“India and US are natural allies” March 2018 issue

“India and US are natural allies”

The engagement between US and India, both at government and business levels, has grown significantly over the last few years. In fact, the US Administration under President Donald Trump has recognised India as a foremost foreign policy priority. The Dollar Business caught up with Katherine B. Hadda, Consul General at the US Consulate General in Hyderabad, to understand the dynamics of the ever-evolving relationship between the two largest democracies of the world.

Interview by Ahmad Shariq Khan | January 2018 Issue | The Dollar Business

TDB: How would you define the current state of US-India ties?

Katherine B. Hadda (KBH): During his recent visit to New Delhi, US Secretary of State Rex Tillerson described US and India as natural allies. And that’s exactly what I see on the ground, here in Hyderabad, especially in terms of our expanding trade relationship and people-to-people ties. Over 130 American companies are doing business in Hyderabad alone and most of the Indians I meet here have a meaningful connection with US. We continue to see incredible visa demand and enthusiasm on both sides. All this growth seems natural and there’s even more that we can do to realise the full potential of our strategic partnership. Given India’s size, diversity, entrepreneurial spirit, and powerful democratic system, US sees India as a great economic partner and strategic ally in the years to come.

TDB: What is the current level of bilateral investment between the state of Telangana and the United States?

KBH: Given the sheer scope and rapid growth of the investment flows between the US and India, it’s difficult to get a precise handle on the numbers. But we can safely say that about $3-4 billion in investments has come from the United States into Telangana, specifically. On the other side, India is one of the fastest growing sources of FDI into the United States in terms of the number of projects and employment generated. I believe that the total amount of FDI from across India into the US is now more than $11 billion. Some leading companies from the states of Telangana and Andhra Pradesh – including Cyient, Aurobindo and Dr. Reddy’s – have grown rapidly in US. I am excited to see that Mahindra plans to open manufacturing facilities in Detroit. I believe that these two-way investments will grow, given the commitments at the national and local levels to encourage investment and entrepreneurship.

TDB: What are your thoughts on India’s pro-FDI stance and improved ease of doing business ranking?

KBH: Based on the enthusiasm from American companies opening and expanding operations in Hyderabad, the effects of business-friendly national and state-level policies are definitely being felt. This is something that the World Bank agrees with and has thus elevated India’s place in their ease of doing business rankings. Today, more than 600 American companies operate in India.  It’s remarkable to think that not even 20 years ago, two-way trade between our nations was less than $20 billion per year. By the end of 2016, it had grown by more than 500% to an annual $115 billion. I think the number of American businesses that are taking to increase their footprint in India speaks for itself.

 

"Healthcare, travel and agribusiness are ripe for greater collaboration"

 

TDB: How do you see the growing culture of startups in India? How can both sides collaborate on mutually beneficial propositions?


KBH: I’m fortunate to be in a part of India that has set a standard for how to facilitate and incubate a startup culture. It seems almost every day I meet an entrepreneur with a big idea and the structural support to make it happen. Obviously, the biggest sign of how closely aligned our two governments are on support for entrepreneurship is the recently held Global Entrepreneurship Summit (GES). And, my team at the Consulate and I know that the governments of India and Telangana are committed to ensuring that we all harness the energy that the GES brought in, now even after the Summit has ended, to keep the momentum going with events that promote entrepreneurship, especially for women, and highlight both US and India as ideal environments to grow businesses. 

TDB: Other than information technology, R&D and defence, what sectors offer potential for collaboration?

KBH: The sheer size and diversity of our two economies demand that we do more to realise the full potential of our commercial partnership. There are many sectors that we believe offer promising opportunities for growth and synergies. One of these is energy. Last year, in early October, I was fortunate to witness the arrival of shipments of US crude oil to India at Paradip Port in the state of Odisha. This was the first such shipment to India since the United States stopped oil exports in 1975, and follows recent commitments to US oil purchases by Indian Oil Corporation and Bharat Petroleum. This was a significant milestone in the growing partnership between the United States and India in the oil and gas sector, and it will enable India to diversify its suppliers and bring down oil prices for businesses and consumers. Beyond energy – including fossil fuels, renewable, and nuclear energy – other sectors ripe for expanded collaboration include environmental technologies, travel and tourism, healthcare and agribusiness.

TDB: President Trump’s ‘America First’ stance has been a cause of concern for many major economies. How do you expect it to impact India?

KBH: It is important to remember that the US maintains one of the lowest average applied tariff rates in the world and is one of India’s biggest trading partners, purchasing close to 20% of India’s total goods and services exports. President Trump’s focus on free, fair, and mutually beneficial trade aims to highlight areas in which the United States commitments to free trade and open markets have not been reciprocated by some of our trading partners. It is also worth noting that India’s nearly $30 billion-dollar trade surplus with the United States is its largest trade surplus with any country.

TDB: The latest developments in the H1-B US work visa system suggest that it is being made a merit-based one. What is the latest on this?

KBH: There are no immediate changes to the H1-B visa programme and individuals with valid H1-B visa are free to travel to the United States. The Executive Order calls for proposals of reforms to the H1-B visa programme. We are not in a position to prejudge the outcome of the review or speculate on any future changes. This review is comprehensive and not targeted to a specific country or sector. 

TDB: What, as per you, are the tariff and non-tariff barriers that impede seamless cross-border flow of services?

KH: United States and India are looking at working together to improve the ease of doing business and increasing bilateral trade. Services trade is incredibly important to both our nations. NASSCOM estimates that US purchases over 60% of India’s services exports. In fact, in 2016 alone, this amounted to nearly $15 billion. India has proposed a broader agreement on services trade in WTO in Geneva, and the US and others are looking at how we might engage in a substantive dialogue to improve this on a global level.

TDB: President Trump has gone all out to promote brand America. What makes US an attractive investment destination for Indian businesses?

KBH: We are proud that we have expanded bilateral trade to a record $115 billion, and two-way investment to $40 billion. For Indian companies, the United States offers a unified, highly-developed and prosperous consumer and business market of some 320 million people and hundreds of thousands of companies, with many more markets and consumers accessible from the US through free trade agreements. We have a highly-educated workforce and excellent infrastructure. Add to this, there is the advantage of low-energy costs and a predictable legal and regulatory environment. We welcome the interest and investment by Indian companies, which creates jobs and prosperity for both.

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