Asia Times, Mar 3, 2006
Nukes and mangoes on Bush’s mind in India
By Indrajit Basu
KOLKATA - Although US President George W Bush’s India visit that officially started on Thursday is hardly expected to grab headlines in terms of business and economic deals between the two countries - rather, the nuclear separation agreement that the two nations have just announced will dominate coverage - both are looking forward to several new initiatives to boost bilateral commercial ties expected to be announced in the next few days.
"[The] Indo-US relationship will [reach a] strategic partnership level now, which will be underpinned by close trade and commercial ties," said Indian Commerce and Industry Minister Kamal Nath on the eve of Bush’s arrival in India on Wednesday evening. "Today India is actively seeking foreign direct investment from the US, but India is also eager to invest in the US."
William Klein, US consul for political-economic affairs in India, said the US commitment to develop strong economic ties had begun well before the presidential visit. For instance, India and the United States have finalized a series of agreements to scrap non-trade barriers in a bid to double bilateral trade to US$40 billion in three years. The most significant feature of that agreement is that the two sides have also resolved the long-pending dispute over India getting entry into the US market, particularly its agricultural-commodities markets.
While the US has agreed to clear imports of mangoes, for instance, from India, the Indian side is finalizing plans to address US farmers’ market access concerns on pulses (beans and peas) and almonds. The Indian step that could benefit the US the most is a relaxation of India’s specifications for wheat imports. Imports of fruits and vegetables are also expected to be cleared during Bush’s visit.
For several years, Indian mangoes have been facing non-trade barriers such as sanitary and phyto-sanitary (plant health) measures from the US side. "We are looking forward [to] Indian mangoes," Bush said in his public address to the country on Thursday.
The United States says that while US companies have been demanding liberal market access for agricultural exports to India for some time, they could not participate in recent Indian import tenders since specifications laid down by the Indian side were "unrealistic".
"[That] issue was resolved at a meeting of the India-US Trade Policy Forum and US Trade Representative Rob Portman," said Indian government sources in an address to the media. Portman added that "US businessmen are looking at large investments into India, particularly in [the] infrastructure and energy sectors". He also indicated that the trade group was looking into the issue of the US allowing entry to refurbished Indian computers, as well as lifting anti-dumping duties on Indian shrimp.
According to the Indo-American Chamber of Commerce, even though the two countries have shared a strong economic and trade relationship for years, there has been a transformation in recent years. For example, the bilateral trade in merchandise goods has increased to $22 billion in 2004, from $5.6 billion in 1990. "This represents an impressive 387% [increase] in a span of 14 years," said K R Chopra, the secretary general of the chamber.
Indian merchandise exports to the US grew 19.28% from $13 billion in 2003 to $16 billion in 2004, while US merchandise exports to India increased from $5 billion in 2003 to $6 billion in 2004 - an increase of 23%. During 2005 the total bilateral trade in merchandise goods recorded a growth of 23% to $27 billion compared with 2004’s $22 billion.
The Indian investment base in the US has been expanding as well.
"Just a few years back India was struggling to meet the quickly changing demands of the global marketplace. Today Indian companies are proving themselves to be credible and lucrative partners of American enterprises," said Chopra.
The chamber adds that for US multinationals - particularly information-technology (IT) companies - India has moved up in importance, not just as a source of talent but also out of a US desire tap the country’s burgeoning market fueled by an economic growth rates of about 8%, one of the fastest growth rates in the world. International (mostly US) IT majors, including Microsoft, Intel and Advanced Micro Devices (AMD), have committed investments of $10 billion in the past three months alone.
Experts say India is not only an important market for US products but is also important as a partner in opening up the world markets. That is why, said Nath, "with contours of India changing on various fronts, US corporates need to take advantage in terms of investing and selling in India".
Nath said that besides IT, there are many opportunities for US companies to explore in India. These include infrastructure, energy, health, and other high-technology areas, and consumer sectors both in the medium and long term. "The growth is going to be there simply because there are more opportunities for US businesses," said the commerce and industry minister.
Klein said, "Bush’s visit marks a milestone as the world’s two largest cultural democracies reach for new heights in their relationship.
However, more significant is the fact that this visit showcases India’s emergence as a potential economic superpower that along with the US can create "history", said Prime Minister Manmohan Singh.
Indrajit Basu is a Kolkata-based equity analyst turned journalist with more than 12 years of experience in business/finance and technology journalism. Besides writing for Asia Times Online, he also writes for US-based publications, as well as IT companies.