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President
Message  With the Indian Parliament according green signal to the nuclear deal, India-US economic engagement is entering a new and vibrant trajectory. The acclaimed deal, which had attracted intense debate at various quarters, will open up a groundswell of business opportunities both in India and the US. It is instructive to have an idea about the broad contours of those emerging openings.
The prime reason for India to go for the deal is the energy security. Lack of power has dragged India’s industrial growth. The power deficit continues to be huge and year after year, its backlog is mounting. Despite the avowed objective of the government to augment hydel, thermal and alternative sources of power, there are constraints for increasing it. If past experience is any guide, the private sectors capacity to fund such large capital intensive projects with long gestation period, has met with only partial success. Efforts to unveil ultra mega thermal projects having over 4000 MW generating capacity is going at a snail pace on account of the genuine difficulties in procuring land and environmental considerations. Tapping alternative sources of energy, could at best a supplementary source, particularly for meeting the burgeoning domestic energy demand. It is a happy augury that a strong political will has emerged to seriously look at the nuclear option as a sustainable one. It is gratifying for IACC that it has lent strong support to the Government to garner the political strength to go for the nuclear option.
Major spin off of this development will be on manufacturing sector, which has yet to achieve its potential. Industry, that includes manufacturing, should grow at over 12 percent on a sustained basis for the GDP to peak at 9 percent. Availability of uninterrupted and quality power can revolutionize India’s manufacturing sector, particularly electronic hardware industry. There are many global companies, which are keen to relocate their production bases to India. Constraints on power supply are a major reason for them draggling the feet. It is expected that their India plans will be revived on the prospects of augmented power. The underlying motivation that these enterprises feel that India is the ideal destination for setting up hybrid or embedded technologies, where India’s inherent software advantage can combine with potential hardware capabilities, that can manufacture a variety of items at a cost advantage. Needless to say, the forward linkages of the nuclear power can impact every facet of the economy, be they infrastructure, finance, the way we trade power and the list goes on.
Now, let us look at the advantages from the US side. India has to import billions worth plant and machinery for installing the nuclear stations. Most of the world class manufacturers of the nuclear equipment are in US and they have started scouting India actively for selling their products. Significantly, some of the large Indian corporations are looking at partnering with the US companies for setting set up such multi billion projects in India. The surge in investment on account of the nuclear deal will lead to hectic activities in banking, components sector and not to speak of uranium imports by India, which also can be sourced from US.
Now, let us look at the impact of the nuclear power on the peripheral and tertiary sectors. Our reckoning is that exchange of experts between the two countries for commissioning and running the power plants will be more frequent. I can foresee a large number of US experts coming and stationing in India for commissioning and running the installations. That movement of experts in large numbers in both ways can re-write our respective immigration policies. Both the countries have to follow a relaxed regime that can facilitate quick movement of experts. I hope the categories of visas put in place to restrict the movement of people will be a thing of the past. In its wake, the US will be motivated to sign a Totalization Agreement with India to do away with double taxation of social security tax, which has been put on hold, mostly because of the unequal number of people moving from one country to the other (India having more number of persons working in US on account of the software boom).
Indeed, we have crossed the first and the major stumbling block. But, still we have to go a long way. Nuts and bolts and dynamics of the nuclear cooperation have to be further crystallized. We have to sensitize a large part of the industry and the general public the benefits of the deal in a language they understand. May I pledge the support of the IACC to carry on with that task in the same vigor and zeal that we have been espousing the cause of signing the nuclear deal.
Farokh Balsara | View President
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