Director of Operations Rick Rossow
am quite bullish on trade between our countries'
is in the early stage of economic revolution and the opportunities
for increased trade and investment between the US and India are
unprecedented, says Mr. Rick Rossow, Director of Operations,
US-India Business Council (USIBC) in an interview with
Amitabha Sen. Mr. Rossow who is "quite bullish
on trade between our countries" would like to attribute the
better relations between the countries today to a number of factors,
most effectives of them being appointments by President Bush of
a number of senior officials in the administration that are personally
committed to strengthening the Indo-US relations; having avenue
of trade that is advantageous to both the countries in offshore
services; increasing knowledge of the US companies about those
Indian industries where good investments can be made; and India's
stability vis-ŕ-vis Pakistan. The Strategic Partnership Agreement
underscores the US government's commitment to India and "that
will certainly help reassure" American investors, he feels.
On the prospects of India as the BPO destination for US firms, Rossow
says: "India is still the destination of choice for BPO services".
The Indo-US relations
including Trade relation have made remarkable strides in last two-three
years. What could be the chief reasons you would like to attribute
to for such a significant improvement in bilateral relations between
world’s two largest Democracies?
relations between our two countries can be attributed to a few different
factors- I can speak most effectively to the reasons on the U.S.
President Bush appointed a number of senior officials in the
administration that are personally committed to strengthening
the relationship. Most
important among these was President Bush’s first choice as
Ambassador- Robert Blackwill.
Amb. Blackwill’s closeness to President Bush began
an unprecedented period of high level of sustained contact
between our governments and militaries.
we finally have an avenue of trade that is advantageous to
both our countries in offshore services- that builds a link
that can survive small “bumps” in the road to strong relations.
American companies are learning more about where they can
make good investments into India.
You don’t have any new Dabhols coming up (however,
there are still a number of as-yet-unresolved disputes from
America’s early investors, particularly in Tamil Nadu).
India’s stability vis-ŕ-vis Pakistan cannot be underestimated.
The Strategic Partnership
Agreement announced by President George Bush and former Indian Prime
Minister AB Vajpayee early this year, has given a new dimension
to the Indo-US relations. The US offer on high-tech cooperation
including nuclear energy and missile defence is seen as unprecedented.
What could be the probable impact of such a move on the US business
and industry? Would it help increase their confidence in Indian
govt. policies and Indian market as business destination?
I think the real benefit of the Strategic
Partnership agreement is that it underscores our government’s commitment
to India, and that will certainly help reassure investors.
about US investment in India, we have case like Dabhol that, according
to many, sent wrong signals to the outer world so far as foreign
investment is concerned. To avert such a 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?
You really can’t say “cases like Dabhol” because
no other dispute that has come up could be compared to Dabhol.
However, that being said, there are other disputes that have
come up. Five U.S.
energy companies are engaged in a dispute in Tamil Nadu.
Another has had problems with a pair of investments in Orissa.
The list goes on… most of the biggest problems are state-level
issues. So to answer
your question, the Center could become more active in resolving
problems at the state level.
Obviously, with coalition politics and the relative strength
of state-level parties, this is not an easy task.
thing the Indian Government can do is to move forward with the reform
process, and further open up other sectors where U.S. investors
are eager to become more deeply involved in the Indian market, including
retail trade (FDI is not permitted), print media (26% FDI), insurance
(26% FDI), telecom (49% FDI) and also by adopting a stronger patent
regime and lowering customs duties.
Prime Minister and Finance Minister have both made announcements
in several of the areas I noted above.
Could you identify
the Indian business and industry sectors where the prospects of
US investment look brighter than what they were few years back?
I think American companies are getting more
serious about manufacturing in India.
Automotive companies and some consumer durable companies
led the way, and others are planning to follow.
This is vitally important since, as vibrant as India’s IT
market is, growth in manufacturing will be able to absorb a much
higher number of workers, bringing them into the formal sector.
& Entertainment- With the two largest movie industries
and two of the most developed cable TV networks, there are
plenty of areas for cooperation.
Indian cinema has dramatically increased the quality
of production, and Indian movies have a growing following
in the States. At
the same times, more American movie studios are releasing
their films earlier in India than ever before.
On January 1, 2005, per the WTO patent agreement, India
must adopt full patent protection. That will help India in two ways- foreign companies will bring
more high-end pharma products into the Indian market, and
India is expected to scale up its research & development
programs for new drugs.
On January 1, 2005 the WTO’s multi-fibre agreement comes
into force, whereby countries must drop quantitative restrictions.
The QR’s had allowed the U.S. to import only a limited
quantity of textiles from each country.
It is expected that India will benefit tremendously
from having foreign markets open further, and U.S. companies
will benefit through being able to import more textiles
from Indian manufacturers.
