Information technology, telecommunications, speciality chemicals and entertainment industry are the major areas which are going to get special focus during the discussions between the Indian businessmen and their US counterparts during President Clinton's visit to India next week.
The Federation of Indian Chambers of Commerce and Industry (FICCI) which has taken the lead in organising round table meetings with the US businessmen in Mumbai on March 24, is looking at the meeting from a long term perspective, aimed at using the Clinton visit as a springboard for giving a wider dimension to the private sector cooperation between the two countries.
In fact, FICCI has been preparing for this visit for the last six months and the prime objective is expand the areas of collaboration much beyond the knowledgebased industries.
For instance, the entertainment industry is getting top priority in the bilateral talks in Mumbai and the Indian side is determined to convince the US counterpart the advantages of cooperating with the Indian film industry which produces the largest number of films in the world. Studies made by the FICCI have shown that the US industry will be highly benfitted by collaborating with the Indian film industry.
As FICCI secretary general Dr Amit Mitra puts it - the Indian industry wants a qualitative change in the Indo-US collaboration and the discussions at the Mumbai meeting might act as a watershed in that direction. The US industry, he points out, has to take into account the technological upgradation that has taken place in the Indian industry in the last nine years since the new economic reforms were initiated in 1991.
As far as the US side is concerned, the US trade department itself has taken into account the vast potential of the Indian market and the opportunities it offer to the US companies. In fact, the US administration is committed to create necessary environment for the expansion of the US companies.
A recent survey on US investment in India conducted by the US administration itself shows that the book value of total US investment at the end of 1998 was esimated at $4 billion more than double the figure of $1.8 billion estimated for 1996. US companies plan to invest an additional $4.6 billion during the four year period ending 2003.
A total market value of $5.3 billion for 118 companies at the end of 1998 has led to the assesment that the market value of total US investment in India will be around $10 billion. Sectoral distribution reveals that manufacturing (55.3%) leads the way among US investors, followed by energy (29.2%), telecom (4.6%), banking (4.2%) and software (3.4%). The US companies responding to this survey employed 48,885 Indians and the total employment by all US firms in India is put at around 1 lakh.
Significantly, the premier investment states of Maharashtra, Delhi, Haryana and Tamil Nadu to gether account for 87.5 per cent of the total book value of US investment with Maharashtra having the lion's share of 40.5 per cent. The three states rated as best by the US investors are Maharashtra, Karnataka and Gujarat but of late they are focusing more on Andhra Pradesh in view of Chief Minister Chandrababu Naidu's efforts to create a proper environment for investment.
One interesting finding of the survey is that there is a trend towards majority shareholdings in Indian companies by the foreign investors, a trend that began in 1991 with the Indian government's decision to raise the limit on foreign equity in JVs from 40 per cent to 51 per cent. Since the the foreign investment policy has ben further liberalised and the US companies who earlier entered into JVs with the Indian firms as minority shareholders, purchased the Indian stake and became majority shareholders.
