Moderated by Rick Badie
India, led by its prime minister, wants to chart a better path for the country’s economic growth, an initiative the Atlanta-based consul general of India says regional businesses and investors should embrace. In a related column on global commerce, an international trade executive explains the importance of “trade promotion authority” legislation to economic recovery in Georgia and the nation.
Invest in India
By Ajit Kumar
The outcome of a historic general election has rekindled international interest and restored global confidence in India. At a time of uncertainty and turbulence in the world, the new government in India, led by Prime Minister Narendra Modi, is seen as a positive development. There is unprecedented optimism about India’s rapid progress under Modi’s leadership.
India’s economic progress with strong economic fundamentals is not only a key factor in global economic stability, but a source of immense economic opportunity for the United States, notably the Southeast. India’s government is committed to removing bottlenecks to improve the investment climate, make it easier to do business, and develop India as a manufacturing hub. To give global recognition to the economy, Modi launched the “Make in India” initiative, urging investors to look towards India as not merely a market, but an opportunity for partnership.
"Make in India"(www.makeinindia.com) is the government's commitment, an invitation to all and a blueprint to turn the country into a global manufacturing hub. With a largely young and mostly educated population, India provides a skilled workforce available for hire at a competitive price.
As the nation’s manufacturing infrastructure and capacity for innovation is poised for phenomenal growth, new smart cities and industrial clusters are being developed in industrial corridors with connectivity. New youth-focused programs and institutions are dedicated to developing specialized skills. Infrastructure projects such as i-ways besides highways, port-led development, optical fiber networks, gas grids and water grids are getting a major push.
Shares of Indian stocks rose to record highs as the Sensex index gained 35 percent in late 2014, making it one of the top performers in the world.
The Wall Street Journal recently reported investors around the world were giving Modi rock star treatment as money managers poured $16.5 billion into Indian stocks. The International Monetary Fund predicted the country’s GDP growth would go from 5.6 percent in 2014 to 6.4 percent in 2015. U.S.-India trade has reached more than $100 billion, and the goal is to increase it to $500 billion in the next five years.As an outcome of the very successful visit of Modi to the United States — the U.S.-India Business Council estimates an investment of $41 billion by American companies in next three years in light of the prime minister’s visit — U.S. companies will be leading partners in developing Allahabad, Ajmer and Vishakhapatnam as “smart cities.”
Last month, the United States was “partner country” at the Technology Summit, where South Carolina Gov. Nikki Haley was the keynote speaker; her 10-day visit to India sought strong business and trade ties. The U.S. also will be a partner country in the Vibrant Gujarat Business Conference, Jan. 11-13.
The Southeast, notably Atlanta with its many important companies, can easily find more opportunities in India. Infrastructure is a trillion-dollar opportunity there. Companies like Coca Cola have announced $5 billion investment in India, while Hindalco, an Indian company, acquired Novelis of Atlanta for $6 billion in 2007.
In response to growing business opportunities between the Southeastern U.S., India chose Atlanta to open its Consulate for the Southeast in October, 2012. Several Atlanta companies are already investing and doing significant business with India.
With the Modi government’s reforms, investors in the Southeast have a golden opportunity to come “Make in India” and invest in the global powerhouse of tomorrow.
Ajit Kumar is consul general of India in Atlanta.
Authority boosts Ga. exports
By Jack Herron
Though many differences remain between President Barack Obama and congressional Republicans, one potential area of cooperation is international trade. Georgia needs the president to push Congress to pass Trade Promotion Authority legislation that gives him authority to negotiate free trade agreements.
According to the U.S. Chamber of Commerce, 38 million American jobs depend on trade. Roughly one in three manufacturing jobs depends on exports, while one in three acres of American farmland produces exported crops. In addition, jobs related to exports pay wages averaging 13 percent higher than jobs with no connection.
International trade will only become more important to America’s economy. Already, 95 percent of the world’s consumers and 80 percent of the world’s purchasing power lay outside the United States’ borders. With an additional 1.2 billion people expected to join Asia’s middle class by 2020, these numbers will continue to increase.
Global growth will increase demand for quality American goods and services, but our exports are much more competitive in countries with which we have trade agreements. Although U.S. free trade partners account for only 10 percent of global GDP, they purchase almost half of total U.S. exports. In countries where we do not have trade agreements, high tariffs prevent foreign consumers from purchasing more quality Georgia products.
Business Roundtable, an association of CEOs from leading American companies, found Vietnam applies tariffs of 30 percent and 20 percent to nuts and chicken cutlets, respectively. Malaysia applies tariffs of 50 percent to golf carts, and New Zealand applies 10 percent tariffs to carpets. These tariffs restrict Georgia’s ability to export to these markets, but would be eliminated by successful implementation of the Trans-Pacific Partnership agreement.
A report commissioned by the British Embassy in Washington estimates the successful implementation of the Transatlantic Trade and Investment Partnership would increase Georgia’s exports to the European Union by 31.5 percent, mainly in the automobile, paper products, chemicals, transportation equipment and aerospace sectors. The same report predicts that agreement would lead to the net creation of 24,000 jobs in Georgia.Congressional passage of the trade authority bill would allow Obama to conclude negotiations on the Trans-Pacific and Transatlantic partnerships, leading to decreased trade barriers and increased exports for Georgia.
Unfortunately, many countries not party to trade agreements with the U.S. lack level playing fields. International trade critics often state lax labor and environmental standards in foreign countries reduce production costs and encourage firms to outsource American jobs. This is a valid criticism and perfect example why Obama needs trade promotion authority.
When it writes authority legislation, Congress identifies goals it needs the executive branch to achieve in potential trade agreements, such as guaranteeing that trade partners abide by internationally accepted labor and environmental standards. Trade agreements force foreign countries to raise their standards, which levels the playing field and better protects American jobs.
In an unprecedented move, Obama is negotiating several trade agreements without trade promotion authority. Congress allowed the previous version to expire in 2007 and has not renewed it. This makes Obama the first president since Franklin Roosevelt to not have this crucial negotiating tool. American industry should applaud Obama for not allowing this setback to deter his trade agenda.
While congressional Republicans largely favor authority renewal, it will require a personal plea from the president to convince congressional Democrats to support this legislation. If Obama moves quickly on this issue at the beginning of the 114th Congress, he can boost exports, create jobs and secure an important achievement for his legacy. Important trade agreements like the Trans-Pacific and Transatlantic partnerships will lay the foundation for future American prosperity.
Jack Herron is director of international trade policy for the Embassy of Israel.
