Defence industry capability gap an opportunity for India, US ties

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    New Delhi: Communications and information technology minister Kapil Sibal on Monday slammed US firms for merely looking at India as a market instead of investing in critical sectors that could help increase the buying power of the bulk of Indians.

    Speaking at a conference organized by the Indo-American Chamber of Commerce, Sibal called for a change of “mindset” that would raise the level of the India-US partnership. He also criticized restrictive provisions in the new US Immigration Bill that are expected to hurt Indian information technology (IT) firms.

    Present at the event were representatives of US industry in India, including Pratyush Kumar, president of Boeing India, and John McCaslin, minister counsellor for commercial affairs at the US embassy.

    Referring to an assessment that India was a $100 billion defence and aerospace market with defence offsets accounting for another $30 billion, Sibal said this “is not going to increase the kind of convergence (between India and the US) we are talking about. It’s not going to do the kind of things the Indian economy needs.”

    Outlining his vision of a “new economic model” of cooperation, Sibal stressed the need for investments in critical areas like connectivity and manufacturing. The “real challenge” before India is to ensure jobs for its youth, and the only way for youths to get jobs is by investing in manufacturing, the minister said.

    With rising wages in China, manufacturing jobs were moving to India, he said. “The Japanese are very keen to invest in India. I don’t know why the Americans don’t. Lots of countries are willing to invest,” he said, naming innovation-driven Israel as one of the countries keen to put in money into India.

    “But American companies are not coming forward, they are only interested in selling their aircraft, they are interested in selling their defence equipment. That’s not the way to ‘converge’ in this partnership... you want to be true partners; you must look at our interests and participate in that because it will help your interests,” the minister said.

    The best way to help American investment and American trade is for Americans to realize that “it’s time for them to participate in the growth story of India, which is going to be the growth story of the 21st century,” Sibal said.

    Once known as “estranged democracies,” India-US ties have transformed in the past decade, with both countries now known as strategic partners. The US is the third largest source of foreign direct investments (FDI) into India. The cumulative FDI inflows from the US from April 2000 to March 2013 amounted to about $11.1 billion, constituting nearly 6% of the total FDI into India, according to figures from the ministry of external affairs.

    Slamming the US Immigration Bill, which is expected to be passed into law in early 2014, Sibal said, “You are a country that talks about liberalisation of the global economy and yet you are increasing the costs of our IT sector by trying to impose restrictions on people going to the US... I don’t think it’s the right attitude.”

    The Immigration Bill will double visa application-related costs for top Indian software services firms such as Tata Consultancy Services Ltd, Infosys Ltd and US-based Cognizant Technology Solutions Corp., which has most of its 162,700 employees in India.The visa reform, which has already been approved by the US Senate, is being reviewed and awaiting approval by the House of Representatives.

    If passed it its current form, the Bill will force Indian software exporters to remove professionals on H1B work permits from client locations in the US and force companies to file fewer visa petitions effective October 2014 as the cost per petition would go up by about $5,000.

    Earlier, McCaslin listed civil aviation, defence, environment, water, franchising, healthcare and medical equipment, transportation and infrastructure including roads, ports and railways, mining and mineral processing as some of the areas India and the US could partner in. Many of the US companies now looking to penetrate the Indian market were small and medium-sized firms with the aim of entering second tier Indian cities, he said.

    Defence industry capability gap an opportunity for India, US ties - The Economic Times
     
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