As President George Bush wound up his visit to the subcontinent last week, media stories focused almost exclusively on a new bilateral agreement on India’s nuclear program. The issue is an important one. India has kept its nukes shrouded in secrecy for years, and the potential for conflict with Pakistan, which also has the bomb, remains high.
Still, it seems odd that even the business press has completely ignored another important development — the announcement on Wednesday that U.S. Trade Representative Rob Portman had hammered out a deal with Indian Commerce and Industry Minister Kamal Nath calling for the doubling of bilateral trade between the two countries in the next three years. While trade with India is relatively low, totaling only $26.8 billion in 2005, or as UPI reported, “roughly 10 percent of trade with China,” it has increased dramatically from $14 billion just five years ago.
Now granted, as the USA Today ‘s David Lynch (one of the few journalists to even explore the economic side of the trip) wrote on Wednesday, “Despite reforms that began in 1991, foreign investment remains limited. This fiscal year, it’s expected to total just $5 billion, vs. the $60 billion that flooded into China.” But Lynch also points out that “India’s economy is enjoying its third-consecutive year of 7.5 percent growth or better,” and some American firms — like Cisco and Boeing — have begun cashing in.
American exports to India reached only $8 billion last year, which was still more than double the 2000 figure. That’s good enough to make the U.S. India’s largest trading partner, accounting for a little over 16 percent of the nation’s exports and about six percent of its imports. Obviously, there’s plenty of room for growth here — and there are plenty of great stories — but no one seems to want to tell them.
For example, according to an AP report from Tuesday, India is set to begin spending about $150 billion annually in infrastructure projects such as roads, bridges and airports in order to make itself more attractive for outside investment — especially for American companies. Anyone following up on this one?
David Cohen of BusinessWeek, another of the handful of reporters who bothered to look at the economic aspect of the president’s trip, noted that over the past 25 years, India has had the second-fastest-growing economy in the world and has “provided the third-largest contribution to global gross domestic product (GDP) growth, accounting for about 10 percent of the total worldwide, trailing only China and the U.S.”
Cohen doesn’t cite an India stat without comparing it to China, which, as we noted last week, has received far more coverage. An article by Minxin Pei that we mentioned in last week’s item informed us that, “In six major industrial sectors (ranging from autos to telecom), from 1999 to 2003, Indian companies delivered rates of return on investment that were 80 to 200 percent higher than their Chinese counterparts.”
This is not to say that India is free from problems. No report on the country would be complete without alluding to the nation’s rampant corruption and poverty. In other words, we are not advocating for stories similar to the one that appeared in Friday’s International Herald Tribune, which gushed that “India has the potential to be our biggest market in Asia, bigger than China, in as much as two to five years … The convergence of the two economies is as much about the alignment of our two democracies, as about the dollars and cents associated with India as an emerging economic opportunity.” The story added that “with 8.1 percent growth expected for the year ending this month, India’s humming economy is lifting millions from poverty, and Western companies have been quick in trying to pry open that market.”
That’s quite a mouthful. Obviously, newspapers and magazines do make room for the occasional business story about India. But we’re a little surprised that the new trade agreement isn’t getting more play. While many reporters have long evidenced their excitement over India’s economic potential, they’re missing the boat on a big step toward realizing it.