Modi's US visit and its biz connotations
While the Obama administration is all set to give a red carpet welcome to Prime Minister Narendra Modi, the business sector in India is both excited and hopeful that the trip will yield positive results for the Indian economy.
Modi's much touted US visit has generated a lot of expectations from both sides. However, the Indian PM must address a few major concerns when he meets US President Barack Obama.
Resolving the visa and immigration Issue
The H1B visa issue will be closely watched by the Indian information technology sector. US accounts for 61 percent of total exports of the Indian IT industry, and the US Immigration Bill in its current form puts restrictions on IT companies on hiring employees on H-1B visas, which are temporary work visas for non-immigrant workers in speciality occupations.
This has led to a higher number of H-1B visa applications by Indian IT majors such as Infosys, TCS and Wipro getting rejected - to the benefit of emerging markets like Philippines and Indonesia.
Foreign-born workers under the H-1B visa programme can typically be employed for three years by a sponsor company and apply to stay longer, but the use of the programme came under the scanner after the US Senate debated comprehensive immigration reform.
The industry has high hopes that Modi would provide a platform for positive discussions on the long pending immigration and visa issues.
India, US bilateral trade
Narendra Modi's meeting with American President Barack Obama is also expected to impart new momentum to the strategic partnership between the two countries. India has received about USD 12 billion in FDI from the US companies during April 2000 to March 2014.
In order to further strengthen the relations on the economic front, Modi's visit may see some forward movement on global free trade agreement (FTA) deadlock.
The business lobby also expects Narendra Modi to revisit its stand on the policy of 51 percent FDI in multi-brand retail that was passed by the outgoing UPA-2 government. Though, FDI in fields like education and online multi-brand retail remains fully closed, other sectors like insurance, pension and defence have been partially opened up.
The news of French retail giant Carrefour shutting down its five cash and carry stores in India, couple of months ago, has dealt a severe blow to the optimism around foreign investment in India. The Indian industry keenly wants revision in the norms of mandatory sourcing requirements from local small and medium enterprises to allow entry of multinationals in the country.
While industry watchers believe that there is an urgent need to simplify labour laws and taxation to attract American businesses into India, it will be interesting to see as to how the Modi government in India will push ahead on reforms.
While global economic powerhouses want the successful conclusion of the WTO Bali Agreement, India's stand on the same has not been well appreciated. Major economies, including the US, have criticised India for its hard stance. The WTO member countries were not able to arrive at a consensus by the July 30 deadline due to strong opposition from New Delhi.
Amid India's tough posture over the food security issue, Modi's visit might bring optimism of finding a solution. Meanwhile it is also expected that the visit might bring an early conclusion of the Totalisation Agreement with America under which the expatriate in either country need not contribute to social security schemes of the host country.
Breakfast meeting with corporate honchos
Narendra Modi's upcoming monumental first visit to the United States will begin with a breakfast meeting with a select group of 10 CEOs. With economic development his key priority, Modi is expected to interact with the American business community in both New York and Washington DC.
In his interactions with top American CEOs, a significant majority of them are likely to be from Fortune 200 and almost all of them from Fortune 500, Modi would be rolling out his policy of “red carpet” and not “red tape” to invite them to come, invest and “make in India”.
In New York, Modi will have one-to-one interaction with five key corporate and finance leaders with an aim to interest them to invest in India. He will be meeting with corporate leaders like Ginni Rometty of IBM, Marilyn Hewson of Lockheed Martin and Jeff Immelt of GE.
Modi will also meet with Michael Bloomberg, mainly because of his involvement in smart city projects. The Prime Minister is interested in seeking his views on the ambitions 100 smart cities project that his government has undertaken after coming to power in May this year.
Modi's meeting with the US business stalwarts will hold a lot of significance since it will be instrumental in deciding the direction of PM's pre-poll promise on job and employment.
India has time and again accused the US of taking "unilateral measure" to pressurise countries to accept Intellectual Property Rights (IPR) protection beyond WTO obligations.
While the Obama administration had been strongly criticising India's investment climate and IPR laws, especially in the pharmaceutical and solar sectors, India has always maintained that its Patents Act related to pharmaceutical products is not discriminatory against foreign companies.
Modi's visit with Obama will also be important for the Pharma industries amidst expectations that India’s stand on intellectual property regime remains assertive and firm. Indian Pharma sector is hopeful that the PM's visit will withstand pressures from the Obama administration over concessions on IP issues.
The euphoria around Narendra Modi has encompassed all and sundry. If the new government, which has recently completed 100 days in office, has to deliver on its promise of ‘acche din’ (good days), it must ensure that Prime Minister’s visit to US brings gains like big ticket investments in the country.
The meeting between a superpower and an emerging power is bound to have major business connotation for both the nations.