AS THE political reverberations of Indian Prime Minister Manmohan Singh's visit to Washington last month begin to fade, business leaders and analysts in India claim that future US-India cooperation will be driven mainly by the private sector.

"The future of the US-India relationship will be powered by the private sector and decisions taken in the boardroom," Mr Charles "Chip" Kaye, chairman of the US-India Business Council, told a seminar hosted by the Confederation of Indian Industry in New Delhi recently.

There is no doubt that India is on the radar of major investors worldwide but the speed at which decisions were reached between the United States and India in July caught many Indian analysts by surprise.

The bilateral joint statement caused an outcry from left wing parties who support the government coalition, but are ideologically opposed to closer cooperation with the US , and also from the Hindu nationalist Bharatiya Janata Party (BJP), who objected largely out of political opportunism.

The agreement includes technology and space research, defence cooperation, and energy, agriculture, environment, trade and development issues.

The most significant aspect for India was the transfer of US technology for the production of nuclear power. This provoked speculation that the country would be constrained by the US in making foreign policy decisions and may even be pitted as a counterbalance against China , serving US interests in Asia .

However, analysts say containment of China may well be a secondary consideration in this "global partnership".

"It all has to do with future potential," explains Mr Arvind Virmani, head of the Indian Council for Research on International Economic Relations, a prominent think-tank.

India 's long-term growth is set to mirror that of China and will overtake Japan in terms of GDP at purchasing power parity within the next three years, he said.

Trashing the counterbalance argument, he added: "In the last five years India 's biggest rise in trade has been with China . It's our second most important trading partner. And our economy is only 45 per cent of China 's."

It's a different imbalance that India is looking to the US to help tackle — that of foreign direct investment (FDI), which is set to climb to a meagre US$4 billion ($6.64 billion) this year. Last year, China drew more investment in one week than India did in the entire year.

Trade with the US is rising fast but it is coming from a low level.

US exports to India rose by 52 per cent between January 2005 and May 2005 but are still worth only US$3.1 billion, while imports from India came to US$7.3 billion, a growth of only 18 per cent from the previous year.

Infrastructure is considered the main obstacle to increased investment.

"We will see a major expansion in the power sector with US equipment, US project planners and US consultants playing an important role," said Dr Amit Mitra, CEO of the Federation of Indian Chambers of Commerce and Industry.

Other obstacles are to be addressed in a newly-formed CEO Forum, which brings together the CEOs of 20 corporate giants from each member country, including Citigroup, Pepsi and Tata.

When asked what obstacles the governments would be tackling first, a US trade official said it would be for the CEO group to "enunciate" them, a sign perhaps that the CEO Forum will have considerable clout.

They will need it.

"In 1996 the government planned a doubling of private investment in infrastructure from 1 per cent of GDP to 2 per cent. It still has not reached that target," said Mr Priya Basu, a World Bank expert.

"If the infrastructure is not right and if the regulations are not streamlined, the investors will be wary of coming in," he said.

"An area where a lot of investment could come in is retail but India does not allow FDI in this sector," said Mr Basu, adding that retail represents the bulk of China 's FDI. The BJP said recently that it would oppose FDI in this sector.

A major factor influencing India 's future growth is poverty.

While the country boasts a large pool of highly-skilled labour, a high proportion of the population is poor and uneducated, leading to low levels of productivity.

Current projections estimate that reducing the poverty rate from 24 per cent of the population to 11 per cent in the next decade will require an 8-per-cent annual growth rate and the creation of 100 million jobs.

"Where are they going to come from, unless growth takes place on the back of labour-intensive manufacturing?" asked Mr Basu.

Tom Sullivan is a freelance writer based in New Delhi