Viewpoint July 17, 2009, 10:06AM EST

Why U.S.-India Ties Require Patience, Spur Hopes

Some Indians are worried a Democratic U.S. President spells trouble for U.S.-India relations, but there are strong reasons for optimism

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In May, when President Barack Obama criticized U.S. tax laws for encouraging companies to shift jobs from Buffalo to Bangalore, it set India's business community on edge. Indian exporters and service providers worried that they might face new, protectionist U.S. laws. Some Indian business leaders have come to believe that only Republican-led U.S. Administrations are pro-India. After all, it was a Democratic Administration that imposed sanctions against India in 1998 following India's underground nuclear test-explosions in the Rajasthan desert.

This unease is misplaced. When Obama took office he faced an unprecedented domestic financial crisis and a tough global economic situation. So a slow start to U.S. relations with India wasn't unexpected. What's more, India was to hold general elections, and Washington might have wanted to wait until results were in before it decided how to approach New Delhi.

But I believe that, years from now, we will view this time as an inflection point in U.S.-India relations. Here's why I am so optimistic: Days after it became clear that India's Congress Party-led bloc was going to win the national election, President Obama took action. He quickly dispatched Under Secretary of State for Political Affairs William Burns to New Delhi for immediate high-level bilateral discussions relating to defense and nuclear collaboration. As a result, trade agreements on defense and nuclear technology appear to be in the offing.

Two months ago, Obama announced he had tapped Dr. Tim Roemer, a former member of the September 11 commission, to become ambassador to India. Roemer was confirmed by the Senate this week. While there is concern in India about Roemer's lack of expertise, Roemer can contribute in ways that would be far more important. Among them: fresh thinking and a keen mind. Many India experts in the U.S. have viewed Washington's strategic policy with India too narrowly, either through the lens of terror in Pakistan or India's past alignment with the former Soviet Union. Roemer could forge diplomatic relations that more accurately reflect the realities existing in the business world.

How to Strenghthen the Bond

While conducting research for my book, Doing Business in 21st Century India, I interviewed dozens of U.S. executives who had worked in India (many of them are still there). I found that it usually takes more than two years for most Americans to begin to appreciate the complexities and subtleties of Indian society. Yet over the past six decades, most American ambassadors to India have stayed for just two years or less. Ambassador David Mulford was among the few who stayed longer. If Roemer sticks around for as long as Mulford did, he could further strengthen the bond between the U.S. and Indian business communities in ways not seen since the Kennedy Administration.

Behind the scenes, top U.S. officials appear to be working to remove legacy rules that date back to when India was lumped in with so-called rogue states. It may take a decade to eliminate these barriers entirely, but we could see significant progress soon, perhaps even this year.

On the business front, there's also been substantial progress so far this year. In January, Boeing (BA) announced that India would be the first overseas customer for the P-8 maritime reconnaissance aircraft, a deal estimated at $2.1 billion. Field trials of Lockheed Martin's (LMT) F-16 and Boeing's F/A-18 Super Hornet fighter aircraft are starting now and could lead to a multibillion-dollar bonanza for one of these American defense contractors. Both General Electric (GE) and Westinghouse have signed memorandums of understanding with India's Nuclear Power Corp.. Those deals could help pay for tens of thousands of U.S. jobs, according to estimates by the U.S.-India Business Council, a Washington-based industry group.