Atlantic Council Proposes Recommendations for India

In its report The Sino-Indian Clash and the New Geopolitics of the Indo-Pacific authored by the South Asia Center of Washington-based Atlantic Council made a series of recommendations to help India meet security challenges.

Highlights of the Report authored by Robert A. Manning and Bharath Gopalaswamy, as reported by Live Mint are:

  • India should propose regular India-U.S.-China talks at least on an annual basis, perhaps on the margins of the G20 or the East Asian Summit meetings aimed at minimizing the risk of misperception or miscalculation.
  •  India and the U.S. should enhance joint maritime patrols in the Indian Ocean.
  • United States and India must boost bilateral security cooperation in the Asia-Pacific.
  • India should also seek assistance from Japan and the United States in developing its indigenous shipbuilding capabilities and should consider permitting Australia to join the Malabar exercises to resurrect the initial Quadrilateral grouping.
  • India should improve its carrier aviation capacity, which will help maintain sea control in the Indian Ocean.
  • The United States can play a major role in helping India modernize its unmanned aerial vehicle fleet.
  • India must seek to improve its space surveillance capacities. India already possesses a developed space program which it must utilize to serve practical military needs.
  • India should establish forward bases to advise the militaries of neighboring countries. India could set up a brigade for each South Asian nation (other than Pakistan), which would take on the responsibility of training and advising the militaries of those countries.
  • India could also create a satellite campus of the National Defense Academy, or an entirely new academy, to train greater numbers of Bhutanese/ Nepali/ Bangladeshi/ Sri Lankan troops in India.

The report noted that as a democracy and a committed market-oriented economy, India appears more focused than China on the rules-based global order, while trying to build a larger role and expand its voice and influence within it.

Flags of US and India

November 11, 2017   No Comments

India Improves Investor Appeal

You may want to take a fresh look at business opportunities and investments in India, if a new World Bank report is to be believed.

In November 2001, Goldman Sachs published a landmark paper where they identified India, along with Brazil, China, and Russia as the four “BRIC” economies that the world needed to watch. Many companies and investors began investing in these countries.

In 2002, the World Bank launched a project to rank the Ease of Doing Business in countries across the world. For well over a decade, more than 135 countries ranked better than the world’s largest democracy — India continued to be stymied by red tape, limited infrastructure and an army of bureaucrats who seemed to revel in creating complex, conflicting, and even arbitrary rules. India ranked worst among the BRICs and many companies mitigated their enthusiasm for India as a result. Persistent players such as Abbott, Accenture, Boeing, Coca Cola, Cummins, Deloitte, Exxon Mobil, GE, Hewlett Packard, Mylan, Oracle, PepsiCo, Vodafone and Western Union thrived despite some setbacks.

In our consulting, we always advised clients to look at specific Indian states, rather than the entire subcontinent when locating sales offices, subsidiaries, or manufacturing plants; some states welcomed businesses while others did not care. For the first time in India’s 67-year-old democracy, the leader (Chief Minister) of a state was elected as Prime Minister in 2014. One of Prime Minister Narendra Modi’s first goals was to improve India’s business environment.

The latest report from the World Bank, “Doing Business 2018“, published this week, shows that India made important reforms in six of the eight areas that the Bank measures for its report. Small economies can pass reforms relatively easily and it is important to note that Nigeria and India are the only large economies to make significant improvements as shown in this table:

Table

To global companies and investors, it is even more important to note that India jumped by 30 ranks overall to go from 130 to 100 and leapfrogged over Brazil, which is stagnant at 125. Such an improvement in just three years since the new government took over is quite remarkable. The juggernaut of the BRIC countries is China and it is currently ranked at 78. If Modi’s government can keep up the momentum, it is not inconceivable that India might vault ahead of its autocratic neighbor in three to five years.

We often help clients to start a new company or office in India and that process has improved considerably. Getting credit and obtaining construction permits for a business has also become easier according to the World Bank’s research. Minority foreign investors in India felt vulnerable in the past but new procedures protect them a bit better while enforcing contracts might also become easier once the new National Judicial Data Grid starts paying results. Paying taxes electronically is becoming the norm and import of goods is being streamlined with more and more online functions for customs clearance.

Does this mean that India is an easy place to do business now? Not at all. The World Bank only measures a few criteria. Foreign companies have many challenges in India: the weather, the pollution, the current government’s tendency to place non- tariff barriers, even occasional price controls, and most importantly the illusion that they can readily understand India, just because they can understand their Indian-American physician.

Skeptics may ask, will progress continue? What if Modi’s party loses the next general election, scheduled in 2019? One major initiative that cannot be rolled back is that the states of India were encouraged to compete with each other for foreign and domestic investment. State leaders in Andhra Pradesh, Telangana, Maharashtra and at least seven other provinces and territories have led the charge in improving their own attractiveness. This genie cannot be put back in the bottle and we anticipate that up to 20 of India’s 29 states will join the race shortly.

