On Friday, February 26th 2015, the South Asia Center (Jackson School of International Studies) and Global Business Center (Foster School of Business) hosted a three-hour symposium. Panelists were experts from the government, academia and industry.
The welcome address was delivered by Dr. Sunila S. Kale, Director of the South Asia Center. She highlighted the Center’s commitment to teaching and expanding knowledge on South Asia, through a host of activities including such symposia, noting its role as a ‘forum for thoughtful debate, critique, and dissent’ on a range of issues concerning South Asia.
Panel I: Development Agendas and Legal and Commercial Frameworks
The first panel, featured Jonathan Bensky, President and CEO of Pacific Northwest Advisors, and Amrita Srivastava, a partner at Desh International and Business Law in addition to Ambassador Venkatesan Ashok. It was moderated by Professor Sunila S. Kale.
The Consul General of India, San Francisco, Ambassador Ventakesan Ashok, observed that a paradigm shift was developing in US-India economic relations. He outlined the geopolitical agenda and economic development policies of the current Indian government. He noted that the Indian economy has experienced 7.5% growth in the last year but that electronics manufacturing comprised only 25% of the GDP, which the government would like to increase to 45%. This is precisely why, he noted, the Indian government had launched Make in India, a national program focused on building manufacturing infrastructure in order to position India as a key electronics manufacturer in the international market. The Consul General observed that Make in India is the government’s flagship program that aims to build much needed infrastructure. These include: the Smart Cities program, which will facilitate the development of nearly 500 housing developments, since ‘affordable housing needs to accompany manufacturing’; the Digital India program (aimed at providing mobile connectivity to a billion people and as a result e-finance access); the Clean India program (to address the lack of sanitation facilities); the BPO operation for knowledge process outsourcing (for which the United States has already committed to a major partnership with India); and Renewable Energy Program (supporting solar and wind energy generation in addition to employing clean-cold technology in cooperation with the United States).
The second speaker, Jonathan Bensky, agreed with the Ambassador on the need for India to have a more prominent manufacturing sector, noting that India has a ‘head start for being a global center for small car manufacturing’. He then turned his attention to how India’s history of markets and bazaars offer it a distinct advantage over China where the private sector was relatively new in his opinion. He called Chandni Chowk, built by the Mughals in Delhi, the ‘first great shopping mall’ and noted that colonial policies too aided in the emergence of private enterprises such as Tata and Godrej which went on to be key market players in the post-colonial period. He observed that the protectionist policies of the Congress government in the early years too aided in the development of heavy investment infrastructure. In his view providing 1 billion people access to mobile phones and focusing on education as a major export (the single largest service exported by the country) should be the priorities of the Indian government for its economic relations with the United States going forward.
Lawyer Amrita Srivastava’s talk highlighted the challenges for entrepreneurs and businessmen in India. She noted that even though ‘bureaucratic hurdles’ had significantly decreased since the 1980s there were still a number of regulations in place that made it challenging for international companies to do business in India. As a result, she observed, that India was ranked 130 out of 189 economies for conducting international business. She compared the Indian regulation scenario with the United States, noting that businesses have to encounter certain regulations in India vis-à-vis reporting requirements and a lack of free market price that they do not experience in the United States. The state, according to Srivastava, played an important part in the implementation of these rules and one of the evident challenges in the past has been a lack of clarity on regulations. She cited the example of Apple, which despite trying for a year has been unable to open stores in the country due to some of these regulations. She ended by observing that we have yet to see, of course, how the Modi government regulations will play out for India-US economic relations.
Panel II: Firms and Entrepreneurs Across the US-India Border
The speakers on this panel were Srivats Srinivasan, Founder & CEO of Nayamode, Prashant Kamalapuram, Director, International Tax at Amazon and Joseph Benson, Regional Director – South Asia for Boeing Commercial Airplanes. It was moderated by Professor Christian L. Novetzke of the Jackson School of International Studies.
