Be wary of rising trade figures with China
USIBC strongly believes India’s lifting FDI caps in Insurance will help establish a long-term debt market in India – as an example – necessary for infrastructure financing. The development of a deep corporate and municipal bond market is another priority. All these translate to more U.S. involvement in India’s infrastructure sector, which is a $1.7 trillion dollar opportunity.
What is the USIBC’s post mortem report of President Obama’s maiden visit to
India? Many a interpretation is emerging but you being at the core of USIBC
Summit in Mumbai what is immediate assessment? How would like to interpret
what emerged in President Obama’s interaction with the India Inc in general,
CEOs in particular?
AS: So far as US-India bilateral economic relation is concerned, a section of media interpretation is that the President sold quite efficiently what he wanted: creation of job opportunities in America and that was one of his prime objectives of this visit after the mid-term election. What could be major achievements you see as USIBC President that would cheer up the Americans and at the same time give positive message to India Inc?
RS: The tectonic shift underway is all about high technology cooperation between the United States and India. The articulation by the President about the export of American goods and services to India – the opening of Indian markets for American businesses – these all strengthen the President’s hand to do what he genuinely wishes to accomplish: to set India and the United States on a course for full and complete strategic partnership. That means the transfer and exchange of America’s best technologies with India. That’s a win-win in every sense of the word.
AS: Like the civil nuclear deal, you are one of the prime movers also in enhancing (through USIBC initiatives) the US-India trade to a much greater height from the current US$ 50 billion level. What do you think are the major obstacles need to be removed by both the governments to expand the US-India trade volume (besides export restrictions that the US government easing export restrictions that President Obama announced during his visit)?
RS: We would hope to see $100 billion in two-way trade by 2015! USIBC needs to remain vigilant about resisting protectionism in all its forms – everywhere! The U.S. Congress is new. Our organization needs to meet newly elected officials to explain how India is no longer all about data entry, but is now all about value addition – so our companies may remain competitive on the global stage, thereby keeping our companies strong so they can maintain and increase their employment bases here at home, as well as abroad.
Another area of focus: India’s infrastructure agenda is mind-boggling. American companies need to be made more aware of the opportunities for them in India; Joint Venture and Partnerships will abound, etc. Moreover, the capital required for India to effectively “build-out” its infrastructure will be enormous. Therefore, a thrust on our part to work with Indian counterparts to help facilitate capital market mobilization in India will be a crucial task and opportunity. We strongly believe India’s lifting FDI caps in Insurance will help establish a long-term debt market in India – as an example – necessary for infrastructure financing. The development of a deep corporate and municipal bond market is another priority. All these translate to more U.S. involvement in India’s infrastructure sector, which is a $1.7 trillion dollar opportunity.
Defense cooperation, USIBC has always believed, will generate more exchanges of technology, building trust and the sharing of technology that will benefit all sectors. The more the United States and India share high technology together, the more capable we both become to take on the greater challenges of the Century: health, learning, clean water, climate, enhanced food production, etc. It all begins with trust. Trust and defense cooperation lead to technology. Technology equals prosperity.
Achieving energy security is another area for major collaboration. The bulk of India’s energy supply is derived from coal. Knowing the impact coal has on climate change, the United States and India need to ramp up collaborative efforts to share clean coal technology. Likewise, civil nuclear power and renewable energy are both sources for non-carbon emitting power. We need to successfully implement the U.S.-India civil nuclear cooperation initiative. This will mean India bringing in line its domestic laws with international conventions. Further, we need to focus on research and commercial launch of renewable energy technologies. There’s no reason we should not be partners in all these energy fields.
