According to Promod Haque of Norwest Venture, a venture-capital firm, it is also suffering a “reverse brain-drain” as Indian and Chinese engineers go home. This, he argues, coupled with the retirement of the baby-boomers, is creating a “shortage of intellectual capital” in America which will eventually threaten its superpower status. The solution is to build a “strategic competitive advantage” through an alliance with an offshore base of intellectual capital. India is the obvious choice. Its pool of highly qualified graduates will be twice as large as China's by 2008, according to the McKinsey Global Institute, and they speak English.
Such a de facto alliance is already in the making, and is helping alert American business to India's other attractions: an economy expected to grow by more than 7% in 2006, for the fourth year running; a fast-expanding middle-class; and a government committed to liberalisation, even if implementing it is painfully slow. In the past year, India has allowed foreign firms to enter the construction and property industries, signed an “open skies” agreement with America and passed a patent law that meets WTO standards. As India continues to open up new industries to foreign investment, the opportunities for American firms are proliferating, says Ron Somers, head of the US-India Business Council.
Under American and international law, such technology can be given only to countries that have renounced nuclear weapons and joined the Nuclear Non-Proliferation Treaty. India has never joined the treaty, and it tested nuclear weapons in 1998. Mr Bush, in effect, was driving a coach and horses through the treaty in order to suit his own strategic ends, a move that invites the accusation of hypocrisy from other nuclear states and wannabes not so favoured. The idea was that India, in return, should take steps to satisfy the Americans on a long list of nuclear-security concerns, such as not exporting weapons technology and continuing to observe a moratorium on testing. Most important, India was asked to separate its civilian and military nuclear programmes, with the former subject to a rigorous inspection regime.
So far, however, the proposals offered by the Indians actually to do all this are far from adequate. As Mr Bush packs his bags, desperate attempts are being made to bridge the gap. The obvious danger is that in order to portray his summit as a success Mr Bush will be tempted to accept even fewer safeguards from India. That would be a dangerous mistake: nuclear proliferation matters too much to allow excessive wiggle-room or create bad precedents. Fortunately, whatever deal is agreed between Mr Bush and Mr Singh will also require the approval of America's Congress, which has already taken a dim view of Mr Bush's nuclear generosity to India.
"This debate... has been hijacked over here [in the United States] by non-proliferation theologians and in India by those rallying under the banner of self-reliance," (India's Ambassador to Washington, Ronen Sen)