India votes, US waits

India’s elections are offering enough drama to intrigue even the most casual American news junkie — a mix of power, corruption and India’s shoe-gate has US television anchors barely suppressing their smiles. But beyond the visual echo of the shoe that former US president Bush ducked in Iraq, the Indian elections are being keenly watched here as they promise to have a profound impact on US bilateral trade and geopolitical stakes in Asia.

Fear over N-fallout
The stakes could hardly be higher for US industry, which has many eggs in the Indian basket. US firms hope that young consumers from rapidly growing India and China will fill the void left by weakness in American consumers.

“India has been growing at 20-30% a year for all of us. So, we actually like doing business in India and all the CEOs I talk to, feel exactly the same way,” said Indra Nooyi, chairman and CEO of PepsiCo, when she took charge of the US-India Business Council.

If you were to ask American CEOs basking in the afterglow of the nuclear deal who they would like to see in New Delhi’s hot seat, most would go with Manmohan Singh at the head of the UPA. LK Advani who leads the BJP (and NDA) is their firm second choice.

The US is wary about the prospect of Mayawati, who has an egoistical penchant for commissioning super-sized statues of herself, becoming prime minister if she takes her BSP into an alliance with a patchwork of Left parties in a third front. US execs won’t breathe a word publicly: but they are spooked by the CPI(M), which wants a review of India’s nuclear deal with the US and a rethink of military relations between the countries.

“If the hard-left political parties were to participate in the government it would be horrible for US business,” a US trade official, who did not want to be named, told DNA. “We don’t fear there will be a U-turn in reforms if the BJP comes to power. The BJP has also said it will not unwind the nuclear deal,” he said.

The US is worried the Left could exert considerable influence if it achieves enough votes to hold a balance of power. The US concern stems from the reality that the new government will have to enact a nuclear liability law. US companies can’t do business till New Delhi signs the Convention on Supplementary Compensation (CCSC) treaty.
“We believe that signing the CCSC would be a way for India to maintain the spirit of the US-India nuclear pact,” said Seth Grae, president and CEO of Thorium Power, a pioneer in developing non-proliferative nuclear fuel based on thorium.

“Singh has played a key role in the passage of the deal; we recognise his efforts to implement the 123 Agreement. We will obviously respect the decision of the Indian people and continue working with our partners in the government. Whatever the outcome, India represents one of the most important new nuclear markets in the world,” said Grae.

With Singh and Harvard-educated free-market liberals like Chidambaram at the helm, 99% of high-tech trade between India and the US is unhindered by export licenses. Singh was negotiating a bilateral investment treaty, which could be scuttled if he doesn’t get re-elected. The US is India’s second largest trading partner and trade in 2007 grew to $41.6 billion. There is a mutual desire to hike it to $60 billion.