On food and agriculture, the new buzzword is the ‘ever-green’ revolution – an goal we all share. Three things pop to mind where U.S. and Indian companies can collaborate to achieve this noble objective. First, U.S. farms – particularly in the western United States – have developed state of the art water use management practices that could be directly applied in India. Water use is critically important, and no country has the luxury of wasting one single drop of this life-giving resource. The U.S. and India need to partner more effectively in sharing these water use technologies. Second, GM seeds that are drought resistant and disease resistant present tremendous opportunities, just as BT cotton has enabled India to become a net exporter of cotton. We need to be collaborating more effectively in ag biotech. Third, USIBC believes strongly that the inefficiencies in India’s farm-to-market supply chain can be greatly reduced by building out infrastructure in the supply chain: warehousing, cold storage, better distribution, etc. This investment in infrastructure will not come on its own: to attract this capital, we suggest that India opens the multi-brand retail sector to organized players. These experts will bring capital, expertise, know-how, and infrastructure, which will greatly enhance productivity and efficiency in the farm-to-market supply chain, thereby progressing India towards a genuine ‘ever-green’ revolution.
Last, but not least, the U.S. and India need to better synchronize their trade policies to mutual benefit and advantage. This means India being more forward leaning on opening its markets, while America being more flexible on encouraging the movement of technical professionals back and forth between the countries. This also requires India to bring its intellectual property regime in line with international best practices, so India becomes the ‘innovation nation’ of the 21st Century. USIBC recognizes India’s daunting health challenges and its need to nurture a massive generics industry. But this doesn’t mean that India should wave aside bringing its IP Regime in line with the world’s greatest innovating countries. Once India does this, discoveries and treatments and cures will be percolating and abounding in India, benefiting its own citizens, and all humanity.
Taking these basic steps over the next five years will double U.S.-India trade from current levels and provide India a comparative advantage as an economic powerhouse for decades to come.
AS: An impression is gaining ground that China is fast catching up with India as the largest trade partner replacing the US. Even from America’s point of view India is still much below the top trade partners of the US. How you view China’s rise as largest trade partner of India? Could you identify the areas that could really raise the trade both ways creating a win-win situation as President Obama said?
RS: Be wary of rising trade figures with China. Can you really call it trade when China’s currency is manipulated such that India finds itself relying on the purchase of sub par super critical coal-fired boilers, which also is flooding the country with Chinese labor, displacing job-creation for Indians? Can you really call it growing trade with China when, in fact, China is on a buying binge of India’s commodities, such as iron ore? Just look back to the U.S.-India civil nuclear deal. Which country quietly opposed India’s entry to the NSG? Which country will oppose India’s full-fledged participation as a permanent member of the UN Security Council? Which country has provided all the fissile materials to Pakistan to fuel Pakistan’s strategic nuclear program? My advice: Choose your friends wisely.
AS: Interacting with the media few weeks before the President’s visit you have said that the commercial focus of this visit would unleash jobs and opportunities that will benefit the American economy at a time when jobs are needed, while providing nurturing collaborations in technology that will ensure inclusive growth in India for decades to come. While the issue of job creation in America has well taken care of during this visit, nothing worth mentioning did emerge about outsourcing. The US being the biggest IT market for India till now, do you expect any significant change in the Federal policy on outsourcing? Or else how US could allay the apprehension of the Indian IT industry?
RS: President Obama’s visit to India, I think, allayed concerns among Indian IT professionals that there was no discriminatory effort underway to undo the U.S.-India knowledge partnership in information technology. In fact, I feel the exact opposite was conveyed. President Obama’s remarks on globalization and on outsourcing were refreshing, open-minded, far-thinking. We need to now strengthen his hands in the U.S. Congress so he can effectively ‘sell’ the concepts of globalization and global value addition to his American audience. Global sourcing and global value addition mean our very economic survival; so we must remain all together on this.
Differences still persist over Immigration issue and hike in visa fees is
not welcomed. What is USIBC’s stand on these two sensitive but crucial
The fundamentals in India are “very strong” you said and identified them as
major shock absorbing elements in Indian economy during the global financial
melt down in 2008. But one also noticed during this period while the FDI
flow into India kept increasing, FIIs pulled back significantly during that
period. Why this contradiction? How you would like to interpret this
AS: Former Under Secretary of State for Political Affairs Nicholas Burns said the other day that Indo-US relationship is loosing steam and the Obama administration should take some bold steps to strengthen this partnership. Do you think the issue has been well taken care of by President Obama during his visit?
