As the contours of a new, improved partnership between the US and India unfolded before the world on the second day of American President Barack Obama's visit to India, the US president, on Monday, moved ahead with scaling up the India-US economic partnership which he said "was defined by so much untapped potential" between the two biggest democracies.
Addressing an India-US CEO summit hosted by Prime Minister Narendra Modi, Obama committed a $4-billion financial package to set the ball rolling and said the two countries would work together to develop new technologies to help India leap forward.
Obama said that his visit was not only about symbolism but substance as well and a vision of greater trade, investment and a stronger economic partnership.
Modi, on his part, promised an open business environment, predictable tax regime as Obama raised issues of trade barriers and intellectual property while seeking ease of doing business in India.
The financial package announced by Obama comprised a $2-billion commitment by the US Trade and Development Agency for renewable energy projects in India.
The Overseas Private Investment Corporation will lend $1 billion to small and mediumsized enterprises in underserved rural and urban areas of India. Besides, the US Export-Import Bank would finance $1 billion in exports of 'Made-in-America' products to India.
Obama pointed out that while US-India trade had jumped by 60 per cent to $ 100 billion a year it was still way behind the USChina trade figure $560 billion.
He said there was a potential for greater trade between India and the US as currently India accounted for a mere 1 per cent of American exports even though it had over a billion people. Similarly, India's exports to the US comprised less than 2 per cent of the total overseas goods coming into the US.
At the same time, Obama sought consistency and simplicity in the tax and regulatory environment in India and resolution of issues relating to intellectual property rights to significantly increase trade and business between the two countries.
Obama said there was huge scope for improving infrastructure in India and enhancing the road network and broadband connectivity will help the business grow significantly.
"There is great interest on the part of US companies to find consistency, clarity, greater simplicity in regulatory and tax environment in India. If that occurs I think we are going to see a lot more business in India. That is consistent with many of the reforms Prime Minister Modi has articulated," he told the meeting of select group of CEOs.
Obama said Modi has brought new energy and vigour in redesigning the architecture in India to facilitate greater growth and investment.
According to the American president, US exporters are concerned about issues like intellectual property rights as the US economy was increasingly becoming a knowledge-based economy. He said absence of an effective IP protection in India was affecting business sentiment. "We tend to operate at the higher ends of the global value chain," he added.
Modi asserted that his government has removed some of the excesses of the past and said we will soon address the remaining uncertainties, an apparent reference to the retrospective taxation law of the previous government that put off global investors.
"You will find an environment that is not only open, but also welcoming. We will guide you and walk with you in projects. You will find a climate that encourages investment and rewards enterprise. It will nurture innovation and protect your intellectual property. It will make it easy to do business... You will find a tax regime that is predictable and competitive. We have removed some of the excesses of the past. We will now address the remaining uncertainties," Modi said at the USIBC meeting.
"In the past eight months, we have worked tirelessly to fulfil the mandate (of the people)-not just to increase our economic growth," the Prime Minister said. He pointed out that the business sentiments in India were among the strongest in major Asian markets and consumer confidence has turned positive after three years.
"The growth in eight core sectors of economy has increased sharply. Inflation is at a 5-year low. 110 million new bank accounts have been opened in the last four months. Investments from the US have jumped by 50 per cent in first six months of my government," Modi said.
"And I know that some of the pledges made in September in Washington have begun to flow in. Yes, I do keep track of these things," he said, as the audience broke out in applause.
Sources said later five CEOs spoke for two minutes each, followed by an open discussion where the other CEOs got an opportunity to air their views.
Reliance Industries Chairman and Managing Director Mukesh Ambani covered agriculture, innovation and skill development. Biocon Chairman and MD Kiran Mazumdar Shaw highlighted pharma and IPR issues plaguing the business relationship between the two nations.
ONGC Chairman and Managing Director Dinesh K. Sarraf talked about India-US not having a free-trade agreement (FTA) hampering import of LNG. Reliance Group head Anil Ambani talked about Indo-US collaboration in solar power while Essar's Shashi Ruia spoke on STEM initiative in the US. Cyrus Mistry of Tata Sons and David M Cote from Honeywell co-chaired the high-profile meeting.