Most people forget that jumpstarting India?s entry into the major league is predicated upon quickly operationalising the 123 Agreement approved by the US and Indian governments. Hence, I am amazed at the uproar and delay created by the Left and BJP to stall the process. The agreement was reached following full discussions involving our scientific community, security experts and top diplomats. The economic implications of a delay in implementing the deal are enormous. No wonder, our economist Prime Minister is pushing for it.
A strategic partnership with the US is vital to India?s ability to sustain high growth, eradicate poverty and emerge as a major global player. The nuclear deal will put at rest the hesitation the world?s two great democracies had in forging a long-lasting strategic relationship. It is a win-win situation. The US would benefit greatly from a stronger India that would provide a big market for US goods, services and investment. India would also be in a position to make a quantum jump in its export of goods, services, investment, and tap greater financial flows and intellectual inputs from its own diaspora. The agreement has triggered an unsurpassed enthusiasm to bolster an economic partnership that can change the world?s dynamics of the 21st century.
Note that a delay in implementing the agreement may cost India dearly. The beneficial impact of the deal on energy security is well documented. The fear of the US dominating Indian policy is totally baseless. Still more absurd is the concern of losing our sovereignty. Smaller countries like Vietnam and Malaysia are not afraid of forging economic partnerships with the US, while maintaining independent stances on global issues. Those opposing the deal should know that our government has ensured national security against all contingencies. What are the economic costs of going back on the deal? The first is a universal display of India?s lack of self-confidence and credibility. This will be a setback for all bilateral economic cooperation. Second, it will delay India?s emergence as a major global economic power. To attain that status, India must grow steadily at over 10% per annum, for which the country?s exports and FDI must grow exponentially. A detailed market access study points out that the US offers the best and most diversified market for employment-intensive products and services from India. The agreement marks a culmination of confidence in each other as natural allies.
This momentum should not be lost. Indian democracy has taken many tough decisions to serve national interests. This is one such decision. At this juncture, US-India bilateral trade and investment are abysmally low. Frantic efforts by the private sectors of both countries, with government cooperation, can increase our exports from $31 billion to over $65 billion by 2010. There is an even bigger potential in services. The US is a major market for our IT/ITeS exports. From $25 billion at present, it could easily go up to $70 billion by 2010. A study of the US domestic services market indicates that India can penetrate areas such as healthcare, education and audiovisual sectors, resulting in another $25 billion in a decade. American investment in India had been extremely low in the past ($6 billion from 1991to April 2007), and it has only picked up in the last three years ($3 billion). Recently, Citigroup and Blackstone launched a $5-billion infrastructure fund in partnership with the Indian government. Several similar initiatives are being contemplated. The Indian diaspora in the US, over two million strong, with a per capita income of over $60,000, has been very keen on the deal.
The economic consequences of stalling the nuclear deal may be very costly. This message should be transmitted clearly to those opposing it, especially since no one has yet come up with a substantive argument against the deal.
?Jayanta Roy is principal advisor, CII. These are his personal views