RS: We must never take our partnership for granted – ever. India desires to sit at the high table in all international fora where it truly matters. The United States can be helpful – but India must first bring its domestic regulations in line with these international conventions. Meanwhile, the U.S. seeks more open access to India’s vast marketplace. India has been slow to open in important areas of defense, insurance, multi-brand retail, legal services, just to name a few sectors. Mindful of the political challenges both democracies face at home, business must lead the way to press for continued progress across all fronts. Commercial relations and business form the foundation of what will one day become genuine strategic partnership between the United States and India. We must continue on this march towards progress. President Obama’s visit has been extremely helpful in this regard – mollifying concerns, eliminating irritants, and building trust between the two free-market democracies.
AS: While the Obama administration has expressed grave concern over terrorist activities being generated from Pakistan and President Obama during joint Press conference with Indian prime Minister Manmohan Singh spared no words to condemn it with a note of caution to Pakistan. Terror and talks cannot go together, said the India prime Minister but at the same time the Obama Administration is offering US$ 2 billion military aid package for Pakistan where the Army reportedly has a dominant voice in the policy making of the government. What message, do you think, this action conveys to the peace loving democratic millions in India if the news turns to be true?
RS: Every thinking man understands the importance of preventing a meltdown in the region, sparked by a collapse of civilian institutions in Pakistan. To shore up Pakistan so it can get its own house in order is the purpose behind U.S. military support there. To leave Pakistan isolated would be as big a mistake as withdrawing precipitously from Afghanistan. It is imperative that the United States and India continue to work together to encourage Pakistan toward a free-market, democratic, peace-loving fold, and that we prevent a de-stabilizing meltdown in this region.
AS: In an interview with IndiaOneStop.com on May 6, 2004 former Prime Minister of Pakistan late Benazir Bhutto had said: “We need to facilitate the trade through measures such as those that facilitated the European common market. Cross-border trade is less than 4% of both countries' total foreign trade. This is a shockingly low statistic. We could set up groups that would give us the structural proposals that could enhance the figures.” But the general impression is that until burning issue like J&K is resolved no significant improvement worth mentioning could be expected on the trade front. Do you think terror and trade can go together?
RS: Wherever it is mutually advantageous to grow commerce between neighbors, we should encourage that. Wherever there is commerce, this tends to foster peace and prosperity. Terror must be condemned always. But think of examples in modern history where, for example, the U.S. had earlier been at war. In Germany, we now count this country as one of our closest friends and allies. In Vietnam, the United States has established a remarkable trading relationship. Can we not one day hope that Pakistan and India open commerce between their borders, bringing prosperity to a region that has been ravaged by insurgency, war and terror? We must enlist the next generation to be thinking about peace, good governance, political stability, and prosperity for all. A powerful, strong nation like India hopefully can be magnanimous in its thinking, looking to the future, attempting to win young hearts and minds.
Previously, Somers was Unocal Corporation’s chief executive in India, developing commercial opportunities in India’s emerging energy market. Before that, he was managing director for India on behalf of Cogentrix Energy, tasked with setting up a 1000 MW electric power project in the Indian state of Karnataka.
During Somer’s residency in India, he served on the board of directors of Hindustan Oil Exploration Company, India’s first private sector oil exploration company, as well as on the board of the U.S. Educational Foundation in India, which oversees the country’s Fulbright and Humphrey scholarship programs. He is currently on the International Leadership Council of the Monterey Institute of International Studies, a professional graduate school preparing students for careers in cross-cultural, multilingual environments. He travels to India frequently.
Somers holds an M.A. from the Bread Loaf
School of English, where he studied at Lincoln College, Oxford University.
He graduated with a B.A. (Honors) from Middlebury College in Vermont. Somers
and his wife, Rebecca, live in Washington, D.C.