The US-India Business Council is dedicated to building commerce between our two nations. A few weeks ago I attended its annual conference in Washington, DC , and I went in wondering if the perception of India as a stupendous, rapidly rising economic opportunity was consistent with the reality, in view of the hurdles that nation must overcome. Short of the infrastructure and governance challenges I have read so much about, I wanted to learn more directly from its leadership – and ours — rather than just reading a brief overview of India’s projected economic future in a business magazine. Further, I was interested in how the India-U.S. relationship is faring …and where the U.S. can be more helpful.
Makovsky + Company became a member of the USIBC about six months ago because of our interest in capitalizing on Indian growth. We have joined forces with our IPREX partner in India, Concept, which is headquartered in Mumbai, to provide communications services to companies in the U.S.-Indian corridor.
Here are some of the facts and forecasts about India that I learned from the likes of India’s Minister of Commerce and our own Under Secretary of Commerce for International Trade:
• Twenty percent of the world’s population currently lives in India. Its huge population represents an outsized workforce and massive purchasing power. By 2050 India will be the third largest economy in the world.
• The most unique thing about India is its spirit of entrepreneurship, particularly in the software and life sciences area. It boasts the biggest generic pharma sector in the world.
• Indian immigrants in the U.S. have established more tech firms than any other immigrant group. They employ 800,000 people here.
• India currently needs $7 billion in outside investment.
• India’s biggest trading partner is China.
• Despite the fact that it is our largest trading customer — with exports doubling in the past 5 year to $5 billion — India needs to greatly deepen its trade with the U.S.
• There will be a huge demand for cars and it is a potential center for electrification.
• India’s economy was dynamic while others were experiencing the financial crisis. The country is currently experiencing 30 percent annual growth.
With all of these pluses, inflation is currently hurting the Indian economy. And there are significant barriers to additional U.S. investment in several Indian sectors, including banking, education, manufacturing and legal services. For example, U.S. law firms are banned from having offices in India; and in manufacturing, there are legal hurdles to overcome. Further, if India does not improve its infrastructure (construction of roads and highways, electricity generation, etc.), it will significantly impede growth. The country badly needs investment in this area.
In addition, India’s ruling Congress Party has been beset by a wave of corruption scandals that have weakened its ability to pass much needed economic reforms to lessen trade and investment barriers. A reputation for governance issues and corruption stifle investment.
Education in India is another potential stumbling block and another area for greater collaboration between our nations. India has a need for more schools and educational institutions and the U.S. can help, particularly in the area of higher education and narrowing the skill gap that will help foster growth.
A new bilateral trade agreement will help unlock the potential for this relationship, termed by President Obama as this century’s defining one for the U.S. Both sides appear to be moving in the right direction. Traveling to India recently, U.S. Secretary of State Hillary Clinton said, "Each of our countries can do more to reduce barriers, open our markets, and find new opportunities for economic partnership."
We agree. Greater cooperation will unlock those opportunities, which also create opportunities for those of us in the communications business.