FDI: Approval process time-consuming

Outsourcing: IT companies need to invest in communities they work in

INDIA has to recognize that China has taken steps to make it a more attractive investment destination, and also been able to provide the requisite infrastructure, said Sanjay Puri, Chairman of the Alliance for US-India Business (AUSB) formerly known as US India Business Alliance (USIBA). In an interview with Amitabha Sen he said in certain sectors, the FDI policy is still restrictive, but more pertinently, the process of approvals for projects and investment is time-consuming and resource-intensive. The institutional process that implements new policy directives – is an area that the Indian government might continue to examine closely.

Commenting on the issue of Outsourcing Puri who is also the Chairman of the US India Political Action Committee (USINPAC) -- the largest and powerful platform of Indian Americans – said that companies will source products or services where they find the best quality at an affordable price. Indian IT companies still get 60 percent of their revenues from the US. These companies need to start investing in the communities that they work in.

Text of the interview

AS: With the change of guard at White House to which area you and the Indian Americans as a whole think the Obama Administration would be giving top most priority and importance in respect of US-India relationships?

SP: Yes, it is likely that the Obama Administration will continue to give the US relationship with India a top priority, and examine all aspects of the relationship for areas to improve. After Mumbai, it is indeed likely that discussion on areas of collaboration in homeland security and counter-terrorism will improve.

AS: Some top leaders in a recent meetings of the National Federation of Indian-American Associations have urged Barack Obama to visit India first when he makes his maiden overseas visit because it would send a powerful message to the entire world. Do you subscribe to this idea?

SP: Yes, it would be a message in one manner, but the President and the new Administration will probably weight regions of the world carefully before deciding. We must not forget that the Middle East and the possibility of renewed stand-offs with Russia are exigent concerns for the US.

AS: There is no denying the fact that for any country to grow and prosper it needs to have good, peace-loving and friendly neighbors. India’s peace process is intermittently punctuated by the Jammu and Kashmir issue and for last two/three years also by terrorist activities allegedly being generated from the neighbouring countries. As a big brother in South Asia India has a special responsibility to maintain peace and harmony. India is discharging its responsibilities even in extreme cases like Parliament attack or serial terror attacks in Mumbai. But if India’s persuasive policy is taken as country’s’ weakness what action do you think India should take if such acts are allowed to continue? How Obama Administration can help India resolve this critical issue?

SP: India will decide for itself in the context of domestic priorities and concerns what its best course of action should be. The world community should recognize that India, as a democratic country, has a range of options that are governed by these priorities. To that end, the US and the West can recognize that India’s options could shrink in the event of another attack that demonstrably originated from within Pakistan.

The US can press Pakistan for greater accountability in closing all terror camps inside Pakistani territory and in the US of money provided by the US.

AS: Do you foresee any major policy shift in the Obama Administration towards India from that of the Bush Administration?

SP: Too early to tell, but no major changes are expected.

AS: While talking about US-India relationships an obvious reference is made to the civil nuclear cooperation agreement that both the countries have signed few months back. How would you like to describe this courageous steps taken by India, its Prime Minister Manmohan Singh and External Affairs Minister Pranab Mukherjee in particular? The Opposition, the Left in particular, still maintains that India’s sovereignty is jeopardized because of this agreement. Your comment please.

SP: The Indian government, and PM Singh in particular, risked their political survival on this deal, which has the potential to provide expanded access to sources of energy that were not available on the world market for India. Many experts in India, who are more qualified to assess the impact of the deal on India’s sovereignty, have asserted that the deal does NOT intrude in any areas pertaining to the exercise of sovereignty.

AS: One of the significant achievements in the India-US bilateral relations is growing merchandize trade which increased to $ 42 billion in 2007 and according to estimate made before the current financial melt-down bilateral trade is expected to touch $60-billion-mark in 2008. Till September, 2008 trade between the two countries stood at over $ 34 billion. The long term estimate projects it at $100 billion in next three-four years. But lot many things would depend on the final outcome of WTO negotiations. Indo-US trade is about one tenth of China-US trade. As Chairman of USIBA what would be your suggestion to increase the US-India trade vis-à-vis that with China.

SP: The two should not be compared at this stage. India also has to recognize that China has taken steps to make it a more attractive investment destination, and also been able to provide the requisite infrastructure. India will get there, but the responsibility to scale up India’s participation in global markets, is shared by India and its trading partners such as the US.

AS: In next few months India will also have a new government with general elections in early 2009. With a new President in the US and a new government in Delhi (without predicting who would win the race), do you think that both the government have to start a fresh dialogue on WTO issues? What is your assessment?

SP: Again, too early to say.

AS: WTO talks apart, what could be your suggestions to facilitate bilateral trade between these two countries in near term perspectives? At the United States India Business Council’s annual meet this year Mrs Indra Nooyi, the current Chairman has spoken about huge potential of Indo-US trade volume and closely linked with that is the question of Foreign Direct Investment (FDI) that she dealt with. Indian market is gradually unfolding since its economic reforms in early 90s which Prime Minister Manmohan Singh had initiated as the then Finance Minister . Do you find India’s FDI policy still quite restrictive? What you would be expecting from the Indian government to step up FDI from the US?

SP: In certain sectors, the FDI policy is still restrictive, but more pertinently, the process of approvals for projects and investment is time-consuming and resource-intensive. The institutional process that implements new policy directives – is an area that the GoI might continue to examine closely.

AS: A major issue that is going to significantly impact US-India trade relations is outsourcing. What is your personal stand on this sensitive issue and what you would be expecting from the Obama Administration?

SP: The US and India must continue to evolve a win-win economic relationship that preserves the optimum amount of economic activity in both countries. Companies will source products or services where they find the best quality at an affordable price. Indian IT companies still get 60% of their revenues from the US. These companies need to start investing in the communities that they work in and pay attention to what the Japanese did in the 80’s. Members of Congress were throwing Japanese TV’s on the steps of Capitol Hill and now Japanese companies are the darling of the Members of Congress since they invested in plants and facilities in US regions like South Carolina, Tennessee, Alabama and created local jobs too.

AS: Last but not least, what are the significant changes you would be expecting in the US-India relationships in next four years from now-- in the first spell of Barack Obama as the US President?

SP: The likelihood is that the US-India relationship will continue to mature, deepen and widen (as the institutions start to trust each other more).

February 2009