Mr. Geithner Goes to New Delhi

U.S. Secretary of the Treasury, Tim Geithner, is in India and he has a lot to do while he’s there.  Geithner’s visit will primarily consist of meetings with India’s leaders in the political and economic sphere in an effort to boost ties between the two nations.  This is both strategically and symbolically an important meeting for both countries.  And, the agenda Mr. Geithner will bring to the table speaks volumes about America’s views on its future relationship with India.

During his time, we can expect four big issues to take center stage, or to at least be play out behind the scenes:

First, among Geithner’s top goals will be showing the U.S. domestic base that he is pushing for U.S. exports.  According to the Washington Post, the United States runs an annual trade deficit with India that has reached nearly $12 billion, and yet FDI (foreign direct investment) between India and the U.S. was about even last year, at roughly $11 billion each.  So, while America may be somewhat concerned by the deficit it runs with India, it should keep its eye on the prize and remember that not only is India a strong ally, but a  large investor in the United States as well.

Tied to this, Geithner will attempt to get India to support it on its push against the Chinese currency.  China’s policy to float the yuan is one that has irked America for some time.  Chinese  policy reforms in this arena were placed on hold after the beginning of the financial crisis.  If India can start to apply pressure on China to follow through on its earlier commitments, Geithner will be able to walk away some tangible spoils.

Geithner will be softening the target in the nicest sense of the word.  If all goes well, President Obama himself will be able to sign some agreements that help solidify therelationship between  the two nations, during a visit which will take place “soon” according to Timothy Roemer.

The U.S. insurance sector is looking for a boom and if Geithner can successfully lobby for the increase of India’s insurance sectors cap on foreign direct investment from 29% to 49%. This is something Indian parliament has considered doing for some time.

Geithner’s first scheduled event Tuesday morning is to a store that offers mobile banking services to its customers. The visit is an effort to highlight steps India is taking to expand financial access to its citizens.  This also represents a tremendous investment opportunity for America.

This is where both countries can walk away pleased that they have helped out their own country and helped to build a stronger relationship in a growing alliance.

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