Two very chastened Indian cabinet ministers arrived in Washington on Tuesday, looking for American investment and patronage to revive an Indian economy that has hit the skids and a rupee that is being decimated.
The swagger and self-importance that characterized Indian economic engagements with American business over the past few years has evaporated rapidly as finance minister P Chidambaram and commerce and industries minister Anand Sharma engage with US interlocutors over the next few days. In its place, there is despair at the nose-diving rupee and the drying up of foreign investment, leaving the Indian projection of becoming an economic powerhouse distinctly wobbly.
"There's no doubt we are going through a rough period right now,'' a senior Indian official preparing for the ministerial engagements conceded.
There was a time not too long ago when Indian ministers were so cocky that they bluntly told the Americans that they couldn't care less if they invested in India or not; there are plenty of other takers, and besides, domestic demand was so strong that it was sufficient to galvanize the Indian economy. Giddy over forecasts on the ''inevitable'' rise of China and India, some even wrote off America and the west, leaving many western commentators smarting.
Not so fast, may well be the message over the past few weeks. The US economy has not only proved to be resilient but is now bouncing back on the strength of a housing recovering and growing consumer confidence, the highest in five years. Meanwhile, all the bluster about BRICS appears to be crumbling fast with even China and Brazil slowing down, though India is clearly the worst performer of the lot.
Which is why the Indian finance minister will spend an unprecedented four days in Washington DC, meeting a range of American economic interlocutors of consequence, from top executives of Wal-Mart, Boeing, Lockheed Martin, and Microsoft, to lawmakers such as Senator Max Baucus Chairman of the Senate Finance Committee and Senator Mark Warner, Co-Chair of the Senate India Caucus, besides his counterpart US Treasury Secretary Jacob Lew. He will also deliver the key-note address on Thursday at the Plenary Session of US India Business Council 38th Leadership Summit, where American executives who have been griping and sniping at India will gather to hear him.
''The finance minister is likely to discuss the issue of investment by US companies in India especially in infra sector, various policy measures taken by the Government to boost investment in the country and tax related matters among others,'' a government statement issued ahead of the visits said, but the sarkari-speak glossed over how much New Delhi is having to bend after having contemptuously dismissed American complaints over barriers to enter the Indian market.
Ahead of the visits, New Delhi has rolled back a range of measures American businesses saw as inimical to them, from punitive tax rulings to mandatory buying of telecom gear from domestic manufacturers under a preferential market access (PMA) policy that progressively calls for 100% local sourcing of security sensitive telecom equipment and electronics from October 2013.
"India's rethink of its PMA policy sends a strong and welcome signal that India is listening to investors and that channels of communication through organizations such as the US-India Business Council are working," USIBC President Ron Somers said on Tuesday as news of the what New Delhi called a "deferment" of the policy came through.
Whether this will be adequate to turn the tide of negative opinion remains to be seen. While India's finance and commerce ministers make the case that New Delhi is ready to do business with the US and rest of the world, there are continued misgivings on part of the defence ministry over liberal foreign investment norms in the defence sector and in the home ministry over open-ended procurement policies in the telecom/electronic sector, both of which are projected as having dangerous security implications.
The US surveillance overreach in recent weeks could not have filled the free-trade brigade with any great confidence, and both Chidambaram and Sharma will have to negotiate the tricky terrain involving national security — protecting it from financial meltdown because it is too closed or a strategic blunder because it is too open.
Two very chastened
Indian cabinet ministers arrived in Washington on Tuesday, looking for
American investment and patronage to revive an Indian economy that has hit the skids and a rupee that is being decimated.
The swagger and self-importance that characterized Indian economic
engagements with American business over the past few years has
evaporated rapidly as finance minister P Chidambaram and commerce and industries minister Anand Sharma
engage with US interlocutors over the next few days. In its place,
there is despair at the nose-diving rupee and the drying up of foreign
investment, leaving the Indian projection of becoming an economic
powerhouse distinctly wobbly.
"There's no doubt we are going through a rough period right now,'' a senior Indian official preparing for the ministerial engagements conceded.
There was a time not too long ago when Indian ministers were so cocky
that they bluntly told the Americans that they couldn't care less if
they invested in India or not; there are plenty of other takers, and
besides, domestic demand was so strong that it was sufficient to
galvanize the Indian economy. Giddy over forecasts on the ''inevitable''
rise of China and India, some even wrote off America and the west,
leaving many western commentators smarting.
Not so fast, may
well be the message over the past few weeks. The US economy has not only
proved to be resilient but is now bouncing back on the strength of a
housing recovering and growing consumer confidence, the highest in five
years. Meanwhile, all the bluster about BRICS appears to be crumbling fast with even China and Brazil slowing down, though India is clearly the worst performer of the lot.
Which is why the Indian finance minister will spend an unprecedented
four days in Washington DC, meeting a range of American economic
interlocutors of consequence, from top executives of Wal-Mart, Boeing, Lockheed Martin, and Microsoft, to lawmakers such as Senator Max Baucus Chairman of the Senate Finance Committee and Senator Mark Warner,
Co-Chair of the Senate India Caucus, besides his counterpart US
Treasury Secretary Jacob Lew. He will also deliver the key-note address
on Thursday at the Plenary Session of US India Business Council 38th Leadership Summit, where American executives who have been griping and sniping at India will gather to hear him.
''The finance minister is likely to discuss the issue of investment by
US companies in India especially in infra sector, various policy
measures taken by the Government to boost investment in the country and
tax related matters among others,'' a government statement issued ahead
of the visits said, but the sarkari-speak glossed over how much New
Delhi is having to bend after having contemptuously dismissed American
complaints over barriers to enter the Indian market.
Ahead of
the visits, New Delhi has rolled back a range of measures American
businesses saw as inimical to them, from punitive tax rulings to
mandatory buying of telecom gear from domestic manufacturers under a preferential market access
(PMA) policy that progressively calls for 100% local sourcing of
security sensitive telecom equipment and electronics from October 2013.
"India's rethink of its PMA policy sends a strong and welcome signal
that India is listening to investors and that channels of communication
through organizations such as the US-India Business Council
are working," USIBC President Ron Somers said on Tuesday as news of the
what New Delhi called a "deferment" of the policy came through.
Whether this will be adequate to turn the tide of negative opinion
remains to be seen. While India's finance and commerce ministers make
the case that New Delhi is ready to do business with the US and rest of
the world, there are continued misgivings on part of the defence
ministry over liberal foreign investment norms in the defence sector and
in the home ministry over open-ended procurement policies in the
telecom/electronic sector, both of which are projected as having
dangerous security implications.
The US surveillance overreach
in recent weeks could not have filled the free-trade brigade with any
great confidence, and both Chidambaram and Sharma will have to negotiate the tricky
terrain involving national security — protecting it from financial
meltdown because it is too closed or a strategic blunder because it is
too open.