The Congress Party came to power on a platform of extending
the benefits of liberalization across India- and they plan
to enact a new green revolution in agriculture. This means some new opportunities for American companies that
have the latest farm products- from fertilizers to seeds
to farm equipment, and, of course, cold chain storage.
At the Asia Society seminar last year,
the then Indian Commerce minister Arun Jaitley observed that being
a Democracy, one of the constraints in implementing reforms in
India is the need for popular sanction of a large mass of people.
With the installation of Congress-led UPA government in India
that to a great extent depends on the support of the Left, the
speed in the reforms process as expected by the US trade and business
may not speed up. Do you think this changing scenario may put
India in the reverse gear of development? Is it possible to implement
reforms without tears?
don’t think the reform process will go into reverse gear.
The path may change somewhat (i.e., more focus on agriculture
and rural development), but will not go backwards.
I personally believe that Democracy is changing to become a driver
of reform in India. Both
of the major national parties can campaign on positions of economic
reform, and will be measured by the electorate on the reforms
they enact while in office.
That is a full turnaround from India’s electoral history
where one party typically ran on a reform platform while the other
ran on a platform of rolling back reforms.
Reforms in sectors like Banking, Insurance,
Civil Aviation, Law where the scope of foreign investments and joint
ventures are very high, are somewhat not on the expected rate. Indian
government on one hand has to think about the massive public sector
structure being built over the decades since Independence and on
the other keeping pace with globalization, India has to reform its
trade and economic policies but how such reforms could speed up
in a situation where poverty, illiteracy hugely influence a country’s
economy? Your observation please?
Not sure what you are asking with this question…
something on how the Government can expedite reform when, at the
same time, India needs improvements in poverty reduction & illiteracy?
I think these two issues are indivisible.
The point behind opening the economy is that an open market
economy offers more opportunities for individuals to improve their
stations in life. No
economic model ever adopted by a nation has proven as effective
in improving overall economic welfare as capitalism. Decreasing poverty and increasing literacy takes money, and
money can only be generated by successful business ventures.
you look at India’s most successful sectors, three of them have
historically not been burdened by heavy regulation or Government
competition- media, pharma, Info Tech- and they thrived.
Two others have recently de-regulated, and are growing fast-
insurance & telecom services. And in these areas, it is generally not the foreign firms that
have benefited most- it is Indian firms.
The discussion about liberalizing the economy isn’t about
opening the door for foreign firms to dominate the market, as was
originally the fear. The
reform experiment has benefited India’s private sector more than
international firms. That
being said, American companies look forward to the growth of new
opportunities to engage in the market and offer new products and
services to India’s citizens.
would be your specific suggestion to the Indian government to facilitate
the process of foreign investment without adversely affecting the
basic structure of the Indian economy?
I don’t think you can bring in foreign investment
without affecting the structure of the economy. I mean this in a very positive sense. Most foreign companies operate in markets around the world,
and have learned & adopted some of the most effective business
practices around the world. As
industries were opened for American companies, Indian companies
have shown a phenomenal aptitude for evolving their own business
practices to compete. As companies begin to compete with each other at such a high level,
government institutions must be ready to adapt to the new business
environment. In short, India
is in the early stage of a revolution that will affect every business
and government institution, resulting in new opportunities for India’s
citizens and has already resulted in the first Indian companies
to begin making their stamp on the world.
One of the major issues that is occasionally
punctuating now the otherwise smooth relationship India has with
the US is the hue and cry over “Outsourcing”. Not only because of
cost cutting also due to non-availability of adequate technical
skills are prompting many US corporations to outsource their requirements
and India being in
an advantageous position is having the biggest chunk of outsourced
works. How do you look at this? What is the prospects of India as
BPO destination from US point of view?
India is still
the destination of choice for BPO services. The growth of offshore
services has certainly elicited an uproar in the United States,
but many American companies must
find the lowest-cost suppliers for internals services because all
of their competitors are doing the same.
The Indo-US trade has grown substantially
over last three/four years but exports to India from US did not
grow at commensurating rate and that is causing concern. Could you
highlight areas where there is immense scope for US to increase
have not heard much concern on this issue; U.S. exports to India
are growing steadily- by nearly 19% from 2002 to 2003, and appear
poised for a similar increase in 2004.
As far as increasing US exports to India, the primary area is in
high-tech goods. Telecommunications equipment.
Defense items. High-end
said and done and under the given situation how optimistic you are
about the Indo-US trade relations? What is your projection? Where
the Indo-US trade relations would stand five years from now?
I am quite bullish on trade between our
countries. Indian companies
have largely embraced global markets, and found opportunities on
every continent. At the same
time, the Indian Government continues to open their economy for
foreign trade & investment.
As I noted before, India is in the early stage of an economic
revolution, and the opportunities for increased trade & investment
between our countries are unprecedented.
October 14, 2004