On Day 1 of India visit, Obama showcases trade deals with US firms

President Obama made a forceful case for free trade on the first day of his state visit to India, showcasing how trade with India can create US jobs.

He brought with him hundreds of US executives who finalized deals on the sidelines of the trip totaling nearly $10 billion in new US exports. The payoff for Mr. Obama‚s argument: 50,000 new American jobs.

'In our interconnected world, increased commerce between the United States and India can be and will be a win-win proposition for both nations,' he said at a business summit in Mumbai. Noting that the US exports less to India than to the Netherlands – a country with fewer people than Mumbai – he said, "we can do better than that."

The ability to announce new jobs helped offset the politically risky proposition of appearing in a room full of outsourcing executives. Persistently high unemployment has heightened public skepticism about trade liberalization, particularly the shift of jobs to countries with lower labor costs like India.

"I think the fact that the president is here with us is quite historic," said Jeffrey Immelt, the CEO of General Electric. "You have to realize that if globalization was put up to a vote in the United States, it would lose."

Indian officials addressing the summit also did their part to bolster Obama's argument. The Ministry of Commerce, Anand Sharma, cited a study from Dartmouth College that found nearly two higher-level jobs being created in the US for every job that is outsourced. So while 2.8 million jobs were outsourced between 1991 and 2001 from top US firms, 5.5 million jobs were added inside the home offices, the study says.

Opponents of outsourcing point out that displaced workers cannot always transition to other work.

India: We are the good guys.

Indian officials and executives also sought to reassure Americans that they were the good guys of international trade – unlike China. Speakers pointed out that India imports more than it exports and generally respects intellectual property rights.

"When you think about China, ask any US CEO or US citizen or Indian citizen – trust doesn't exist. What we have is trust between our two countries," said Mukesh Ambani, chairman of Reliance Industries in Mumbai.

To spur further business deals, Obama promised to loosen US export controls on sensitive technologies.

The details of that deal remain unclear, says William Blair, president of Raytheon India, but it has the potential to further business collaboration in defense, aerospace, and homeland security.

Mr. Sharma, meanwhile, promised in the next few months to announce a new manufacturing policy that will develop "mega-investment manufacturing zones."

But Sharma and several Indian CEOs reminded the at times gung-ho American business executives of India's limitations.

"We are also home to a very large number of poor people," said Sharma. "For us, the emphasis is on inclusive growth where wealth is created and redistributed."

Building an educated workforce comes slowly

He noted that while India will add 200 million more people to its workforce in the next decade, only 20 to 25 percent of those workers will be skilled.

This is all to remind the US that India will pursue gradual reforms, says Teresita Schaffer, a former State Department specialist in South Asia and a trustee of the Asia Foundation.

"The Indian government is quite cautious when it comes to economic reform. The changes they introduce tend to be stable; they don't get revoked the next year," she says.

That slow approach clearly frustrates some US CEOs like GE's Mr. Immelt. After an Indian CEO said American popular opinion against globalization "scared" him, Immelt pounced.

"There's a trillion dollars of infrastructure investment that's supposed to happen in India that's not happening, and in some ways you guys haven't lived up to your side of the bargain," said Immelt.

If government reforms target infrastructure industries, he said, "there will be so much business for United Technologies, GE, Honeywell, and other companies that the outsourcing debate can take care of itself."