India is new top stop for world leaders seeking deals

A host of world leaders trooped into India over the last few months, including Russia’s president on Tuesday, to strengthen relations with Asia’s third-largest economy, attracted by its booming market and growing diplomatic heft.

Like a revolving door, India has hosted every major world leader in the past six months. All United Nations Security Council permanent members or BRIC countries of emerging economies have had their leaders visit India, the world’s second fastest-growing major economy after China.

Britain, the United States, France and China have together secured around $50 billion in deals ranging from defence, energy to telecoms. Once Moscow’s agreements with New Delhi on Tuesday are counted, this figure could well double, including nuclear reactors and supersonic fighter aircraft.

When Chinese Premier Wen Jiabao said the 21st century belonged to Asia during his visit to India’s capital last  week, he did not refer to just China.

“It’s very simple. We’re the new kid on the block,” a senior Indian diplomat told Reuters.

“The stars are all aligned. We’re opening up at the right time in history and no one wants to miss this opportunity. The revolving door won’t slow down anytime soon.”

Analysts say it is the ability of India to bring some substance to the table, partly because of its growing confidence on a global stage, which has put it in focus.

That aspect was on display in climate talks in Mexico this month, where India sought to break the logjam by suggesting all countries should agree to binding carbon emission cuts.

But while such issues underscore India’s growing relevance, the country’s long-term goal is to find a place at the high table of global powers and be taken as seriously as China.

“Everybody wants business deals and a degree of political and strategic cooperation with India, and especially for the Americans, India’s possible role as a counterweight to China is very important,” said Praful Bidwai, political columnist.

But the country’s emergence as a factor in the global economy is seen as a logical outgrowth of some of the world’s biggest challenges — the global financial crisis, regional stability and growing fight for natural resources, and India’s ability to help resolve those problems with a $1.3 trillion dollar economy growing annually at about 9%.

“India and China are the two fastest growing markets and we have just seen that they can be the locomotives that can pull us out of recession. And along with this economic might has come political endorsement,” said Lalit Mansingh, former Indian foreign secretary.

“If you look at the new centres of global power, India is one of the five such centres. You cannot ignore that.”

India’s new status is not all about its role as a global “soft power”. Rather, it is about a country with increased confidence being a vital market for both struggling and growing economies around the world, especially crucial in times of economic slowdown in the West. With a population of 1.2 billion and a steady opening of a once-restricted economy, a fast-growing middle class, everyone wants a piece of the pie.

British Prime Minister David Cameron pointedly made his first official visit to India and US President Barack Obama spent the longest time abroad as president in India.

These instances underscore the importance now placed on India, once seen as a hopeless yet vital democracy struggling with poverty, corruption and political infighting.

While its raucous democracy and sometimes unpredictable regulatory climate hamper investor sentiments, the economy’s potential is staggering.

For instance, India’s retail sector is worth $450 billion; its nuclear power market is estimated at $150 billion over the next decade and India needs to spend $1.5 trillion on improving its infrastructure, which is holding back economic growth by 2% a year.

India is forecast to be one of the five largest economies in the world by 2020, along with China and Japan.

But key issues still need to be addressed as India takes on a global role. Most prominent among these are the current corruption challenges facing Singh’s government and the changing regulatory environment.