Wooing India with a Capital "W"; Bush will soon make his first trip to the South Asian nation. He faces plenty of competition for the affection of the world's largest democracy 
BusinessWeek, February 28, 2006

By Manjeet Kripalani

On Mar. 1, U.S. President George W. Bush will arrive in India, his first trip to the subcontinent. Bush will spend most of the next two days in New Delhi, the Indian capital, where he'll visit Rajghat, the cremation site of Mahatma Gandhi, before a busy schedule of meetings with the Indian prime minister, Manmohan Singh, and other government and opposition leaders. Then it's off to the historic Old Fort of Delhi for a speech, and a quick hop on Air Force One to the southern city of Hyderabad, where he'll stop by an agriculture university and the Indian School of Business.

If it sounds like a pleasant trip, it should. After all, U.S.-India relations have never been so good. The two countries have been warming up to each other in recent years, and the threat of terrorism has engendered closer ties in both defense and diplomacy.

Commercial links are growing, too. Last year, India eased restrictions on foreign investment in real estate, relaxed rules on foreign ownership of phone companies, and signed an Open Skies agreement with the U.S. that allows more air travel between the two countries. U.S. giants General Electric (GE ) and Bechtel, which had been shareholders in a troubled $2.5 billion power project in Maharashtra state, finally got compensation from the Indian government after years of bickering.

"WALKING INTO A MINEFIELD." Still, the trip won't be entirely without stress. Bush can expect fierce protests by various Indian groups. The Communist Party, part of the ruling coalition in New Delhi, has planned demonstrations criticizing the invasion of Iraq and Washington's treatment of the Muslim world. Members of other civil society and anti-globalization groups, who are fasting in protest, will line the New Delhi streets where Bush passes. While violence is unlikely, the protests will certainly embarrass Bush.

Singh, too, will have to walk a rough road. Last July, when Singh visited Washington, he and Bush agreed to work on greater nuclear cooperation. India was to separate its civilian and defense facilities, and give the International Atomic Energy Agency access to the civilian sector. For Bush, it meant battling Congress so U.S. companies needn't be bound by the Nuclear Nonproliferation Act, a 1978 measure that allowed them to supply nuclear reactors to countries such as China but not to India.

Singh has had to battle perceptions that he has gone soft on the nuclear issue. Many Indians worry that if he gives too much, their country risks trouble with its nuclear neighbor, Pakistan -- a neighbor that is seen as a staunch ally of Washington. Others bristle that India will be giving up too much independence if foreigners are granted access to its nuclear program. "They want us to safeguard our nuclear facilities, but ask nothing of [Pakistan President Pervez] Musharraf," says Monu Nalapat, professor of geopolitics at Manipal University. "Bush is walking into a minefield."

CEO ROUNDTABLE. Beyond the nuclear issue, though, there is plenty of cooperation. Ven Parameswaran, who runs the New York-based Asian Securities Corp, which promotes foreign investment in India, says that, for businesses, this is the most important trip ever by a U.S. president to India. "The visit is so much more than the nuclear agreement," Parameswaran says.

Though there isn't an official business delegation traveling with Bush, three groups of corporate leaders are planning to visit India at the same time. "There's a lot of convergence of views [on business]," says Nandan Nilekani, a member of the CEO Roundtable, a group of 10 Indian and 10 U.S. chief executives formed last year to lobby for business-friendly laws and to boost ties between the two countries. The group will meet with Singh and Bush on Mar. 2.

On the agenda: the promotion of agribusiness and agriculture technology transfers from the U.S. to India, which will help support reforms in India's agricultural sector. The U.S. also wants India to open up its retail sector to foreign investment, increase caps on foreign investment in insurance and the news media, and allow foreign banks to buy Indian financial houses. India is pushing a free-trade agreement on services with the U.S., which would free up the movement of labor and increase U.S. visas for Indian professionals, especially tech workers. And it wants U.S. investment in infrastructure.

STATE SUITORS. Most important, they're likely to discuss co-production of military hardware. That would send a clear signal that the U.S. sees India as a counterweight to China's growing military strength. According to Tarun Das, who heads the Confederation of Indian Industry, 10 or more new agreements are likely to be signed. "Our current $40 billion trade with the U.S. is just a fraction of U.S. trade with China," says Das. "We want U.S.-India trade to reach at least $100 billion in the next five years."

Plenty of others would like the same thing. The Bush visit comes amid a parade of state visits, all from countries seeking to cash in on India's growth. On Feb. 19, French President Jacques Chirac arrived in India for three days with a delegation of 30 businessmen. They signed agreements on sales of Airbus passenger jets and civilian nuclear cooperation, though the latter won't be finalized until Washington's offer is settled. The day after Bush leaves, Australian Prime Minister John Howard will visit New Delhi. Two months later, Chinese President Hu Jintao is expected.

The Bush visit and increased economic ties, says Tarun Das, "is making every other major economy in the world wake up to India."