Geithner Has His Work Cut Out for Him in India.

Timothy F. Geithner, the U.S. Treasury secretary, lands in New Delhi on Tuesday for a two-day trip to inaugurate a new economic and financial partnership between the world’s largest and oldest democracies. It is a return of sorts for Mr. Geithner, who lived for five years in New Delhi as a child.
Mr. Geithner has his work cut out for him, economists and policy analysts in both India and the United States say.
Hammering out economic agreements between the two countries has traditionally been an arduous task.
“On principle, they both agree on everything,” said Jahangir Aziz, chief India economist at J.P.Morgan in Mumbai. “It always comes down to the nitty-gritty and that’s where things get stuck. Part of the problem is neither of them wants to give the other side an inch.”
It took nearly 20 years for the United States to lift a ban on imports of Indian mangoes, for example, and a deal to allow energy-strapped India access to U.S. nuclear technology, agreed in principal four years ago, still has not cleared all the legal hurdles that would let American companies sign contracts to do business here. (French and Russian companies, by contrast, have signed contracts and are expected to begin work soon.)
The two countries remain far apart on U.S. farm subsidies and India’s unwillingness to open its markets to foreign farmers, because they both want to protect their agricultural sectors. The countries’ disagreements there helped to scuttle global trade negotiations in 2008.
Indian officials expressed very cautious optimism ahead of Mr. Geithner’s visit.
“There is good reason to believe that there will be real economic outcomes to match the avowed ambition of such engagement,” Rahul Khullar, India’s commerce secretary, wrote in an e-mailed response to questions.
This should, in theory, be a fertile time for India and the United States to forge a new economic relationship.
American companies, facing moribund sales at home, continue to flock to Indian shores, where the economy is projected to grow 8.5 percent this year.
U.S. businesses also remain the largest customers for India’s marquee information technology industry. India, for its part, needs billions of dollars in infrastructure, and could benefit from American technology.
Some American media and Internet companies like Google and Facebook, which have either left or been banned from China, have captured huge audiences in India.
“This doesn’t mean everything is perfect in India, but the challenges firms are facing in China are certainly causing companies to take a second-look — with the benefit accruing to India,” said Ron Somers, president of the U.S.-India Business Council, a group based in Washington that promotes business ties between the two countries.
Those ties have grown significantly since India began to open its economy in the early 1990s. Bilateral trade has tripled in the past 10 years, to $37.6 billion. American private investment in India is now worth $16.1 billion, about 10 times what it was in the late 1990s.
But India still lags far behind the United States’ most important economic partnerships, with India ranked 14th on a 2009 survey, behind Venezuela, Italy and Brazil.
Moreover, political leaders in Washington and New Delhi have often struggled to establish trust with each other. The administration of President George W. Bush won over many Indian leaders because it championed the nuclear deal and was seen as tough on ism. But many Indian politicians and newspapers have a less favorable view of President Barack Obama because they believe that his administration is pushing India to prematurely open negotiations with Pakistan, its neighbor and rival.
“This issue has generated doubts in Indians’ minds that makes it a lot more difficult to reach the comfort levels we achieved during the Bush administration,” said C.Raja Mohan, an Indian academic who is the Henry Alfred Kissinger scholar at the U.S. Library of Congress.
Specifically, reports in The Wall Street Journal that the Obama administration plans to push for increased diplomacy between India and Pakistan were greeted here with derision.