Why Does the American Left Fear the Rise of India?

The American relationship with the republic of India is heading in the wrong direction. Given recent history, where strong and positive U.S.-Indo relations were in full bloom, this is especially disconcerting. President George W. Bush’s administration, long maligned as arrogantly unilateralist, solidified a close bilateral partnership -- friendship, even -- with the rising South Asian power. Bush saw India as a natural ally: the world’s largest multiethnic democracy, looking at its place in the world at the turn of this century through much the same prism our own ancestors looked through in the late 19th and early 20th centuries. As Harvard historian Sugata Bose observed, the strengthening of ties between India and the United States “may turn out to be the most significant foreign policy achievement of the Bush administration.”

Under President Barack Obama, however, those ties are in moderate though steady and not insignificant decline. Since Obama’s inauguration, our relationship with India has begun to erode. To its credit, the Obama administration authorized a $2.1 billion arms sale with New Delhi last year. But there is more -- there should be more -- to the American-Indian friendship than signing off on a Boeing contract with the Indian defense ministry.

For instance, trends in trade are worrisome. Whereas in 2008 the United States exported $17.6 billion worth of goods to India, by 2009 that figure had dropped by more than $1 billion. Some of this is due to the recession, but consider: from 2001 through 2008, imports from India to the United States had gone up by $2 or $3 billion annually, culminating in $24 and $25.7 billion worth of goods imported in 2007 and 2008. That figure plummeted by $4.6 billion in 2009. During Bush’s tenure, protectionist economic policies were done away with. Outsourcing, that dirty word, was embraced. The United States became India’s largest investment partner; foreign direct investment in petroleum exploration, infrastructure, mining, telecommunications, and other good things accounted for much of all investment into India.

The free trade policies agreed upon by President Bush and Prime Minister Singh liberated markets and destroyed barriers in agriculture, textiles, iron, steel, coffee, tea, information technology, pharmaceuticals, and more -- and as a consequence, helped develop the rise of India’s first genuine middle class in history. According to the National Council for Applied Economic Research, there are approximately 220 million “aspiring” Indians -- a “consumer class” -- living in households earning between $2,000 and $4,400 per year, who can now afford to buy niceties and luxuries. Some estimates have India’s middle class even larger. This was not the case fifteen or even ten years ago.

And when a caveat in this relationship deemed less beneficial to the United States arose, President Bush still kept things in long-term perspective so as not to denigrate our newfound camaraderie with India. When American food prices skyrocketed in 2008, Bush attributed it to India’s progress and implored Americans to place developments into a broader context: “Their middle class is larger than our entire population,” Bush said. “And when you start getting wealth, you start demanding better nutrition and better food. And so demand is high and that causes the price to go up.”

Today, President Obama sounds markedly different about India. He has employed populist oratory, criticizing “a tax code that says you should pay lower taxes if you create a job in Bangalore, India, than if you create one in Buffalo, New York.” Such language has increased anxieties in New Delhi. “We are already witnessing signs of protectionism in the world’s biggest economy,” the Indian external affairs minister was quoted as saying, proclaiming that “we will need to argue against this trend at the international [forums].” Just one month into Obama’s presidency, India was prepared to present its grievances with the new administration’s protectionist policies to the World Trade Organization.