SIMON MARKS: Wander down one of the side streets of New Delhi, and it's like stepping back in time. In this capital of a democracy one billion-strong, you can still find ghettos of poverty at almost every turn.
And yet, even in some of the city's slums, there are still subtle hints of the extraordinary changes under way here; changes that have seen India become a locomotive of high-tech development that has helped redefine its relationship with the U.S.A. That relationship is still emerging from the chill of the Cold War.
L.K. Advani is India's deputy prime minister, and widely regarded as the most influential politician in the country.
L.K. ADVANI: The common man in the street in India often regards Russia as friendly, America as hostile; recalling the days of the Cold War when America was supposed to be a supporter of Pakistan, and India had a supporter in Russia. There has been a sea of change in the relationship in the past few years, though it's somewhat late.
SIMON MARKS: That change can be gauged on the streets of India today where people may not be America's biggest fans but they're certainly aware of the shift in attitudes here.
MAN ON STREET: Right now, you see, the United States comes as a superpower. And I think anyone who is strong, we should be friends with it. Never be on the wrong side. Always be on the right side.
MAN ON STREET: I'd give them 60 out of 100 on the basis of trust here, I can’t trust them, just because the relationship, it hasn’t matured yet, so that’s the point. Five years from now, there might be good relationship; that’s it.
SIMON MARKS: A key factor encouraging the development of that good relationship is commerce. The modern U.S.-Indian relationship has been built on the bedrock of a high-tech explosion here that occurred just as India was introducing economic reforms, ending a period in which it sought economic self-sufficiency with minimal foreign participation. Tata Consultancy is India's largest information technology company, and its executive vice president, Phiroz Vandrevala, a self-described "evangelist" for the Indian software industry, now finds his largest export market is the United States.
PHIROZ VANDREVALA, Executive Vice-President, Tata Consultancy Services: India was not an open economy until 1990. But post-1991, when the whole climate of India changed, when we could bring computers in freely, telecom became available, everything just exploded. The ability for people to use Indian talent without them having to actually physically travel was when the boom actually took place, because that's when you could actually bring real cost productivity benefits to the table.
SIMON MARKS: Over the past ten years, two-way trade in goods and people between India and the U.S.A. has brought Indian software expertise to America, and U.S. trademarks to downtown Delhi. Today, some forecasters predict the Indian economy could be larger than Germany's within two decades. Many U.S. businesses have found that India has become a crucial offshoot of their operations either as a client, or as a vendor. Today, Indian commuters run the back-office support operations call centers, finance departments and payroll offices for some of America's largest corporations, which have invested $12 billion in India since 1991.
SIMON MARKS: And was this all happening simultaneously with India reexamining its traditional Cold War relationship with the United States?
PHIROZ VANDREVALA: It was happening in spite of that. What has happened clearly in the last few years has given it a further fillip. If you look at the early-'90s, we were still in the cold war stage. Sure, the boom had started, but clearly American and Indian industry saw the advantage. And I personally would believe that our industry has played a critical role in the thawing of the relationships and the strategic relationship that we enjoy today.
SIMON MARKS: At the Indian foreign ministry, officials say whatever the rifts of yesterday, today's generation of Indian leaders were just waiting for a chance to forge a new bond with the U.S.A. Yashwant Sinha is India's foreign minister.
YASHWANT SINHA, Foreign Minister, India: I think certainly some of us did look at that possibility, and we were hoping that someday this kind of relationship will be developed. But we are very happy that there is now a richness to our relationship, as there should indeed be between two major democracies in the world.
SIMON MARKS: The events of last September 11 only served to underscore the broader changes in U.S.-Indian relations. The government in Delhi was an enthused backer of the Bush administration's war on terror, having long been opposed to the Islamic fundamentalism of the Taliban in Afghanistan. And during the Indian Prime Minister's visit to Washington last year, President Bush himself hailed the transformation in relations.
PRESIDENT GEORGE W. BUSH: My administration is committed to developing a fundamentally different relationship with India, one based upon trust, one based upon mutual values. After all, the prime minister leads a nation that is the largest democratic nation in the world.
