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Economic cooperation was a major topic during the recent visit of
President Bush to India, with the United States agreeing to an ambitious
three-year target for doubling trade. A delegation of top American
business executives also accompanied the president, keen to explore
investment opportunities in one of the world's fastest-growing
economies.
As the president visited India, U.S. Trade Representative Rob Portman
accepted a challenge from his Indian counterpart (Trade Minister Kamal
Nath) to push bilateral trade to $50 billion in three instead of five
years, as earlier targeted. Bilateral trade stood at over $28 billion last
year.
The optimism is based on the growing interest among American businesses
in India's vibrant economy.
The head of the financial services company JP Morgan Chase, William
Harrison, co-chairs a forum of 20 major American and Indian companies that
is outlining a plan to boost commercial collaboration.
Harrison says U.S.-based multinationals see India as an important
destination as it catches up with the other booming economy in the region
- China. "You can't be a global CEO (Chief Executive Officer) today, doing
your job and not really focusing on how you can do business in India. You
just can't be. And, by the way, a lot of people love to compare China and
India. It is not an 'either-or.' I think for most big multinational
companies, you have got to be looking at both of them because they are
both right at the top of the list of where you have got to be to do
business in the future."
Dozens of U.S. businesses already have a foothold in India. Technology
companies Microsoft and Cisco have invested billions of dollars developing
research centers in India to use its pool of skilled talent.
Other multinationals are targeting India's 300 million middle-class
consumers, who buy Levis jeans, aspire to own a Ford car, and frequent
McDonalds and Pizza Hot outlets.
And the American defense industry wants to sell warplanes and high-tech
weapons to India as the political relationship between the two nations
enters a new phase.
Indian Finance Minister P. Chidambaram told the visiting business
executives the country wants more U.S. investment, especially to revamp
its overburdened infrastructure. "For the U.S. side it means a great
opportunity, an opportunity to invest in India, in our roads, our rail
network, or airports and our seaports, to use your acknowledged strengths
in the financial sector and invest in our insurance sector and banking
sector."
But American businesses say India has to liberalize more rapidly,
especially in fast-growing services such as banking, insurance and retail,
if U.S. investment there is to reach its potential.
JP Morgan Chase Chairman Harrison identifies other factors that
intimidate American businesses thinking of increasing their stake in
India. "It is infrastructure first, lack of infrastructure, and secondly
the perception, real or not, of the bureaucracy, of doing business here;
whether that is getting permits to do business, or is getting licenses;
whether it is the delay in the court system to settle contract disputes or
whatever it is, there is a perception there that we think [all this] could
be facilitated [speeded up]."
The Indian-American business forum
has several recommendations for removing obstacles to cooperation. These
include speeding up infrastructure development in India, making Bombay a
regional hub for the financial operations of U.S. companies, and
increasing cooperation between top technical institutes.
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