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Economic Affairs to Define Obama India Visit

25/01/2015 8:30 AM IST | Updated 15/07/2016 8:24 AM IST
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An Indian worker wears an American flag before it is hoisted up a flag pole in New Delhi, India, Friday, Jan. 23, 2015. India's Prime Minister Narendra Modi has invited U.S. President Barack Obama to be the first American president to attend India’s annual Republic Day festivities marked on Jan. 26. (AP Photo/Tsering Topgyal)

My flight from Delhi into Mumbai on November 5, 2010 was almost empty. Who in their right mind flies on Diwali, the biggest Hindu festival of the year for many Indians? In the security line, the passenger ahead of me realised that we were both headed to be part President Obama's first visit to India and cajoled me, "You Americans are out of your mind! Do you think our leader would show up for his first visit to Washington on the day after Christmas?"

I was reminded about this interaction as officials inside the Washington D.C. Beltway gushed about how the immense potential of the world's two largest democracies has remained untapped. I will share some tips on realising that potential more fully later in this article.

But first, the timing of President Obama's historic second trip to India is much better. He and the First Lady will be the guests of honour at the military parade that celebrates the creation of India's constitution on January 26, known as Republic Day in India. (India celebrates its Independence Day on August 15 which is similar to our Fourth of July; some beltway experts have described this incorrectly). The first three words of the preamble to India's constitution should be familiar to every American school kid, "We the people." What many in America may know not know is that the architect of India's constitution, Bhimrao Ramji Ambedkar obtained his master's and doctorate degrees at Columbia University in New York.

With President Obama is Commerce Secretary Penny Pritzker who travels to India for her second trip since the election of Prime Minister Narendra Modi. US Trade Representative Michael Froman will also be part of the team. They will meet a small group of Indian and American CEO in a closed session in Delhi followed by a dialog with a larger group of business people on Monday evening. Earlier this month, Secretary of State John Kerry was at Vibrant Gujarat, an investment and trade summit in the state which Modi ran for a decade.

Security, defence, and climate change are important issues on the table but trade is what is making such a strong push toward India in 2015

Bilateral US-India Trade Skyrockets

Just a few years ago the United States and India exchanged less than $20 billion in goods and services and India barely figured among America's top 25 trading partners. When President Obama announced the National Export Initiative in 2009, I predicted that India would be a big part of the solution. It turned out that I was right, but perhaps too conservative.

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At present the two countries exchange about $100 billion in goods and services. Top American exports to India cover a wide range of categories: aircraft, petroleum products, chemicals, industrial machines, engines, instruments, telecommunications equipment, medical devices, wood, wood pulp and tree nuts such as almonds and pistachios. But this is only the beginning.

American Companies Can Prosper

Major opportunities for expansion of American exports in 2015 exist in power, clean energy, transportation, aerospace, information technologies, water, sanitation and waste management, healthcare and tourism.

In addition any American branded product or service that is reasonable exportable to any emerging country, can find a market in India, where by 56% to 15%, Indians express a favourable, rather than unfavourable, view of the United States, with 28% offering no opinion. By a margin of 21 percentage points, they are more positively disposed toward the United States then they are toward China according to a Pew Center study released in March 2014.

Success in India requires considerable internal resources and time which is possible if you are part of a Fortune 100 company. For most of the next 2000 largest companies, it makes sense to use third party expert guidance from advisors and consultants that have staff in both United States and India (provided that teams in India and the USA work closely together). Smaller companies with more limited needs can also work with the US Department of Commerce and its Gold Key service offered its offices in India.

"Among the new initiatives are a major focus on advancing US companies' participation in infrastructure opportunities in select markets where there are critical needs for power, transportation and other infrastructure," commits the Assistant Secretary of Commerce, Arun M. Kumar. Since taking charge of the US Commercial Service, last year, Kumar has made a number of trips to India. This month he was there for Vibrant Gujarat and Secretary of State John Kerry; he is back again with President Obama and Commerce Secretary Penny Pritzker. Kumar brings a unique perspective to the Commerce department, having founded and run the US-India practice for a Big Four firm earlier in his career.

