At the Centre of Global Biz

It will be business intersecting with geopolitics over the next few weeks as India gets ready to take its place at the global high table.

The global biggies visits kick off this Diwali with US President Barack Obama inking commercial deals worth $15 billion. The US President will also discuss strategies – global balance, currency, war, Afghanistan-Pakistan and the rise of China.

Obama will be followed by French president Nicholas Sarkozy facing flak at home over pension reform; Sarkozy in India from December 6 will sign a billion dollar deal from upgrading Mirage fighter planes. He is also scheduled to ink the first commercial agreement for nuclear reactors in India by Areva the first beneficiary of the Indo – US nuclear deal.

Russian President Dmitry Medvedev will be the next dignitary on Indian visit. He will sign a slew of defense deals and reaffirm an old friendship with India.

On December 16, India will play host to its neighbor rival. Chinese premier Wen Jiabao will come to repair relations with India after a year of rubbing each other the wrong way, At Hanoi this week, Wen and PM Manmohan Singh decided to walk through difficult issues and at least try and maintain the modicum of decent state to state relations. Incidentally R-ADAG chairman Anil Ambani last week sealed a $10 billion deal for the supply of power plant equipment with Shanghai Electric about the same amount as the deal for 126 fighter aircraft that’s up for garbs.

Is India already at the Global high table? Other powers seem to think so. India continues to be more conservative in its approach but can hardly prevent itself from feeling a little flattered.

Actually, UK’s new young PM, set the ball rolling in the July visit this year that put a number of strategy eggs in the Indian basket. So, while the terms of engagement would still be different as each of them have a clear set of objectives yet all of them are chasing mutually beneficial opportunities in India. The visiting heads of states would definitely be eyeing the huge defense orders that are slated to emanate from India as well as slices of the nuclear trade as definite short term attractions. The long term attraction is the Indian market, which is a trillion dollar economy its high growth rate of an estimated 8.5% and the projection that India should be catapulted to the top three of the leagues tables of the largest economies in the next 20 to 25 years.

When that happens India would also have a significant clout over global affairs. In short, it would be useful to partner with such a country now which can deliver on two different levels of the value chain – as buyer of their finished products as well as a destination for their foreign direct investment Sample the numbers:

1) India is expected to buy almost $50 billion worth of arms over the next couple of years (although Saudi Arabia has signed a contract for $60 billion worth of weapons from the US)
2) India’s plans to buy 126 fighter planes for $10.4 billion (Rs 46,488 crore) which forms one of the larger arms deals worldwide apart from a host of other weapons platforms
3) The world is also impressed by India’s performance in the recession years. It grew at 6.7% and 7.4% in 2008-09 and 2009-10 respectively.
4) The estimated 300 million middleclass with growing spending power.

But economies are not the only thing that is driving these leaders to India. What India also brings to the table is a stable democracy with smooth transition in leadership which makes the political risk very low. Besides, the presence of a large young population makes the market attractive. What’s more according to analysts Indian could soon best China in its growth rate.

There is also a distinct geopolitical shift of power into India. It started with the invitation to participate in the G8 summit (the strategic meeting ground for the world’s most powerful countries) in 2003. By the time the global financial crisis struck in 2008, then US president George Bush mobilized G 20 and put countries like India as the world’s top decision making table. In a world increasingly governed by economics, the geopolitical relevance of the country can only improve.

It would however, be correct to paint the economic and bilateral needs of all these countries with the same brush while France would largely look at defense tie ups its emphasis would also be on nuclear cooperation. About 90% of its installed power in France is nuclear energy based. Similarly Russia would focus on defense contracts but would also look at collaborations in oil and gas and telecom.