Lawrence Kudlow, writing with William P. Kucewitz, covers many themes in his analysis of India on NRO today, a nation whose strategic importance and desirability as an ally we have highlighted since our beta—site debut. As a market gurus, the authors focus mainly on India's economy, but do not neglect the strategic elements of the relationship.

India's economy has had to endure some stifling restrictions — and in certain cases outright bans — on foreign direct investment. FDI, in fact, hasn't grown in at least five years, averaging around $1.3 billion per quarter since 2000. In some sectors, such as retailing, mining, and railways, FDI is strictly prohibited, while in others, like banking and telecommunications, foreign investment is permitted but closely regulated.

The new bilateral accord promises to change this, and there's every reason to be optimistic. Informal links are being forged every day as large numbers of India—based firms service IT equipment and software in the U.S. In addition, India's current stock—market boom owes much to international investors. Foreign portfolio investment in India totaled $3.8 billion in the first quarter of 2005 versus $4.6 billion in the fourth quarter of 2004 and $3.7 billion in the first quarter of 2004. These inflows compared with a 2000—2003 quarterly average of just $840 million.