US-India Strategic Partnership: "History will be made in 2006"
Commenting on India's global leadership in BPO, the USIBC President said : "India will continue to expand its market dominance in this field, yet to prevent political backlash it will be imperative for India to provide U.S. companies greater market access, to reduce its trade deficit, and to continue to buy American, which would include meaningful defense cooperation."
AS: "India is a rising economic influence of power in the international system.... It is emerging as a potentially very stabilizing and positive force in international politics," US Secretary of State Condoleezza Rice has recently told the US Wire Service correspondents. How would you like to see the role and contribution of the US in helping India shape up as a global power? Could you identify the areas that would benefit the both the countries?
RS: U.S. Industry has always appreciated the value of doing business in India, and we are delighted that the strategic partnership between our two countries has finally achieved the stature and recognition it deserves - appreciating India's vital importance as a major economic force for the 21st Century. Collaborations and joint ventures in key sectors that result in investment-led growth will be the catalytic role that U.S. Industry hopes to play.
AS: The US Chamber of Commerce includes in its membership some 3 million businesses and is one of the largest business chambers in the world. That itself speaks for huge responsibility to share its experience with other upcoming countries like India that has the potential to become major global power. How will the US Chamber help Indian business and industry in this respect? What would be the three major focus areas that you may like to emphasize to strengthen US-India trade and business relations?
RS: A priority must be to champion India's quest for energy security by supporting the sharing of U.S. civilian nuclear technology with India consistent with the July 18th Joint Statement. In addition, it is important we continue to:
AS: Could you tell us about the areas that call for greater understanding of the realities and corrective policy measures to be taken by both the government and private sectors to take US-India economic relations to a greater height?
RS: Freedom of movement of capital in and out of investments is a key determinant for investors when they consider alternative locations for investing. Sanctity of contract is an equally important litmus test, as is surety of the regulatory regime, rules and taxes affecting investments. Focusing on ensuring success in these key areas will improve confidence, which will attract investment, resulting in success. Success will spur success. U.S. Industry and Indian Industry share a common view on these points. With a common resolve to improve in these areas, Indian and U.S. Industry are collaboratively supporting the convergence of these two dynamic economies.
AS: CIA's National Intelligence Council has identified India and China as two major global players emerging to dominate this century. Though the US investment in China is much higher than that of in India, still a feeling is gaining ground that one of major reasons of the US getting closer to India is to contain China's influence in South Asian region? From business point of view how substantial such feeling is ? Do you think a cordial and stronger Sino-Indian relationship would ensure a more stable South Asian region, a development that would ultimately help US business and industry as well in longer term perspective?
RS: U.S. Industry's attraction to India is due to its vast pool of well-educated talent, its rule of law, its secular democratic principles, its vibrant and free press, and India's strong cultural and family values. India enjoys significant demographic advantages over China with 54% of the Indian population under the age of 25. For all these reasons - which are all the right reasons - India is the place to be.
AS: Yet another crucial issue that hugely impacts the South Asian regional affairs is Indo-Pak relations. To what extent do you feel this impacts US investors to India? Do you think the resolution of Indo-Pak issues including the Kashmir issue could bolster the confidence of the US investors to put in more funds in India?
RS: Investment will always seek the safest harbor for the highest return. The détente taking place between India and Pakistan creates a conducive environment for business. U.S. Industry - and I suspect all Industry - would like to see peace between these neighbors grow to the point where a showdown - like what happened in 2002 - will never be repeated.
AS: The post- Strategic Partnership Agreement scenario regarding Indo-US bilateral relations looks to be quite encouraging. In fact, both the countries are talking about "Next Steps in the Strategic Partnership". Indians are eagerly looking forward to President Bush's visit to India this year. How upbeat is US business and industry today about doing business with India?
RS: History will be made in 2006. India's economy is powering ahead in excess of 8% GDP. The fifth-ever visit of a U.S. President to India is bound to be successful. One-fifth of the world's population will welcome President Bush, who will attempt to distinguish the U.S.-India strategic partnership by the most sacred demonstration of trust - civilian nuclear cooperation. A bounty of opportunity will ensue - far beyond commercial measure. USIBC - at 180 members and counting - is privileged to play its part and bear witness to "democratic India's arrival as a force in the world." Success of the civilian nuclear initiative will tip the balance, aligning these two great democracies for the 21st Century.
AS: Talking about US investment in India, we have cases like Dabhol that, according to many, sent wrong signals to the US investors so far as foreign investment is concerned. To avert such disaster what do you think should be done by the Indian government not only to dispel any apprehension about the future of their investments, but to increase their confidence in Indian investment policy?
RS: Continued engagement resulting in positive deliverables is the answer. 2005 witnessed a string of such positives. The Patents Act, the Open Skies Agreement, the resolution of Dabhol, the raising of FDI caps in telecom, the purchase by Air India of Boeing aircraft... these all send extremely positive signals. With enough successes in the tally, we'll get far enough along to the point Dabhol will become a faint memory. Trust and confidence will eclipse nagging legacy doubts of the past; we need to instill trust and confidence in one another by achieving business successes.
AS: About trade barriers, what would be your suggestion to New Delhi government to facilitate American investments in India?
RS: USIBC would like to see India and the United States work collaboratively together to make this WTO Round conclude with momentous success. This will unlock prosperity and jobs around the world for countless millions.
AS: India is a global leader today in BPO sector. "Outsourcing" to India is one area that raised lot of political controversy. What is the prospects of India retaining its leadership in international BPO market?
RS: India will continue to expand its market dominance in this field, yet to prevent political backlash it will be imperative for India to provide U.S. companies greater market access, to reduce its trade deficit, and to continue to buy American, which would include meaningful defense cooperation. So long as India's dominance in the service sector results in a win-win scenario where U.S. Industry and Indian Industry prosper, it is sure bet that our two dynamic economies will continue to converge and reciprocally benefit from the other's synergies.
AS: Last but not least. The EU Trade Commissioner said that Doha would be the litmus test for India's leadership in trade negotiations. The sea of trade opportunities is there for India. On the other hand, agriculture being the mainstay, what role you would be expecting of India as leader of developing nations' block at WTO ?
RS: As India becomes a world leader in the services economy, it is in India's interest to lower trade barriers thereby enabling access to its markets, including to its vast agriculture sector. Ultimately, this will spur job creation and prosperity - reaching the metros as well as the rural sector. If India opens up its markets, India will be provided reciprocal access to the world - where India will compete on the World stage in its capacity as a major global power. India must seize this historic opportunity and provide leadership at the upcoming WTO Rounds.
Mr. Ron Somers is the President of the US-India Business Council, established in 1975, and comprised of more than 160 of the top U.S. companies investing in India. The USIBC serves as the primary link between U.S. and Indian companies, promoting open access, free trade, and the strengthening of commercial relations between the two countries. He serves as the Council's CEO, leading advocacy initiatives on Capitol Hill as well as in New Delhi. Ron also heads the Manhattan India Investment Roundtable in New York, comprised of the top 20 Fortune 500 financial service institutions, banks and insurance companies investing in India.
Mr. Somers recently served as Unocal Corporation's chief executive in India, developing commercial opportunities in India's emerging energy market. Previously, Ron served as 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.
A seasoned India-hand having spent 11 years resident in India, Ron has served on the Board of Directors of Hindustan Oil Exploration Company (HOEC), India's first private sector oil exploration company, as well as on the Board of the United States Educational Foundation in India, which oversees the country's Fulbright Scholarship endowment.
He holds a Masters of Arts degree, where he studied at Lincoln College, Oxford University, and an Honors degree from Middlebury College in Vermont.
February 28, 2006