If you have questions about how your company can do better in India or if you want to take a fresh look, Contact Us or drop me a note here on Linked In.

November 2, 2017   No Comments

India and USA Are Natural Allies says Tillerson

U.S. Secretary of State Rex Tillerson arrived in India as part of a multi-stop tour across the Middle East and South Asia. He had discussions with Prime Minister Narendra Modi, and  India’s minister for Foreign Affairs Ms. Sushma Swaraj. Tillerson and Swaraj stressed the close relationship and shared values between the two countries and pledged to work closely on matters of security, and also to enhance defense and economic cooperation.

The US Secretary of State, Mr. Rex Tillerson calls on the Prime Minister, Shri Narendra Modi, in New Delhi on October 25, 2017.

The US Secretary of State, Rex Tillerson calls on Prime Minister Narendra Modi, in New Delhi on October 25, 2017

Tillerson mooted a larger role for India in stabilizing the economy of Afghanistan, and pledged American support to fight terrorists. “In the fight against terrorism, the United States will continue to stand shoulder to shoulder with India. Terrorist safe havens will not be tolerated,” he said.

Tillerson expressed concern that extremist groups could threaten the security of Pakistan. “We also are concerned about the stability and security of Pakistan’s government, as well as that these terrorist organizations have enlarged their numbers, enlarged their strength and their capability,” he told reporters.

While recognizing India as a key partner in the face of what he considers as China‘s negative influence in Asia, Tillerson reiterated that India could play a wider role in the region, reports Voice of America.

“The United States supports India’s emergence as a leading power and will continue to contribute to Indian capabilities to provide security throughout the region.” He said Washington was willing to provide New Delhi with advanced technologies for its military modernization.

“We also look forward to further cooperation in the broader Indo-Pacific region as we both promote a rules-based approach to commerce, and a transparent and sustainable approach to economic development,” he said.

October 27, 2017   No Comments

China Expert Lauds India’s Future

China has long been the real engine behind the BRICS but with its own growth slowing now values the concept as a diplomatic forum, says an article in Forbes, written by Hong Kong-based China expert, Douglas Bulloch. The key problem with BRICS has always been that there is little that unites all its member countries aside from a once-shared propensity for high rates of growth, the article adds.

The upshot is that China has huge amounts of infrastructure and an economy that must now service enormous amounts of debt. The staggering GDP growth figures they have achieved over many years have yet to register the consequences of all that investment and if much of it generates little or no return, the consequent write-downs will weigh down on China’s GDP figures for years to come. Some estimate coming write-downs in excess of 35% of GDP, which would mean China’s economy is actually much smaller than its reported GDP.

India, on the other hand, registered a growth rate higher than China last year, and while India’s economy is much smaller than China’s right now, in contrast to China it has a great deal of catch up growth ahead of it, and–again unlike China–has a government with an appetite for structural reform as a key driver for future growth, rather than debt-fueled investment and exports.

Modi at BRICS Summit 2017

Forbes: China, with its enormous debts, closed capital markets, asset bubbles and increasing communist party interference in the economy would look like an entirely different kind of investment prospect than India, with its greater growth potential, favorable demographics, open and pluralist society and reform minded government. Indeed, apart from both being large economies it’s hard to imagine anyone putting the two economies in the same category anymore.

India looks the better bet.

 

 

October 9, 2017   No Comments

Regional Languages Drive India Smartphone Sales Further

With nearly as many smartphone users as the U.S. has people, India is already one of the world’s hottest mobile markets, with America’s Apple, Korea’s Samsung, China’s Oppo, Vivo and Xiaomi jostling for market share with Indian brands such as Micromax.

Nubia Smartphone

India’s 300 million smartphone users could grow by more than 50% in the next few years, reports CNN Tech giving reasons for this:

  1. 1 billion Indians do not yet have a smartphone — a huge market opportunity.
  2. More than 66% of India’s 1.3 billion people still don’t have access to the Internet, and when they do so over the next decade, it will likely be through mobile devices. “Mobile has already become the primary device from which users access the internet,” says Shobhit Srivastava, an analyst at Counterpoint Research, a global industry analysis firm headquartered in Hong Kong.
  3. India has many regional languages, and many of the country’s newest mobile users are discovering the Internet in one of them. “One of the major reasons the smartphone hasn’t been able to penetrate rural or [smaller] cities is because it’s all in English. You need to have the regional languages, and a lot of players have understood that. They are investing in putting regional languages in their smartphones, turning this challenge into a differentiating factor for themselves,” Srivastava added.
  4. India has more than 100 smartphone brands catering to a variety of budgets.

October 4, 2017   No Comments