinese goods.
If the U.S. and India team up in the Group of 20 leading economies’ discussions about China’s currency it will be hard for China to ignore Subramanian said.
Last updated: July 9th, 2024
