Tuesday , December 11, 2018

GROWING U.S.-INDIA TRADE Indian Cultural and Commercial Opportunity

In early August 2014, on the first Sunday of my new life as a commercial diplomat at the U.S. Embassy in New Delhi, India, I struggled out of a four-seat taxi with my wife and four children in the heat of the summer in the bustling neighborhood of Vasant Vihar.

There were no sidewalks, and horns seemed to honk from all directions as we cautiously crossed the street among the cows and street vendors that glanced at us. In the coming weeks, we would learn to drive ourselves through those streets, notwithstanding the cows, lack of sidewalks, and chaotic traffic patterns that always make for an interesting ride.16.01-02_IndiaTrade_Paul Frost_S

Our experience was perhaps emblematic of India today—overwhelming and bewildering at first, but dynamic and full of potential for those that adapt and form lasting relationships in this huge, fascinating country.

Although I had always been interested in international affairs, I had never anticipated moving to India. After earning a master’s degree at the University of California San Diego, I spent a few years in Washington, D.C., where I worked at Georgetown University, and afterwards, the Export-Import Bank.

In 2007, we moved to Charlotte where I was in commercial lending and international trade finance at BB&T and Bank of America until 2014, when I joined the Foreign Commercial Service and was assigned to serve in India.

U.S. Commercial Service in India

Presently, I work as one of 10 American Commercial Officers in India within the U.S. Commercial Service, a division of the U.S. Department of Commerce’s International Trade Administration.

The U.S. Commercial Service employs more than 260 Foreign Service Officers in 75 markets around the world, including seven offices throughout India. Our primary purposes are to promote the export of U.S. goods and services to India; advocate on behalf of U.S. business interests with government entities; and recruit investment from India into the United States.

Opportunities and Challenges in India

 The last 16 months have been a terrific time to be at the Embassy in New Delhi. The United States and India are strengthening their commercial partnership as never before. President Obama is the only U.S. President to visit India twice while in office, including attending India’s Republic Day celebrations in January 2015.

India’s Prime Minister Narendra Modi and President Obama have also met twice in Washington D.C., most recently during the two countries’ first-ever Strategic and Commercial Dialogue. President Obama said in January, “India and the United States are not just natural partners—I believe that America can be India’s best partner.”

With more than 1.2 billion people, India is the most populous democracy in the world. The country is governed under a parliamentary system comprising 29 states and seven union territories, and has more than 22 official languages. Since gaining its independence in 1947, India has passed through many struggles with a strong desire for sovereignty and independence that leaders such as Mohandas Gandhi and Jawaharlal Nehru fought so hard to achieve.

India is currently experiencing some of the world’s fastest economic growth rates and is attracting impressive amounts of investment, but it also has its challenges, considering:

  • Every month, roughly one million job seekers enter the job market. In response, the central government is pushing a “Make in India” initiative to spur manufacturing and job creation.
  • More than 300 million Indians live with no or little electricity, especially in rural areas. While there is a big push to build new energy capacity, utilities are consistently hampered with a lack of capital and abundant red tape.
  • About 500 million Indians have no indoor toilets, which has serious sanitation and public health ramifications.
  • India ranks 130 out of 189 in the World Bank’s annual “Ease of Doing Business” ranking. Although the business-friendly Prime Minister Modi wants to improve India’s ranking, it is difficult to combat the webs of bureaucracy and corruption that have contributed to this low ranking.
  • It is estimated that India needs $2 trillion to spend on infrastructure improvements—roads, bridges, ports, and more. But national and state budgets cannot come close to these figures, causing the government to explore public-private partnerships and look for ways to attract long-term investment.

Positive Trends in India

Given these challenges, what does India offer U.S. companies? There are many positive trends and tremendous potential.

First, U.S.-India bilateral trade has increased fivefold since 2000 to $103 billion today, with a projection to increase to $500 billion by 2025.

A look at North and South Carolina’s export figures to the BRICS countries (Brazil, Russia, India, China and South Africa) indicates there is room for U.S.-India trade to grow, especially compared to our trade with China. Although the populations of India and China are nearly the same, North Carolina’s exports to China are more than six times higher than India, and South Carolina’s exports to China are 11 times higher than India.

Second, the demographics of the BRICS indicate the growth potential for trade with India.

