On his first day in India, President Obama announced two measures that will warm the hearts of many American defense companies if further steps follow.

• Speaking to business executives in a 20 minutes charm speech, he promised to loosen export controls on American goods destined for India.  Many of these export controls have prevented U.S.  corporations from offering platforms that incorporate the latest technology developed for the U.S. Department of Defense or other American organizations. India for its part has expressed reservations about buying yesterday’s American technology. Israel, Russia, France, UK, Sweden and Italy have consistently offered current products and services to help India’s security needs; as a result Israel and Russia both see India as their largest defense customer and the two countries alternate as India’s largest source of military products in recent years. The loosening of the American controls will put products from General Dynamics, Lockheed Martin, L-3 Communications, ITT, Raytheon and many others in the running. So far Boeing has had a lead over all other American suppliers of defense products.

• There is also news that India organizations such as the Vikram Sarabhai Space Centre (part of ISRO), the Defence Research and Development Organisation (DRDO), and even Bharat Dynamics Ltd (The government owned defense company that makes missiles) are being removed from the US Department of Commerce’s “Entities List”.  DRDO labs removed from the entities list include India’s Armament Research and Development Establishment, Defense Research and Development Laboratory, Missile Research and Development Complex and the Solid State Physics Laboratory. For American companies, this list is a virtual embargo on shipping anything (without some very special permission, that is rarely if ever granted).  This is  good thing for all concerned.   DefenseWorld reports that DRDO is already hungering for possible lucrative offset contracts that may be offered to its labs by foreign suppliers who are required to spend 30% or more of large new orders on enhancing India’s defense capability.
• Note that organizations working on India’s “strategic” nuclear program, such as the Bhabha Atomic Research Centre  (BARC)in Mumbai remain on this embargoed list. The India Expert does not expect BARC and other Department of Atomic Energy groups (IGCAR etc) to come off the entities list any time soon.  (Of course the nuclear utility, NPCIL, is not on the entities list).

American investors should well be aware of the emerging economies growing rapidly on the continent of Africa. Indian industry has already put into action a collaborative effort with the national government to develop strategies toward competing with China and European nations for capturing these business growth opportunities, particularly in East Africa.

India’s Commerce and Industry Minister Anand Sharma accompanied a delegation representing 187 Indian companies to “Namaskar Africa,” meetings held October. 14-15 in Nairobi, Kenya. This event involves a series of opportunities promoting India-Africa business networking organized by the Federation of Indian Chambers of Commerce and Industry (FICCI).

Part of the strategy has Sharma meeting with the top Kenya government representatives – President Mwai Kibaki and Prime Minister Raila Odinga. Additionally, FICCI President Rajan Bharti Mittal, vice chairman for Bharti Enterprises, leads the Indian business delegation that has expressed a strong interest toward developing telecom business opportunities in Africa.

India currently experiences bilateral trade of $30 billion throughout Africa. Efforts are underway to expand trade into East Africa where trade revenue is much lower at $4 billion. The countries with representatives meeting with Indian counterparts include Uganda, Ethiopia, Rwanda, Kenya and Seychelles.

A challenge toward successfully competing has brought together both industry and government leaders in India in order to devise a plan that will “level” the field. In a study released by FICCI, one strong competition challenge presents itself because Chinese companies are government-owned with far greater capital at hand for investment than any privately owned Indian companies. According to the report India is attempting to counter the offers from Europe and China by extending credit lines to African companies. “This will help source capital goods from India,” Mitra said in the report.

Africa has experienced  5.4 percent economic growth throughout the past decade and the outlook is rapidly improving. The FICCI report further states that: “For the first time in over three decades, a large number of African countries have begun to show sustained economic growth at the rates that are similar to the rest of the developing world and exceed that of most of the developed countries. The study discovered several areas of opportunity for Indian companies in addition to telecom including healthcare and pharmaceuticals, road and railway construction, general construction, power and mining.

Dr. Manmohan Singh  of the Indian National Congress party was sworn in as India’s Prime Minister today, after the general election results of last week. Included in his cabinet were returning ministers Pranab Mukherjee (Foreign Minister), Sharad Pawar (member of alliance party NCP), A K Antony (former Defense Minister) and P Chidambaram (most recently Home Minister).

New entrants in the nineteen member cabinet included S M Krishna, Ms. Mamata Banerjee (of the West Bengal based Trinamool Congress), Ghulam Nabi Azad, Veerappa Moily and C P Joshi. Others are Sushilkumar Shinde, S Jaipal Reddy, Kamal Nath (former Commerce Minister) , Vyalar Ravi, Meira Kumar, Murli Deora, Kapil Sibal, Ms. Ambika Soni, B K Handique, and Anand Sharma are also among those inducted into the Cabinet.

The council of ministers in India is usually larger than 50, including junior ministers. Media reports indicate that the expansion will occur on Tuesday. Congress Party leader, Salman Khurshid and National Conference President Farooq Abdullah will be among about two dozen who may be inducted. Other reports indicate that returning ministers may include Vilas Muttemwar and Mukul Wasnik.

While the congress party had 206 seats of its own in the  Lok Sabha (lower house of Parliament), its United Progressive Alliance (UPA) coalition won 262 seats in the 543-member national parliament, just 10 short of the 272 needed for a working majority. The alliance quickly garnered pledges of support from independents and others to take its voting strength to 322.