The United States, from all accounts, is placing tremendous hope on achieving some tangibles in the economic sphere during President Barack Obama’s visit to India in early November. A pre-visit briefing in Washington was revealing — indicating quite a lot of variance between what the American people would like to see from the visit and the expectations of the President and his close advisers as well as the US business community. The US government would like to make exports its cornerstone — hoping that increasing exports to India would help create more jobs back home in America. India has already placed big-ticket orders worth $12 billion with US firms — of which $5 billion is defence-related and the rest in commercial deals such as the purchase of Boeings. It suits India to buy from the US as the strong rupee (`44.45=$1) makes imports cheaper, while exporters, particularly small and medium enterprises, stand to lose.
India’s $12 billion imports are expected to create around 50,000-60,000 new US jobs. The US would also like to increase agricultural exports to India, but fears in this country that this would deal a death blow to Indian farmers have created an insurmountable hurdle. America gives substantial subsidies to its farmers under different heads, and while India too offers farm subsidies these are nowhere at comparable levels. This was one of the key contentious issues between the two countries at the WTO’s Doha Round of talks. Mr Obama will meet Indian industry and trade leaders in Mumbai as well as American CEOs to discuss business-related subjects, and he is also likely to invite Indian businessmen to set up industries and create jobs in the US. There is a joke doing the rounds that if he invites the Patels to put up more motels in America, it would solve that country’s unemployment problem! There might even be some truth in that. What is a fact is that Indian companies are now the second largest foreign investors in the US, next only to the UAE, and have created around 57,000 new American jobs.
But what appears to interest the American people more are the jobs lost rather than new jobs created. One of the perennial queries US officials face is when will Americans pick up the phone to make a service-related complaint or query and not get an Indian voice at the other end? This is instigated primarily by the “victims” of the outsourcing of jobs to India, but there is nothing much that Mr Obama can do about this in India. The solution really lies back home in the US — where American companies are outsourcing work to cheaper destinations as the pull of profits is always stronger than nationalism or so-called patriotism. He might use tax incentives and ensure a competitive workforce so that Americans can compete with the workforce in India and China. Mr Obama, of course, is all too aware of the disquiet among his fellow citizens — possibly why he avoided any stops at outsourcing “hubs” like Bengaluru and Hyderabad during his forthcoming visit.
For Indian businessmen, one of the major concerns is the huge hike in H-1B visa fees which the US Congress recently introduced to raise $600 million for securing the US-Mexican border. Fees have been raised for companies that have more than 50 per cent of their employees on such visas from $320 to $2,320 for skilled workers and from $320 to $2,570 for unskilled ones. To counter this, the Indian information technology sector is considering hiring more American employees in the US. But the visa cost issue remains a sore sticking point, with commerce minister Anand Sharma pointing out in a recent letter to his US counterpart that it would cost Indian firms an extra $200 million a year.