SIMON MARKS: The countries’ two navies have engaged in joint exercises over the past year. And in a visible sign that India is starting to diversify away from its traditional reliance on military supplies from Russia, the U.S. is selling Delhi $140 million worth of military radar. With India's annual military budget set at $1.5 billion, it's business that the U.S. is keen to expand.
DONALD RUMSFELD: I think the United States and India have a growing and healthy relationship on a military-to-military basis, which I value and I know that India values, and we look forward to seeing it evolve over the years.
SIMON MARKS: Both sides agree that over the course of the past decade the U.S.-Indian relationship has transformed beyond all recognition. And yet there are still concerns here in Delhi about the future direction of that relationship, concerns sparked by another new global friendship, the one between the U.S. and India's neighbor and nemesis, Pakistan.
Largely out of necessity, the U.S. turned to Pakistan after the events of last September 11. President Pervez Musharraf, once criticized by Washington for seizing power in Islamabad in a bloodless military coup, is today lauded by the United States for delivering Pakistani support to the fight against al-Qaida, and for withdrawing Pakistani support from the Taliban in Afghanistan.
In New Delhi, there is bewilderment and even some consternation over America's new relationship with a country that is engaged in ongoing conflict with India. Even though Pakistan was until the British withdrawal from India back in 1947 part of India, the two countries have been at loggerheads over the disputed territory of Kashmir and other issues ever since.
L.K. ADVANI: We have succeeded in building up India as a single nation state, viable, multi-lingual, multi-religious, multi-ethnic, and still a democracy, a vibrant democracy. It's not like Pakistan, where out of 55 years, more than half they have been under military rule. No democracy has survived there. It survives for a couple of years, and then there is a coup and there is a military dictatorship back again. Today, I feel surprised sometimes when a country like America, it doesn't lay stress on the need to make Pakistan a democratic country.
SIMON MARKS: For India, everything comes back to the disputed territory of Kashmir. The government in Delhi accuses President Musharraf of sponsoring Islamic militants who it says are infiltrating Indian territory, and launching terrorist attacks against Indian citizens, a claim the Pakistani leadership vigorously denies.
L.K. ADVANI: For us, it is important that India is a democracy, it should function as a democracy. And therefore, what is needed here in India is not merely the satisfaction of those who are in office, but even the satisfaction of the people. And the people today are extremely distressed that the country, which has been the source of all terrorism in India for two decades now, as a result of which we have lost not less than 60,000 persons; 60,000 more than the number of people we lost in the four wars that we had with Pakistan. And yet, the main principal country fighting against terrorism should have that as its ally.
SIMON MARKS: The irritants in relations aren't only one way. In May 1998 the Indian government conducted a series of nuclear tests, as did Pakistan, and both countries found themselves on the receiving end of U.S. sanctions that have now been lifted.
Earlier this year, the U.S. Government issued a travel advisory warning U.S. citizens that increased tensions between India and Pakistan made both countries too dangerous to visit. It, too, has now been lifted, but the very fact that it was issued caused alarm bells to ring all over India where businesses take the free movement of people-- particularly between the high- tech hubs of Bangalore and Silicon Valley-- for granted.
PHIROZ VANDREVALA: Industry wants this relationship to be as strong as possible. Clearly the travel advisories that we had, which were withdrawn only a few days ago, had an impact, and that's not good news for us.
GEORGE FERNANDES, Defense Minister, India: Well, I don't think they should have had these earlier advisories asking people not to go. There was no situation that warranted that.
SIMON MARKS: George Fernandes is India's defense minister. He says he's still optimistic that the new U.S.-Indian relationship will survive any obstacles it encounters.
GEORGE FERNANDES: Our relations with the United States is based on mutual trust and transparency, and naturally, we should be together in fighting all common causes. There may be areas where there are differences. On... there could be differences and nuances, there could be differences in some basic issues, there could be disputes on trade-related matters. There are bound to be hiccups in relationships, but I don't think the kind of relationship that we have today between the United States and India is something that can be derailed by anyone.
SIMON MARKS: After decades of talking past one another, the world's most powerful democracy is now working closely with the world's largest. Economic and geopolitical changes have helped lure the United States and India closer together. It's a relationship with even more potential for growth as both sides learn to trust one another.