Indo-US Incorporated

On March 3, about the time when US President George W. Bush was addressing Indian drawing rooms on better business ties from the ramparts of...

On March 3, about the time when US President George W. Bush was addressing Indian drawing rooms on better business ties from the ramparts of Delhi8217;s Old Fort, senior American officials in China were exhorting the Chinese government to be a more 8216;8216;responsible stakeholder8217;8217; in the world trading system.

China was just not doing enough to protect intellectual property, it seems, and could now expect its trading partners to fire salvos at it from the World Trade Organization8217;s WTO ramparts, James Mendenhall, general counsel for the US Trade Representative8217;s Office, told a gathering in Beijing on that day.

A bit earlier, Indian and US industrialists made public six 8216;Major Areas for Cooperation8217; as part of the US-India CEO8217;s Forum set up in July last year by Bush and Prime Minister Manmohan Singh. While China8217;s economic might is a reality, the current feel-good environment, CEOs feel, is the best launching pad to take economic relations between India and the US to a higher plane.

THE INDIA STORY

The Forum8217;s report deals largely with turning India into a lucrative destination for big-ticket US investment. In fact, this route is not new. Developing and 8216;8216;maturing8217;8217; the Indian market and consumers is exactly what all US companies from Intel and Microsoft to Citigroup and PepsiCo, have done in India since liberalisation.

The Forum8217;s plan is similar, to take what has already happened in the PC, software, banking and carbonated beverage market to a larger scale 8212; make Mumbai into a financial hub, set up a 5 billion Infrastructure Development Fund and multiply Special Economic Zones. US industry now wants India to reform its power sector, says it will give support for clean fuels, and look at enhancing joint R038;D collaborations, and drive higher education.

Of course, the key focus is financial sector reforms in India 8212; banking, insurance, pensions 8212; as well as retail. There are expectations that US investments can help India8217;s social and health sector reform too. Of course, systemic and procedural issues and clarity have also been gone into, in detail, by the Forum.

8216;8216;India8217;s advances in the service sector have made it an ideal investment place in the world. It now needs to focus on access to knowledge and improve its infrastructure,8217;8217; said technopreneur Sam Pitroda at a gathering of industrialists on Friday.

THE US STORY

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There8217;s a lot on the US plate too. Specifically on the technology front, the US will have to relax norms to transfer dual-use technologies to India, especially in advanced fields like biotechnology and nanotechnology. There are also issues on relaxing the restrictions on the expansion of Indian banks into the US market, a long-standing demand, that is a key part of the action agenda.

A Totalization Agreement 8212; whereby social security contributions are made in only one country with a refund-on-return regime 8212; could now see the light of day. On trade and industry promotion, the Forum had said the US will actively look into liberalising the visa regime for service providers, in fields ranging from IT to nursing staff. This is a big problem for India Inc, but US officials have sought to reassure. Says Altaf A. Lal, Health Attache for South Asia in the US Embassy, 8216;8216;I know that visas are an issue, but there are special categories for various sections.8221;

For manufacturing, the Forum has asked for lower customs duties on steel, textiles, as well as the removal of anti-dumping legislation on such items. Specifically, the Forum has also asked for lower non-tariff and technical barriers on both sides.

THE ROAD AHEAD

The bottomline is that bilateral trade between India and the US remains small 8212; at 40 billion, it8217;s one-sixth of US trade with China 235 billion. In fact, coming in late after China8217;s headstart in doing business with the US, India still has a lot to look forward to, going by the heady feeling the US businessmen have left behind.

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But the fact remains that if India and the US live up to their pledges, made over Thursday and Friday, to double trade, they will hit only 50 billion in 2009.

8216;8216;Clearly, a lot needs to be done, but the CEO8217;s forum has shown the way forward. Rest depends on how well and how soon bottlenecks in infrastructure are taken care of by India,8217;8217; says William Harrison, co-chair of US-India CEOs Forum.

At one level, the headlines centre around efforts to woo the US financial sector, like Finance Minister P. Chidambaram did on Friday. But if the roadmap laid down by the Forum is any indication, it8217;s now up to CEOs, Indian as well as American, to do some leg work, stand up and be counted.