Kumar is responsible for supporting worldwide exports. But India is projected to be one of the leaders in growth in 2015. In absolute terms, India is expected to grow at the same level or more than all ten of the ASEAN countries combined; that includes such major regional economies as Indonesia, Thailand, Malaysia, Singapore, Philippines and Vietnam. No wonder India is the focus of President Obama's pivot to Asia.

"India has a huge need for energy efficient urban infrastructure and US companies have advanced solutions to help," adds Kumar. I take that to mean the Smart Grid, Intelligent Buildings, road traffic systems that manage red lights to minimise waiting, and much more.

Are American Companies Lagging in India?

The Economist published an infographic in 2013, illustrating that 59 percent of the market capitalization of Suzuki of Japan was due to its India business. Forty two percent of Switzerland's Holcim, a cement maker, is represented by its India sales. For Anglo-Dutch consumer company Unilever, 15 percent of its market capitalization is contributed by its prolific presence in India. The only American company to qualify for that infographic is Cummins at 12 percent of market cap attributable to its engine sales in India.

Clearly the Swiss and Japanese, perhaps even the Dutch, have mastered Indian English better than Americans. Part of the answer why Americans lag is that the Europeans had a head start. But Citi, GE and J&J have been in India in some form for over 50 years. Let's look at some the deeper causes and how to correct them.

Two tips for success in India

American executives and government officials need to take the time to learn and understand that India dances to its own tune. For too long, Washington had linked India and Pakistan together in its world view. President Clinton felt compelled to stop in Islamabad during his only official trip to India. Earlier this month John Kerry also hopped over to Pakistan after leaving Vibrant Gujarat. Thankfully most of the Obama administration views India in its own right. Some think-tanks in Washington have also evolved.

Most American companies new to India, however, still tend to view India through a China prism. Many creative possibilities for breakaway success in India are denied as a result of viewing India as an incremental market. I teach executive workshops on doing business in India and when I speak to attendees a year or two after they participate, one of the most enduring lessons that they tell me they have learned is how to look to an India as the diverse, textured, free society that it is.

Which bring us to the beginning of my story and my guess about how a delegation of 200 American executives found itself flying into India on Diwali and the day after. I am reasonably sure that planners in Washington were aware of the lunar calendar and the specific date for Diwali that year. But as direct, blunt communicators, Americans are socialised to call a spade a spade. We mean what we say and we say what we mean. We love the firm handshake. That directness, however, is not always an asset.

So it is conceivable that someone in Washington asked "the Indians" a blunt question, something like "The President can leave right after the Congressional elections and would like to visit Indonesia after stops in Delhi and Mumbai. This would put him in India on November 6 to 8. Is that a problem?"

Indians, however, are socialized to be indirect and subtle. They are also trained to be excellent hosts. Treat your guest as if they are a god, says an old Sanskrit proverb. If that god is also the "leader of the free world" you might contort the lives of tens of thousands of your fellow countrymen in order to say, "No problem. We will adjust."

The most important chapter in my book Doing Business in 21st Century India is the one on cross-cultural communication. I tell my clients that possibly the most important cross-cultural skill they need to appreciate if not master, is indirect communication. This requires listening carefully to what your Indian counterpart says and does. It requires patience and ongoing dialog. It requires a communication style that does not seem threatening to the Indian side. These skills take time and training.

For greater success in working together, Americans need to practice being less direct and Indians need to work toward more bluntness and assertiveness. Converting this concept into reality is much harder than it seems. A good chunk of my day job as a trusted advisor to American executives on India-related issues is devoted to more effective communication.

Deputy National Security Advisor Ben Rhodes spoke this week in Washington about "our commitment to embrace the potential of this [US-India] relationship." For the trade component of the relationship to reach $500 billion is possible.

I can envision a day soon when a dozen large American companies could see more than 10 percent of their market capitalization coming from India. These will be companies that invest the time to understand India and Indians uniquely.

In the meantime, President Obama's shining a light on the India opportunity by visiting twice should help both US and India companies.

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