India is the new American dream

WHEN John Walton, the heir to the Wal-Mart retail family's vast fortune, was killed in a plane crash three weeks ago, the story was reported in most of India's national newspapers, along with the details of his life.

New Delhi's often insular press does not usually dwell in much detail on anything other than the most important international news; but attention these days is intensely focused on the US business world, particularly conglomerates such as Wal-Mart.

The Indian media has pored over the US supermarket giant's efforts to break into the local retail sector, an untapped gold mine long closed to outsiders.

To support their case for expansion across the subcontinent, Wal-Mart and other American companies have been spreading the news that they are increasingly using India as a significant source of supplies. Wal-Mart is buying goods worth approaching $1.5bn from India this year.

The amount is small compared with what it currently spends in China, but it is a serious start and a clear message to Beijing. Behind Wal-Mart is a long queue of potential investors in India headed by Ford, American Express, General Electric and the ubiquitous Starbucks.

Last week the state visit of India's prime minister, Dr Manmohan Singh, to Washington DC began what political commentators here in New Delhi have described as unprecedented dialogue and co-operation between the world's largest economy and the biggest democracy. According to one US State Department source, relations between the two countries were now unequivocally bonded. "In the post-Cold War, post-September 11, 2001, world society, US and Indian interests generally converge. Both cherish democracy, commercial enterprise, the rule of law, secularism, non-aggression and religious pluralism," he said.

With the White House increasingly concerned that China might some day turn its rising economic and military power against US interests, its relationship with India is now widely seen on Capitol Hill as the key counterbalance in Asia.

The CIA analysis describes India today as the most important "swing state" in the world, a country that could tip the balance between war and peace, between chaos and order.

Last week, to coincide with the visit of Singh to the US, the publication of a Washington think tank report, highlighted this belief. In a timely study titled India as a New Global Power and prepared for the leading Pentagon-backed strategy group The Carnegie Endowment, Ashley Tellis, an Indian-born adviser to the White House, argued for the urgent upgrading of the US relationship with India and quoted an internal CIA assessment that claimed India, in the future, could be a major asset or hindrance for the US.

India, Tellis stressed in his report, will soon be one of the world's five largest economies and could serve as a potential hedge against an expansionist China and a crucial ally in the war against terror.

He added: "The CIA has compared the emergence of China to the rise of Germany in the 19th century and the US in the 20th century in terms of mapping the global future.

"There is a real fear that China might some day turn its rising economic and military power against America. In this context the US needs to look at a re-ordering of their relationship with India which today is not only a key ally in the war against terror but a counterbalance in Asia against China's dominance."

American political analysts remain abuzz over last week's rare White House state dinner for the visiting Indian Prime Minister, only the fifth such occasion in George Bush's presidency.

During the summit, Bush promised Singh substantial US help for India's civilian nuclear power programme in return for a commitment to adhere to non-proliferation pacts.

Only a few years ago, America saw the burgeoning Indian call centres and hi-tech campuses as a threat to US jobs; now most major US corporations rely on the backroom expertise of Indian specialists to hold down costs and remain competitive.

For America the contrast with China could not be more marked. India, despite its ramshackle infrastructure, is now attracting Western investors who have been burnt by sharp practice, the notoriously opaque legal framework in China.

India's political system is more multi-layered, its society more open and economy more transparent. Little wonder, therefore, that Washington sees India as a counterweight to China, yet the US is only too wary of India's own relationship with Beijing. In April this year the Chinese premier, Wen Jiabao, made his first visit to New Delhi with virtually the same message of alliance communicated by the US last week.

In talks aimed at resolving 43-year-old boundary disputes in Northern India and to set the stage for growing co-operation on trade and security issues, the meeting was described in the Indian press as a success.

Neither the US nor China can afford to ignore a growing regional player such as India, or to have it working directly against them.

Beijing in particular has reason to be wary of Delhi as the US courts India to be a counterweight to a rising China. But crucially many officials and scholars in New Delhi say the future of Indo-Chinese relations may be less competitive and aimed more at allowing each other to grow large enough to make the world multilateral once more.

"There is no question that the US follows a doctrine of unilateralism" and that is an area of joint concern for India and China, according to Mira Sinha Bhattacharjea, former director of the Institute of Chinese Studies in New Delhi. "The bottom line is that we are the neighbours here. We share a border. I would like to see America take a wiser approach to these relations, and see the co-operation of India and China, which includes elements of competition, as a positive thing."

As Lord Palmerston, the Victorian British statesman and exponent of gunboat diplomacy, once said: "We have no eternal allies and we have no perpetual enemies. Our interests are eternal and perpetual, and these interests it is our duty to follow."