The relationship between India and the United States is on the threshold of a new resurgence. Newer opportunities are knocking at the doorsteps of both the countries and with Narendra Modi all set to visit US next month, there could not be a more opportune time to take this relationship to the next level. The recent visit of US Secretary of State John Kerry and Secretary of Commerce Penny Pritzker to India could not have come at a more crucial juncture. Their meetings with various dignitaries, including Indian Prime Minister Narendra Modi, reinforced the need to strengthen the relationship between the two countries, in the wake of India walking out of the WTO.
The issue of Energy security is critical for both the US and India. As a country US is producing more fuel than it can ever use, but the refusal to export the same to India is hurting the trade relations between the two countries. For US, it would ensure that thousands of jobs are created and it would boost the economy several notches higher and for India it would mean an uninterrupted supply of clean energy. Why this win-win situation for both US and India is still pending and has not been implemented is beyond comprehension.
Apart from that, defense development between the two countries is the need of the hour and both US and India must seize every opportunity to collaborate on defense and not let other factors restrict the growth between the two nations. The recent visit of Defense Secretary Chuck Hagel to India was a step in that direction.
Hagel has left India with few concrete agreements and he acknowledges the fact that the world’s oldest and the world’s largest democracy must be results oriented and do more to transform the defense co operation between both the nations from just buying and selling tradeoffs to the next level of co production and co development.

In the near future, The US is hoping to partner with India as it modernizes its military, but at the same time Indian leaders are more interested in co-development opportunities than in simply buying American-made weapons.

The new initiative brought to the forefront by Hagel includes more than a dozen proposals that would transfer technology and production expertise to India. It includes a plan for the US and India to co-produce and co-develop, the next upgrade of the Javelin anti-tank missile which would be cheaper, lighter and more capable.

The development initiative in other words is part of a larger picture which is America’s attempt to improve what has often been a shaky relationship with India, which can turn out to be one of their most prominent allies in Asia.

As Indian Prime Minister Narendra Modi prepares for his first speech from Delhi’s Red Fort on Independence Day, history is waiting to be rewritten. In fact Modi has been preparing for this moment for some time now.
If we roll the clock back a year from now, it was on August 14, 2013 when Modi had thrown down the gauntlet by challenging that his August 15 speech in Gujarat, as Chief Minister, would draw as much attention as that of then Prime Minister Manmohan Singh’s from the Red Fort.
His speech last year on Independence Day had begun from a college in Bhuj and had started about half an hour after Manmohan Singh’s speech had finished. Modi had then torn into Dr. Singh’s speech branding it uninspiring and disappointing. The bigwigs at BJP had then proclaimed that Mr. Modi’s next Independence Day speech would be at Delhi’s Red Fort. In fact so fond a wish was it that in election-bound Chhattisgarh in September last year, the BJP erected a replica of the Red Fort as a stage for a Modi rally.
Here we are a year later, and the stage is set for Prime Minister Narendra Modi to deliver a speech which many expect would be inspiring and thought provoking in equal amounts.

As the D day draws closer, it is believed that the speech will highlight three major initiatives that are in the pipeline. The spotlight shall remain on big ticket reforms but the three initiatives-a clear plan for the Clean Ganga project, skill development for the nation’s youth, and real steps to ensure financial inclusion-will be the main ingredients of Modi’s first address to the nation.
In fact all three of these major initiatives have been the fulcrum of Modi’s campaign and have been the party’s manifesto in the run-up to the Lok Sabha elections this year. In the pipeline are plans to create separate nodal offices for skill development and Clean Ganga project. While the skill development for youth is proposed to be handled by about 20 ministries, different programmes to clean Ganga shall fall under at least three ministries.
True to Modi’s focus on skill development, the government has completely dedicated one of the six areas on the recently launched web portal MyGov to it. The purpose is to develop bold ideas, concrete policies, initiatives and interventions to help develop employable skills on a mass scale to meet the needs of the industry and help youth enter the job market.
So as the countdown begins for August 15, the nation shall wait with bated breath for Modi to unleash a speech which will be charismatic and impactful in equal amounts. After all, we already know he is a man of his words.

