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The Rediff Interview/Amit Mitra, FICCI, Secretary-General
'Americans perceive Indians to be very smart'
September 30, 2005
Dr Amit Mitra, Secretary-General, Federation of Indian Chambers of Commerce and Industry, is on the board of directors of many companies in India, including Steel Authority of India Limited, GAIL (India) Limited, and Bata India Limited. He is also a member of the advisory board of the Unit Trust of India; member of the central listing authority established by the Securities and Exchange Board of India; and member of the Life Insurance Council.
He did his masters in economics from Delhi School of Economics in 1970 and then obtained a doctorate in economics from Duke University, USA in 1978. He has taught at major universities in the United States.
Mitra talks to Managing Editor Sheela Bhatt on how India can further business ties with the US and usher in a second green revolution.
"Now, Americans perceive Indians to be smart. The infotech revolution changed it all," he says.
How do you think will India be benefited after the prime minister's US visit?
The nuclear issue took the high ground because the US said that they would supply nuclear fuel to India. But there are many important economic dialogues that we haven't been talked about which FICCI is taking up. Firstly, the knowledge transfer in agriculture -- the first green revolution took place because of knowledge transfer from the US. We adopted Norman Borlaug's varieties of wheat in Punjab. So Punjab today can feed India even if all Indians start having only wheat.
Though we have agriculture universities, fertilisers and seeds, our farmers are going on producing only wheat and rice because of our pricing policy. We are not producing a wide range of agriculture products. We believe that knowledge transfer from the US will induce a second Green Revolution. We are still importing huge amount of oil seeds from Malaysia and Indonesia because we haven't diversified.
The world will soon move from petroleum to ethanol, which is derived from sugar. Brazil uses 30 per cent or more ethanol as fuel. We have to adopt newer technologies.
So what steps should the government take to initiate a second green revolution?
India and the US can collaborate on several fields. For knowledge transfer and research, India should create five more universities like the Pant University in Uttar Pradesh with the US collaboration. India should become a value-adding country in the agriculture sector.
Dabhol Power Corporation had held back all the power sector investment into India. India and the US should collaborate in the energy sector as the US has a tremendous capacity in power generation.
India also has to get the electricity act amended to revive the power sector. India will also witness a huge amount of exploration in the oil and gas sector. US-based companies have to their credit 80 per cent of oil and gas discovery in the world. In the infrastructure sector, ports and airports need to be developed.
US-based Raytheon has expertise in air control machinery so when we improve the infrastructure in 26 airports in the next five years, Raytheon could supply all levels of equipments.
But we have heard all these things before, beyond rhetoric, will there be any action?
Of course, there has been progress in several fields. There has been a huge increase in the number of flights from India to the US. Sahara and Jet Airways are planning to launch direct flights to the US. This will certainly improve business ties between the US and India. Our airports should be developed to accommodate this huge growth.
What are the areas covered in the Indo-US economic dialogue?
This includes seven areas. After the PM's the US visit, these areas have opened up. There is a separate dialogue called 'Energy dialogue.' Both are headed by (Deputy Chairman of the Planning Commission) Montek Singh Ahluwalia and his counterpart in the US.
What were the issues discussed in first round?
The government had discussions in high technology and biotechnology. We do not have the protocol in place for bio-technological transfers. An Indian who was doing doctoral research in Florida was arrested, as he was suspected of having sensitive information. Such incidents happen because we don't have a protocol in place for bio-technological transfers.
Till we define and put in place protocols, we cannot boost trade in biotechnology.
Krishna Ella, Chairman of Bharat Biotech, has prepared a complete paper for FICCI on this issue. The control structure in the US defence system is huge. There are controls of commerce department, state department and another controller for aircrafts.
Some of the joint ventures, with the US even need the approval of the Congress. US has withdrawn 750 licenses in high-tech area so we should now work in biotech, nanotech, advanced IT and defence. US should withdraw 2,000 licenses, some of which are of no use today.
Due to these restrictions, India has only $90 million of high-tech business with the US out of the total trade of $21 billion. In the defence sector, we are working on joint ventures, technology transfer, co-production and possible offsets. If we are buying aircraft of $1billion we need at least $ 300 million as offsets.
Which are the strong areas to develop trade between the US and India?
India has a strong knowledge base. We can improve trade in IT, entertainment, biotech, chemicals, pharmaceuticals and textiles. Unlike China, India was not prepared for the post-textiles-quota era. Though the US is the largest investor in India, the investment is not evenly distributed.
We are now working area wise. Investment in automobiles is there but now we are working on investment in auto components sector as well.
General Electric has already invested $2 billion in India. We are becoming the clinical trial hub of the world and policies in this regard are being formulated.
What are the challenges that you face?
The developments are very slow. These are historical processes. We have political comfort with the Bush administration. Like the earlier administration, they are not asking India to sign the Nuclear Non proliferation Treaty or the Comprehensive Test Ban Treaty.
(US President) Bush believes that technology will overtake all these agreements. Democracy has become driver of the US foreign policy. Japanese experts and the US are worried about China's transition to democracy.
China is economically open but not politically. American and Japanese scholars are saying that China will go through the catharsis process of moving to democracy. We have democracy dividends, while China has democracy deficits. We are trying to work out collaborative arrangements and technical transfer with the US.
Is there a major change in Americans' perception of India?
Till 1990, the Americans considered India as a country of snake charmers. When I was studying in the US, India made headlines in the local papers in Pennsylvania only when there were cases of dowry deaths.
This has undergone a radical change. Now, Americans perceive Indians to be very smart. The IT revolution changed it all. In some sections, about 40 per cent of the Microsoft staff is Indians. Interestingly, at one of their meetings in Microsoft, staffers started talking in Hindi when they discovered that all of them were Indians!
Such stories have a tremendous impact on Americans. They are not worried about business ethics because that have had good experiences in joint ventures. They think India today has the cutting edge in IT.
But now we need to take them beyond IT, to other fields with tremendous potential.
Wockhardt has just bought a firm in the US after buying one in the United Kingdom. Ranbaxy accounts for 70 per cent of its sales from overseas. We must tell Americans that a revolution is happening in the power and pharma sectors as well.
Americans need to be told that Indians are smart not just because we know how to use computers, also because we know how to do good business.
How was the business meet in Chicago?
The event in Chicago was to create awareness about Indian companies. We want mid-West the US companies to start with trading. We urged them to buy products from India as we have high-end goods.
We took ten companies in the FICCI delegation to Washington with Defence Minister Pranab Mukherjee. Because of the sanctions against India these companies had no contacts with the US since 1996. Companies like Hindustan Aeronauticals Ltd, Bharat Earthmovers, L& T, Bharat Electronics made a presentation to top American defence equipment manufacturing companies like Honeywell, General Dynamics, Boeing and Raytheon in Washington.
"Gosh! We didn't know that you make so many things now," they remarked after the presentation.