2010 Advocacy Objectives
USIBC will pursure three main advocacy themes in 2010 that will enable India to achieve Inclusive Growth, Self-Sufficiency, and Sustainable Prosperity. Emphasis will be placed on enhancing agricultural productivity, developing infrastructure, and facilitating access to best technology. Cross-cutting issues affecting all industry sectors will remain a top USIBC priority.
USIBC's 2010 Advocacy Agenda
The U.S.-India Business Council (USIBC) must be prepared to advocate "uphill" for bold economic reforms in India.
The following is a breakdown of key advocacy issues at the forefront of USIBC's thirteen Executive Committees:
Protectionism - Keep a close vigil against back-sliding on both sides. TARP conditionalities on H1-B Visas and non-tariff barriers like the Vodafone Tax Ruling and how this could thwart M&A in India are but two examples where USIBC must remain vigilant, advocating for global engagement and against parochial nationalism and regression.
Towards Freer Trade - Success at Doha continues to be the ultimate goal, with greater opening in services, cooperation on agriculture, and a more rationale system enabling movement of high technology professionals between our economies. Towards this end, a first-step will be to advocate for continued Bilateral Investment Treaty negotiations between the Indian Government and the Obama Administration.
Competition Commission - Anti-Trust legislation being formulated in India must be consistent with International Best Practices and must not damage investment flows between the two countries. Engagement with the Indian authorities as India's Competition Commission takes shape will ensure continued engagement between Indian and American companies on a "level-playing field" basis.
Aerospace & Defense - As part of the Clinton-Krishna 5-pillar strategy agreed in July 2009, strategic cooperation (nonproliferation, counterterrorism and military cooperation) forms the first pillar, and as such represents one of the most important and promising elements of the bilateral relationship as India plans to procure over $45b worth of advanced military and security equipment to modernize its armed forces over the next five years.
To overcome roadblocks that stand in the way of critical tools addressing "global commons" such as counter-terrorism, maritime security, cyber security, regional as well as global security, the Communications and Interoperability Security Memorandum of Agreement (CISMOA), among other agreements, must be signed.
We must partner in combating terror. This means greater defense/security cooperation. The Medium Multi Role Combat Aircraft (MMRCA) sale (126 fighter aircraft procurement which includes Lockheed Martin and Boeing as strong contenders) is a crucial step in intensifying this vital relationship.
USIBC suggests raising the FDI cap for investment in India's defense sector from 26% to 49%. This move will bolster confidence and enable U.S. companies to make more robust investment in activities that facilitate technology transfer.
USIBC supports a robust strategic relationship with India, including transfer of defense technology and licensing – in consonance with U.S. National Disclosure Policy and believes export controls policy should be reflective of the evolving strategic relationship between both countries.
Digital Economy/IT - India and the United States remain leaders in the digital economy and the opportunities for further investment and collaboration in the Information and Communications Technology space are immense. But both sides cannot rest on their laurels. Moving forward, it is vital that the two countries address new issues that could erode international competitiveness and undermine bilateral trade and investment. Both sides must contribute to this opportunity by adopting a rational policy that enables the ready movement of technology professionals. On the Indian side, the Government must work to develop a national encryption policy that follows international best practices, create a predictable and transparent tax and customs regime, enact labor reforms supporting contract labor, and develop educational policies that will assure a future workforce of highly skilled technology professionals.
Energy and Environment - If controlling carbon emissions is the imperative, then American technologies can contribute greatly. Vast opportunities for technology transfer and collaboration exist – with the caveat that Green Intellectual Property (like all IP) must be licensed and protected. USIBC's job in 2010 must be to document compelling arguments in favor of Green IP Protection as part of its Global Intellectual Property Center (GIPC) Initiative, as well as to roll-out an important study in this area.
Financial Services - If "big bang" reforms typically occur as a new government in India comes to power, then USIBC stands a good chance on advocating for the reforms we have been pressing for the best part of the last decade. More bank branches to be opened across all of India and the lifting of the Voting Rights Cap for those banks which prosper as a result of this global shake-out must be a USIBC priority.
Insurance & Pensions - India's insurance market has enjoyed tremendous growth- in terms of coverage and in the types of products available- since the market was partially deregulated in 1999. Important reforms still remain, however. Foreign investment in insurance is limited to 26% FDI, and is largely barred altogether in the pension fund management business. The Government of India has been working on setting up new regulatory regimes for related products including mortgage guarantees and title indemnity.
Further liberalization is vital to drive future growth for the industry and for the wider economy. The insurance industry, especially the life insurance industry, plays an important role in funding infrastructure development through investment in long-term domestic financial instruments. Further liberalization of the insurance market will help finance India's ambitious infrastructure build out, critical to India's long-term prosperity.
Food & Agriculture - A weak monsoon in 2009 highlighted opportunities for the U.S. and India to collaborate to provide farmers with updated agricultural inputs, farming techniques and post-harvest technologies in India's rural sector, if given access to an open trade and investment environment that can also bolster food security. Food standards should be aligned with international best practices that can further integrate Indian and multinational producers into the global food trade, and simultaneously provide Indians with safe food.
Legal & Professional Services - Enabling genuine collaboration between American law firms and Indian legal service providers will prove to be a golden conduit for investment – as investor confidence will be bolstered when U.S. law firms are allowed to practice on Indian soil. Pressing for India to open its legal services sector to American practitioners is a top USIBC priority.
