24th Annual General Meeting of AMCHAM – 22nd April 2016
Indian government and the challenges that U.S. companies are facing as they invest or do business in India. He stated that U.S. government is quite bullish on the Indian economy and PM Modi has done an excellent job in marketing the opportunities and raising the profile of India globally. The U.S. Embassy is doing their best to bring more companies to India, find the opportunities and also help them navigate the challenges.
John also mentioned that the reforms that the PM is trying to drive through is quite laudable. There has been some incremental progress made. However, certain challenges in terms of requirement of legislation still persist. Some of the challenges that remain are the need for open, transparent and predictable process when it comes to companies and the government. On infrastructure projects, robust interactions with the governments are needed.
John concluded by highlighting that all infrastructure projects at the end of the day, have to be commercially viable projects and the company has to make money, which is well understood by government, but it is not easy to implement.
Mr. Arun Kumar Jain, Managing Director, Fluor Daniel India Pvt. Ltd. during his talk stated that 70% of infra projects in India are failed projects in terms of compliance with the schedule and cost and there are several factors which contribute to this. One of the many factors is the irrational bidding process by largely Indian companies.
Arun touched on the lack of rigor for risk identification, risk allocation and how risk mitigation leads to either the project coming to grief or the companies coming to grief. He also informed that very few companies invest in construction assets and they only engage in subcontracting. All these factors are currently not being evaluated in the bidding process.
Another aspect which hurts the construction process is the amorphous focus on construction planning. Construction productivity in India is one fourth of what can be achieved. Other factors to add to this are low premiums for safety, housekeeping and facilities for workers as well as transportation of workers. He strongly feels the issue lies in the bidding system as well as the companies that bid. If companies from the U.S. which have better management are allowed to play a greater role, it will definitely help improve the situation.
Mr. Ajay Singha, Executive Director, AmCham, gave the opening remarks for the luncheon session. Welcome remarks were made by Ms. Vanitha Narayanan, Chairperson, AmCham and Managing Director – India/South Asia, IBM India Pvt. Ltd. Vanitha mentioned that Ambassador Verma heads one of the largest U.S. missions in the world and has played a crucial role in enhancing the U.S. – India relationship. Vanitha led the AmCham door knock delegation to Washington DC last year, where she met with Congressmen and Senators from both political parties, and she emphasized that the discussions were extraordinarily positive on both sides of government. She gave a brief summary of the previous two panel discussions.
Chief guest Mr. Richard Verma, U.S. Ambassador to India, gave a special thank you to Amitabh Kant because every American company that comes to India wants to meet Amitabh first because of his ability to push for change. Ambassador Verma thanked him for driving change in the U.S. – India bilateral relationship.
Ambassador Verma has travelled all over India. He has learned a lot and seen a lot. He has seen factories, manufacturing plants, visited AmCham member companies and met the staff; he has seen the impact of CSR projects, and has had the privilege to be at meetings with Prime Minister Modi and President Obama. He has seen their increasing alignment in many issues, specifically the climate agreement reached in Paris last year. The commercial side of the U.S. – India relationship was elevated in the first ever both strategic and commercial dialogue between the two countries. He has witnessed the increase in trade and the barriers that have come down.
He reflected on the progress made thus far:
2015 displayed the highest ever recorded two-way trade, approaching $108 billion
Most Indian students studying in the United States at 140,000
Broke records for the number of Indian companies in the U.S., number of U.S. companies operating in India, FDI of Indian companies in the U.S.
Volume of agriculture trade was over $6 billion
Defence trade exceeded $14 billion
Number of visas issued was over 1.1 million
Ambassador Verma expounded on the breadth of the U.S. – India relationship across sectors. On a government to government level there are 38 dialogues at the assistant secretary level or higher. These dialogues are deepening trust and strengthening the relationship between both governments.
Massive urbanization is taking place across India at historic levels. There are better transport networks, communication networks are better, cities are providing more higher paying job opportunities, increased education while rural area opportunities are drying up. With India’s urban population expanding at the fastest rate ever recorded in history, India needs to construct a new city of Chicago every year for the next 15 years. The question is now, how do we deal with it and assist the government and help people live better, more efficient lives.
There are investment opportunities in smart cities and infrastructure. Smart cities have become a pillar in the strategic and commercial dialogue. It is one of the first things that Secretary Pritzker asks Ambassador Verma about. A number of U.S. agencies are engaged in the work — USTDA, USAID, Department of Transportation and even the Army Corp of Engineers. The Deputy Secretary of the U.S. Commerce Department led a very successful trade mission of 40 executives from 18 companies that travelled to Delhi, Mumbai and Vizag. There has been a reverse trade mission to the U.S. also that went to New York and San Francisco. This has resulted in sharing of best practices in areas such as water sanitation and disaster preparedness.
The Ambassador mentioned that the AmCham Infrastructure Capability Deck was a milestone in getting the word out about what U.S. companies can do and it features more than two dozen companies. The USG wants to see the private sector succeed. Financing is an area where everyone has to work together more. It will take creative public/private partnership models to get projects off the ground. The Ambassador said that the embassy, as well as Washington, are supportive of the smart cities initiative and look forward to working together.
Vanitha introduced the other chief guest, Mr. Amitabh Kant, Chief Executive Officer, Niti Aayog, and emphasized his ability to make every stakeholder feel important and how he has played a vital role in strengthening the U.S. – India relationship.
In his address, Mr. Kant said that the bilateral trade can be pushed to a greater height. The relationship is not fully tapped and there are more things that can be done in the Indo – U.S. landscape. India needs to grow at 9-10% per annum for three decades or more. If India grows, naturally this relationship will be strengthened also. India needs to become a very easy and simple place to do business. Some of the current rules and processes are antiquated. The GOI is committed to making things easier. The central government has been working to make business easier at the state level also. Ease of doing business is critical.
Mr. Kant said that India must understand that this is a globalized world in which India must be an integral part of the global supply chain. Over the last several months India has opened its economy to vast sectors such as railways, defense, medical devices, etc. The FDI has gone up by almost 48%. The largest amount of FDI has come from the American Tower Corporation which will control about 57,000 mobile towers in India. He said that their technology will ensure less dropped calls.
According to Mr. Kant, India has been a very reluctant urbanizer. India’s challenge is that in the next 2 decades 330 million people will become urbanized. The challenge is to create 2.5 Americas to compensate for the population growth. Technology can be used to leap ahead. Companies like Cisco, AECOM, CH2M Hill will help India embed first class technology in cities. Mr. Kant mentioned that America has mastered the art of innovation from its academic institutions and universities. India must also embrace free markets and free trade to expand manufacturing and export across the world. In turn, America must open up its services sector to allow Indians to go and work there. This will allow the Indo – U.S. relationship to flourish.
On this occasion, the AmCham CSR Compendium Happily Going Miles for Their Smiles, a compendium of CSR activities of U.S. companies in India 2015-2016, was released. The vote of thanks was given by Mr. Richard Rekhy, Vice Chairman, AmCham and CEO, KPMG in India.