India, US must look beyond rhetoric for growth: Kumar

Rajiv Kumar, Seceretary General, Ficci and Pramit Pal Chaudhuri, Foreign Editor, Hindustan Times, and Member of the Mational Senior Advisory Board discuss about the comment made by the US President Barak Obama on India investment.

Rajiv Kumar, Seceretary General, Ficci and Pramit Pal Chaudhuri, Foreign Editor, Hindustan Times, and Member of the Mational Senior Advisory Board discuss about the comment made by the US President Barak Obama on India investment.

Below is the edited transcript of their interview to CNBC-TV18.

Q: Why are we upset and defensive about Obama's comment that it is hard to invest in India? The fact has been acknowledged by the government and the PM himself that we need to move and fast track the reforms?

Chaudhuri: I don't think President Obama has said anything unusual. A number of American and foreign leaders have also urged India to consider moving forward on FDI in retail. 

It is the stated policy of the Indian government that we should move forward on multi-brand retail and allow more foreign direct investment in that area. There is a knee-jerk response in India to almost anybody making any recommendations to us on controversial policies, but India itself is quite open to tell other countries what they feel they should do on the economic front. India's Prime Minister, repeatedly tells other governments to open up services and immigration from India.

So, I don't think that one should be surprised by President Obama statement. In fact, he was responding to a question, it was not an extemporary statement on his own part.

Q: Government responded in typical style where Veerappa Moily says that certain international lobbies like Vodafone is spreading this type of stories and Obama is not being properly informed about the developments in India particularly when India's economic fundamentals are strong. Corporate India everyday lists out the same set of demands, so what is the big fuss about it?

Kumar: It is a usual political reaction because we tend to take our sovereignty very seriously, in fact wear it on our sleeves. But the fact is, may be the timing of the statement could be a little off given. The PM who took over as the FM, in last 20 days has made several statements with regards to reforms that we will take and the animal spirit that he wants to revive etc.

So, Obama could have given the benefit of the doubt to the government that it is now going to walk the talk. However, we should also look at the context in which the statement has been made by Obama, currently he is in the midst of a real tough election battle.

Therefore, he is trying to signal to his own constituency, which is the business constituency that he is going to take up concerns on their behalf and India remains a very strong investment opportunity in a situation where Europe is going away and China is slowing down and as the leader of his own investors, he doesn't want India to slip away either. We should understand his own perspective rather than make such a big deal.

Q: Do you think Obama is playing his card on anti-outsourcing rhetoric to gain political mileage in the upcoming election?

Chaudhuri: Yes, Obama will at least make rhetorical statements about outsourcing then there maybe some action as has been mentioned about taxation issues regarding outsourcing or almost none of, which will have any real impact on India. The only action that has had any impact in terms of outsourcing has been the increase in visa fees and a slight reduction in the number of H1B visas, but that's an automatic part of the election campaign.

The text of the second half of the interview shows that United States has a larger strategic interest in India. The concern that has been expressed by number of US think tanks that if India does not live up to its economic potential and present economic slowdown becomes a permanent state of affairs then America's strategic perspective in Asia, its positioned its ability to pivot to Asia, to partly balance China, to depend or expect that a democracy like India will become a serious alternative to China in Asia will also be compromised and Obama makes that very clear. 

Q: Are we missing out on the fact that strain or cracks may have appeared between India and the US relations, where the US expressed disappointment publically when the MMRCA deal did not go its way, India putting import restrictions on poultry, the US being unhappy with agricultural subsidies issue, visa issue and India dragging the US to the WTO over steel issue?

Kumar: No, I don't think cracks have appeared at all. These are all niggles or wrinkles that we have in any bilateral trade relation as both the side have their own list of demands and both sides try to protect their own interests as far as possible.

I think we have to look at the bigger picture, the India-US economic relationship is now on a trajectory which it was never was because of the technology regime now getting liberalized. Indian firms can import high technology that they couldn't do before.

The US investment companies are now very keen on getting into the Indian infrastructure space which they hadn't done earlier, the fact is that our IT companies will not be greatly affected by these outsourcing things. The only thing that is happening is that the rhetoric will be ratcheted up because of the election year. In our case also, as we draw closer to our own elections the rhetoric will go up.

Both sides have to look and must look beyond the rhetoric to stabilize and improving this relationship as it is critical for both countries as far as their employment generation and growth prospects are concerned that our bilateral relations improve.