India’s population and national savings rates are second only to China’s among the BRICS, and its population is forecast to surpass China’s by 2025. Although India’s GDP per capita is the lowest among the BRICS, its middle class is rapidly expanding.

Third, despite India’s diversity of cultures and languages, English is commonly spoken throughout the country, making business activity easier for Americans. Also, there is broad familiarity with and affinity for the United States throughout India. Roughly three out of every 100 Americans is of Indian origin, which has formed a powerful commercial and familial network.

The sectors in which I specialize are indicators that the future is bright for U.S.-Indian trade:

  • Tourism: In 2015, the U.S. consular sections processed a record-setting one million visa applications for visitors from India. And the number of visitors from India to the United States has increased by 20 percent in the last year.
  • Education: More than 130,000 Indians are currently studying at universities across the United States, a 30 percent increase since 2014 and its highest rate ever.
  • Investment: At nearly $11 billion, India is the fifth fastest-growing source of business investment into the United States. Indian firms in the U.S. have created nearly 44,000 jobs and export nearly $2 billion from the United States. Sven Gertzer of the Charlotte Chamber of Commerce recently visited India to scout for more investment leads.

A recent investment by an Indian firm in North Carolina is worth highlighting.

In 2014, a company from southern India named SG Mills invested $40 million to open a yarn spinning facility in Eden, North Carolina. This investment initially started when one of my colleagues in Chennai, India, referred SG Mills to the U.S. Department of Commerce’s SelectUSA office, which promotes foreign direct investment into the United States.

SG Mills is a third-generation, family-owned business. It is the largest spinner in India with a total installed capacity of 1.1 million spindles and a workforce of 30,000 employees. SelectUSA, through the U.S. Commercial Service post in Chennai, India, worked closely with the team members at SG Mills as they considered their approach to the U.S. market.

SelectUSA introduced SG Mills to several economic development organizations in a variety of U.S. states. Ultimately, Governor Pat McCrory’s office persuaded SG Mills to establish their U.S. operations in Eden, resulting in the company’s investment of more than $40 million and the creation of more than 80 new jobs.

Finding Opportunities in India

How can Charlotte companies find opportunities in India?

We often share the following advice:

Remember the Three P’s: Persistence, Patience and Partners. India has its challenges, but the right partners combined with a long-term commitment often leads to success. The U.S. Commercial Service offers matchmaking and partner-selection services for a small fee to American firms in any of our 100+ Export Assistance Centers throughout the United States, including one in Charlotte.

Because India is so vast and diverse, it is wise to consider a regional strategy. Our seven offices located throughout India can advise Americans on ways to develop such strategies. Companies should not overlook ‘Tier 2’ cities that are each home to millions of people and often have abundant trade opportunities.

Be prepared to offer customization and after-sales services in order to maintain and grow relationships.

These are just a few areas in which the U.S.-India commercial relationship is growing and deepening. For Charlotte-based companies, India offers much in cultural and commercial opportunity.

Content contributed by Paul Frost, a Foreign Commercial Service Officer at the U.S. Embassy in New Delhi, India. The Foreign Commercial Service is the trade promotion arm of the U.S. Department of Commerce’s International Trade Administration. The role of a Foreign Commercial Service Officer is to promote the export of U.S. goods and services, attract foreign investment into the United States, and defend U.S. commercial interests abroad. Frost can be reached at paul.frost@trade.gov. For more information, visit www.export.gov/india and www.buyusa.gov/india.

Content contributed Shumaker, Loop & Kendrick, LLP, a full service law firm founded in 1925 with more than 240 attorneys practicing in Toledo and Columbus, Ohio; Tampa and Sarasota, Florida; and Charlotte, North Carolina.     Our Charlotte office is sharing in the fast-paced development of the Carolinas by providing representation on corporate, securities, real estate, tax, litigation, immigration, employment, creditors’ rights, international business transactions and litigation, financial transactions, health and all other business specialty areas. For more information, contact Scott M. Stevenson, the Charlotte Managing Partner, at 704-945-2180 or sstevenson@slk-law.com or visit www.slk-law.com.



Yes, I want to subscribe to CLT.biz Insights and join the CLT GLOBAL AMBASSADOR NETWORK promoting economic growth and development in the greater CLT region.

Please keep me up-to-date and informed about CLT assets, resources and economic progress.

Thank you, John Paul Galles