Life Sciences - As part of our GIPC Initiative, a push for protecting incremental innovation must be a top 2010 priority. Finalizing a Study that makes the case for protecting incremental innovation and successfully rolling this Study out in India will set the stage for the amendment of India's Patents Act, which falls short in this important area. The result will be to spur discovery and innovation, bringing India in line on this specific front with other world economies.
Almost all U.S. pharmaceutical companies are conducting clinical trials in India. This presents quality control issues and begs for better harmonization of our respective regulatory structures. In 2010, USIBC will insert itself more aggressively into this confluence of interests.
Manufacturing - India aspires to be a world-class manufacturer. India's prowess in this sector is already apparent in automobile and auto components manufacturing. Manufacturing is a priority sector as it generates jobs and employment. USIBC can play a helpful role in guiding U.S. companies to India, while supporting various policy initiatives that will enhance India's reputation as a major manufacturing and investment hub.
Successful implementation of India's policy supporting Special Economic Zones (SEZs) is essential – particularly in light of the Nandigram and Singur tragedies. USIBC must work with Indian authorities and U.S. companies to fully grasp the promise, potential and purpose of the newly-announced National Manufacturing Policy and to tweak industrial promotion policy where shortfalls are occurring - to ensure "soft-landings" for our member-companies, while assuring fair treatment of locals.
USIBC will work to develop a National Investment Policy where federal and state governments should be the signatory on mega projects with joint accountability and enforcement as well as advocate for consistent and predictable manufacturing policy and regulatory regime to create a secure investment climate.
Media & Entertainment - The vibrant media and entertainment industries of the U.S. and India are known throughout the world for their content and technology. U.S. and Indian studios – Hollywood meets Bollywood – are collaborating now more than ever and the Indian media and entertainment industry continues to experience enormous growth, despite the global economic crisis. Both sides, however, must do more to implement policies that unleash entrepreneurship and foster innovation. Most importantly, India must do more to protect intellectual property, lower barriers to trade and investment, and create business environment that encourages international collaboration and protects creativity.
Real Estate - With price adjustment and consolidation the present watchwords of this industry, it is all the more important for India to adopt policy that allows foreign direct ownership of existing real estate. USIBC will continue to advocate this opening in 2010, consistent with its goals to bring more transparency and predictability to the Indian real estate sector, including in the areas of stamp duties, title assurance, and intermediation of capital.
Retail - Making India's farm-to-market supply chain more efficient can only be accomplished by the gradual, full-entry of organized retail. Foreign Direct Investment caps in the retail sector should be lifted, so as to leverage the full capacity of the private sector to drive a supply chain build-out and transfer skills in industries ranging from agricultural procurement through retail management.
Transportation Infrastructure - The current five year plan calls for $514 billion in upgrades to India's crumbling roads, ports and airports -- with about two-thirds of the investment coming from the private sector, while the next five year plan outlines $1.7 trillion in infrastructure spending.
The public funding shortfall indicates the prominence that the private sector will be playing in this massive infrastructure build-out and underscores the point that Indian policy formulation needs to calibrate in order to fiercely compete for its fair share of capital.
Physical infrastructure needs immediate attention to keep the economy growing. Presently, the GOI is suggesting the Public Private Partnership model for faster delivery of projects i.e. water, ports, rail connections, freight corridors, airports and security infrastructure. All of this requires massive FDI and private sector participation, presenting an enormous opportunity for US industry. Models of public-private partnerships (PPPs) will need to be tested and proven to develop India's airports, ports, roads/highways, and railways. These models must include guarantees against the political risks of changes in contracts and government levies. Development of viable models, demonstrating returns on investment, will need to be profiled and successfully promoted to promote a greater level of participation by US industry.
In 2010, USIBC will continue to advance its "flagship" Initiatives:
Green India - In September 2009, USIBC co-hosted, with the Confederation of Indian Industry, the second annual Green India Summit in New Delhi. Green India explored the opportunities and challenges in India's clean energy and clean water sectors, and showcased U.S. Technologies that can help India meet its ambitious needs.
Coalition for Healthy India - USIBC's Coalition for Healthy India (CHI) will continue to promote advancement, quality control and IP Protection in this essential industry, and will remain vigilant against any back-sliding by India towards compulsory licensing. CHI's objectives will be achieved by highlighting the need for affordable access to the latest and best treatments for Indian patients, featuring 'world-class' best practices applied by U.S. Pharmaceutical and Biotechnology companies.
USIBC Strategic Trade Initiative - The Obama Administration plans to move forward with the Bilateral Investment Treaty (BIT) with India, though the US will first review its own "model text" prior to launching negotiations with India, or any other country. Support for BIT talks remains strong within the Indian government, as well as with private sectors in both countries. Achieving a BIT with India will benefit investment flows between our countries, creating jobs on both shores. USIBC will be the U.S. private sector convener of this important initiative.
Hollywood-Bollywood Initiative - USIBC led a high level Executive Mission to the 10th Anniversary of the FRAMES Media and Entertainment Conference in Mumbai, India from February 17-20, 2009, which featured the participation of famed actor Danny Glover, supported by Corporate Sponsor, Intel Corporation. USIBC has laid out an aggressive agenda for 2010 to stem the scourge of DVD piracy and strengthen U.S.-India media and entertainment collaboration.
For a visual roadmap please view the USIBC 2010 Work Plan .