The first speaker, Srivats Srinivasan, who first moved to the United States for business school, spoke about his experiences as a ‘serial entrepreneur’ doing business in both the United States and India. Having experienced the ‘pleasure and pain’ of operating companies in two countries he was an advocate for India as a favorable place to do business. India, he noted, is ‘a land of a billion opportunities’, that it is a burgeoning center for production and development with the Make in India program further strengthening the country’s importance as a manufacturing hub comparable to China as a partner for the United States. Admittedly there are challenges of doing half-way across the world, Srinivasan observed, but he personally had not encountered bureaucratic hurdles as someone who had started quite a few companies, but, on the contrary, had received favorable treatment from the state, perhaps because of his IT background. Rather, he challenges Srinivasan ran into related to everyday logistics of operating a business in two countries where the time difference often called a communication lag and resultantly impacted productivity and efficiency.
The next speaker, Prashant Kamalapuram observed that as a start-up, Amazon is open to experimenting and India’s trillion-dollar market was a similar experiment for them. He noted that doing business in India was similar to the EU in that it was ‘like operating in 21 different countries’ and companies had to pay attention to a ‘myriad of laws’. There are several layers to federal and state law and many hurdles to resolving challenge. He gave the example of the Soch Bharat ‘federal service tax surcharge’ in 2014 where after receiving the notification of a change in law at 6:00 pm on a Friday evening they had four days of Diwali holidays in which they had to respond to the change in law.
The last speaker on the panel was Joseph Benson, of Boeing Commercial Airplanes, who noted that growth for his company is coming from emerging economies such as South-East Asia and India. He noted that there were a total of 1740 Boeing aircrafts in India which was a direct result of the growth of the Indian economy, and India is also where they have the largest forecasted growth of airplanes. The Make in India program, according to Benson, was critical for Boeing and its partners who in the past have sourced raw materials such as aluminum from India and are now looking to partner with world famous companies like Mahindra and Tata for manufacturing as well as helping train Indians in technical and business skills needed for Boeing’s operations there.
Panel III: Energy, Environment and Telecommunications in India Today
The final panel included Sumit Roy, Professor of Electrical Engineering, University of Washington, Meenakshi Rishi, Professor of Economics, Seattle University and Ranjit Bharvirkar, India Program Officer, Regulatory Assistance Project (RAP). It was moderated by Professor Abhinav Gupta of the Foster School of Business.
UW Electrical Engineering Professor, Sumit Roy, spoke primarily about the Digital India initiative, an important supporting component of the Make in India program. He noted that Digital India is an infrastructure service between provider and consumer but the social notion of it is one that broadband utility is a social right. In his view, this is an important question that societies and states around the world need to grapple with in order to reach a better understanding for how public-private partnerships need to be approached in such scenarios. He added that India probably has one of the largest numbers of cellphone service providers in the world, seven according to his last count. He ended with the important observation that electronics manufacturing is a tough market for India to enter for a host of factors.
Economist Dr. Meenakshi Rishi, the second speaker, noted that for the Clean India initiative ‘business as usual’ is not an option for the Modi government. Rishi pointed out that the lack of environmental laws posited a big challenge for the program. However, for those looking to invest in the Clean India program the good news was the lack of infrastructure which presents a compelling opportunity. She spoke specifically about carbon emissions in India that have been rising since the 1950s and the state’s pledged to bring the emission levels below 200%. She also noted that the government’s verbal commitment to double solar capacity in 18 months does not have any evidence of investments to back it up. She also observed that the ‘international situation of water scarcity is looming large’ and since ground water is drying the Indian government needs to revisit their policy regarding subsidies, which has wrongfully been favoring large farms since the Green Revolution, which has evidently failed.
The last speaker, Ranjit Bharvirkar, noted that the fundamental problem with the electric supply situation in India was not a technical one but a ‘personality crisis with the distribution center’. Bharvirkar observed that India still has to determine whether electricity is a business or a public service that is an important aspect of socio-economic growth. In his view, it was the inability to decide between the two, to determine where the public ends and the private starts, that is the main hurdle to universal electricity supply in India.