Geithner seeking stronger US-India economic ties to boost prospects for US companies

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Geithner seeking stronger US-India economic ties

WASHINGTON — Treasury Secretary Timothy Geithner will seek to strengthen economic ties between the United States and India during meetings this week in hopes of boosting U.S. business prospects in the fast-growing Indian economy.

Geithner’s first scheduled event is a visit Tuesday morning 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. The Obama administration sees those efforts as key to achieving more balanced global growth and avoiding the problems that helped push the world economy into recession.

Geithner will also meet with Indian Prime Minister Manmohan Singh at his residence and participate in the first meeting of the US-India Economic and Financial Partnership, designed to promote greater trade and investment.

Analysts said it was understandable that Geithner and Federal Reserve Vice Chairman Donald Kohn would be leading a U.S. delegation to India for talks, given the fact that India’s economy has surged in the past decade.

It is the second fastest-growing major economy in the world after China and has grown to be the world’s fourth largest economy by one measurement.

“Geithner’s trip is a recognition of the fact that India is big and growing and very dynamic,” said Arvind Subramanian, a senior fellow at the Peterson Institute for International Economics, a Washington think tank.

Evan Feigenbaum, a senior fellow at the Council on Foreign Relations, said that a decade of rapid economic growth has transformed India from an afterthought for U.S. companies to a country where U.S. companies are competing for infrastructure projects.

“There has been a transformation in the U.S.-India relationship,” said Feigenbaum, who was the deputy assistant secretary of state responsible for U.S.-India relations in the last two years of the Bush administration.

Feigenbaum said that he expected a key aspect of Geithner’s discussions with Indian officials would revolve around developing agreement on proposals to overhaul the global financial architecture in the wake of the financial crisis of the previous two years.

India is a member of the Group of 20 nations, the group that includes the world’s richest industrial countries plus fast-growing developing nations such as China, India and Brazil. The G-20 was designated by Obama and other leaders at a summit last September in Pittsburgh as the top policy-setting group for the global economy.

“For the first time in its history India has a seat at the table of the top management group of the global economy,” Feigenbaum said.

The first meeting of the US-India partnership group will be led by Geithner and Indian Finance Minister Pranab Mukherjee. The two will hold a joint news conference at the conclusion of those talks Tuesday afternoon.

On Wednesday, Geithner and other members of the U.S. delegation will talk to Indian entrepreneurs and chief executives of leading companies in Mumbai, the country’s financial center.

A Treasury official who briefed reporters on Geithner’s trip said that he planned to use his different meetings to discuss challenges that are still facing the global economy in the wake of the financial crisis as well as ways that India can make progress in opening its financial sector to more foreign investment.

But Feigenbaum said the administration was not likely to succeed in a push to expand opportunities for U.S. and other foreign financial firms to do more business in India.

“The lesson that many Indians took from the global financial crisis is that they fared better because their system is relatively insulated,” Feigenbaum said.