By Nantoo Banerjee
India-friendly Joe Biden’s ascendency to the top job in the United States means a lot for India, especially in the area of trade and economic relations as the country is looking for large foreign investments from diplomatic allies to grow its domestic industry and boost employment. Contrary to the official data on sources of FDI inflows into India from April 2000 to December 2019, putting the USA as the fifth largest investor after Mauritius, Singapore, Japan and the Netherlands, nine out of the top 10 foreign companies in India today are from the US.
The nine companies are: Apple, Amazon, Citibank, Coca-Cola, Google, Hewlett Packard, IBM, Microsoft Corporation and Pepsico. Japan’s Sony Corporation ranks 10th in the list. For several years, the US and India have been working on boosting investment and employment. Now the time has come for a stronger push. For this, both the US industry and India needs support from Washington DC, especially with regard to technology transfer and immigration rules.
In its own way, India is increasingly investing in the US, expanding its enterprises and creating jobs for US citizens. According to a report by the Confederation of Indian Industry, under the title “Indian Roots, American Soil 2020,” as many as 155 Indian companies have invested $22 billion in the US. These enterprises created nearly 125,000 jobs in the US. These Indian companies are doing business in all 50 the states. Texas, California, New Jersey, New York and Florida are home to large number of US workers directly employed by Indian companies.
The top five states in which Indian firms have generated maximum employment are: Texas (17,578 jobs), California (8,271 jobs), New Jersey (8,057 jobs), New York (6,175 jobs) and Florida (5,454 jobs). The Indian FDI was the highest in Texas ($9.5 billion), followed by New Jersey ($2.4 billion), New York ($1.8 billion), Florida ($915 million), and Massachusetts ($873 million). Indian investments in 20 US states stand at over $ 100 million each. The report said that 77 percent of the companies plan to make more investments in the US.
The reason behind the brewing expectation of deeper Indo-US business and trade relations is Biden’s long and productive association with India even much before he became the Vice President in the Barack Obama administration. He had always advocated a stronger relationship with India. As early as in 2006, three years before he became the US Vice-President, Biden’s vision of the future of US-India relations mentioned: “My dream is that in 2020, the two closest nations in the world will be India and the United States.”
Although Obama, then a US Senator, was initially hesitant to support the Indo-US civilian nuclear deal, Biden had championed the cause leading the charge and working with both Democrats and Republicans to get the civil nuclear deal approved in the US Congress in 2008.
Another reason behind the expectation under the present circumstances is Biden’s personal dislike for Chinese President Xi Jinping in the recent years. Biden had personally known Xi for several years and reportedly spent more time in private meetings and dinners with Xi than any other world leader. Xi too had lauded Biden, gushing public praise. However, the ‘bonhomie’ no longer exists between the two leaders. At personal level, they seem to distrust each other. What soured the Biden-Xi relationship remains as much a mystery as the sudden overturn in the ‘personal level’ relationship between Prime Minister Narendra Modi and President Xi Jinping since 2019. Xi was one of the very few global leaders who didn’t immediately congratulate Biden after his election victory, apparently because President Trump contested the election results. However, days later, China finally congratulated Biden and Kamala Harris after Biden’s Arizona victory. The Biden administration’s diplomatic and economic ties with China will bear significance on US-India relations.
The possibility of a better US-Iran relation, under the Biden administration, may also directly benefit India and its economic ties with Iran which came under severe pressure from actions by Trump imposing trade embargo and Xi promoting large infrastructure investment in Iran. China and Iran are in the process of sealing a long-term economic and security pact. India is highly concerned about its strategic stake in the Chabahar port project in Iran. India has committed a Rs.100 crore investment to the project in its last budget. The port is close to Pakistan’s Gwadar port being developed by China as part of its China-Pakistan Economic Corridor.
India’s pace in developing the Chabahar project has slowed down due to US sanctions, making Iran impatient about it. India is clearly caught in the geopolitical rivalry between the US & China over Iran. While India got a waiver from US sanctions for development of the port — on the ground that it will help access Afghanistan bypassing Pakistan — it is still not clear whether railway and other linked projects are exempt from such sanctions. India, as also a number of prominent EU members, hope that the Biden administration will lift the trade sanction on Iran.
The last but not the least, India hopes that the Biden administration will go soft on immigration and visas, specially H1B visas for skilled professionals. Before the presidential election, Biden promised to support family-based immigration, increase visa allocations for permanent and work-based immigration, reform the visa system for high-skill, speciality jobs and eliminate the limits of job-linked green cards.
However, it may not be immediately easy for Biden to keep his pre-poll promises on immigration visas for which the rules have been tightened by Trump through official orders over the last three years. Visa and technology transfer issues hold the key to the expansion of economic relations between the two large democracies. The issues may be difficult, but surmountable. Joe Biden’s victory in the presidential election certainly provides a silver lining. (IPA Service)