Obama pledges $5.3 billion in investments and loans to India

Obama pledges $5.3 billion in investments and loans to India
India's Prime Minister Narendra Modi (L) and U.S. President Barack Obama watch India's Republic Day parade in the rain together from their review stand in New Delhi January 26, 2015.

NEW DELHI - US President Barack Obama ended a landmark day in India on Monday with a pledge of $4 billion (S$5.3 billion) in investments and loans, seeking to release what he called the "untapped potential" of a business and strategic partnership between the world's largest democracies.

Earlier in the day, at the invitation of Prime Minister Narendra Modi, Obama was the first US president to attend India's annual Republic Day parade, a show of military might that has been associated with Cold War anti-Americanism.

It rained as troops, tanks and cultural floats filed through the heart of New Delhi, but excitement nevertheless ran high over Obama's visit, which began on Sunday with a clutch of deals to unlock billions of dollars in nuclear trade and to deepen defence ties.

Both sides hope to build enough momentum to forge a relationship that will help balance China's rise by catapulting democratic India into the league of major world powers.

The leaders talked on first name terms, recorded a radio programme together and spent hours speaking at different events, but despite the bonhomie, Obama and Modi reminded business leaders, including the head of PepsiCo, that trade ties were still fragile.

India accounts for only 2 per cent of US imports and one per cent of its exports, Obama said. While annual bilateral trade had reached $100 billion, that is less than a fifth of US trade with China.

"We are moving in the right direction ... That said, we also know that the US-India relationship is defined by so much untapped potential," Obama told the Indian and US business leaders. "Everyone here will agree, we've got to do better."

Modi said US investment in India had doubled in the past four months and vowed to do more to slash the country's notorious red tape and make it one of the world's easiest places for business.

Obama said that US Export-Import Bank would finance $1 billion in exports of 'Made-in-America' products. The US Overseas Private Investment Corporation will lend $1 billion to small- and medium-sized enterprises in rural areas of India.

Regarding renewable energy, a key focus for Modi, $2 billion will be committed by the US Trade and Development Agency for renewable energy, Obama said.

Most significant was an agreement on issues that, despite a groundbreaking 2006 pact, had stopped US companies from setting up nuclear reactors in India and had become one of the major irritants in bilateral relations.

"Mobama breaks N-deadlock," ran the front-page headline of the Mail Today newspaper, which carried a photograph of Modi and Obama hugging each other warmly.

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