About the Event

On July 30th, 2014, USINPAC organized a Congressional Briefing on US Liquefied Natural Gas (LNG) Exports to India at  the United States Capitol Visitor Center Room, Washington D.C.

The purpose of the briefing was to inform offices of lawmakers and thought leaders about the tremendous potential for US LNG exports, the nature and scope of the LNG import market in India, how LNG can advance energy security, a critical US foreign policy goal in the region, and ways to expedite LNG trade between the two largest democracies of the world.

The briefing mainly focused on the following key points:
• Significance of India as a trade partner of the US in LNG exports
• The DOE-FERC licensing process for approval of US LNG exports
• Potential for Legislative action to expedite US-India LNG trade

Speakers at the Briefing 

Congressman Ted Poe
Congressman Ted Poe is a leading advocate in Washington for limited government, free markets, low taxes and individual liberty. Rep. Poe serves on the House Judiciary Committee, and the Foreign Affairs Committee as Chairman of the Subcommittee on Terrorism, Nonproliferation and Trade. He has been a champion of LNG exports  and recently introduced a bill that would require the Department of Energy to expedite and approve exports of natural gas.

Congressman Pete Olson
Congressman Pete Olson represents the 22nd District of Texas in the U.S. House of Representatives and also serves on the House Energy & Commerce Committee. The Energy & Commerce Committee has wide jurisdiction over the energy, healthcare, and telecommunications industries and Rep. Olson’s contribution towards the LNG initiative has been immense.

 Congressman James Lankford
Congressman James Lankford is the U.S. Representative for Oklahoma’s 5th congressional district. From EPA regulations on the energy industry to the negative impact of regulations on banks and financial institutions, Congressman Lankford has always believed in making an impact and resolving issues. He is dedicated to freeing up business to grow and add jobs and take the United States to a bigger economic platform.

Erik Milito
Erik Milito is the director of Upstream and Industry Operations for the American Petroleum Institute. Mr. Milito’s work covers regulatory and legislative matters related to domestic exploration and production, including access to domestic oil and natural gas resources both onshore and offshore. Prior to his current position, Mr. Milito has served as API’s managing counsel covering a host of legal issues, including oil and natural gas leasing, royalties, environment, fuels, transportation, safety, and civil justice reform.

Sadanand Dhume
Sadanand Dhume is a Resident Fellow at the American Enterprise Institute, where he writes on South Asian political economy, foreign policy, business, and society, with a focus on India and Pakistan. Mr. Dhume has served as India bureau chief of the Far Eastern Economic Review and as Indonesia correspondent of FEER and the Wall Street Journal – Asia, and is currently a South Asia columnist for the Wall Street Journal.

Dr. W. David Montgomery
Dr. Montgomery is an expert on the economic issues associated with climate change policy, and testifies as an expert witness in state and federal courts on antitrust and damages cases dealing with petroleum and natural gas markets. His scholarly work is frequently published in peer-reviewed journals, and Congressional committees have requested his testimony on climate change, issues affecting oil and gas markets, and other energy market and environmental issues on numerous occasions. He advises clients on the strategic implications of changes in energy and environmental policies and energy markets.

Dr. Michael E. Canes
Dr. Michael Canes is a Distinguished Fellow at the Logistics Management Institute (LMI) in McLean, VA, where he conducts research on energy and environmental matters. While at LMI he has directed the LMI Research Institute and was a contributing author to the 2008 Defense Science Board study of Defense Department energy strategy, “More Fight – Less Fuel.” Prior to coming to LMI, Dr. Canes was Vice President and Chief Economist of the American Petroleum Institute, where he served for 25 years. At API, Dr. Canes was responsible for the Institute’s economic research and statistical publications, and was frequently interviewed and quoted in trade and public media.

Ankit Desai
Ankit Desai joined Cheniere Energy, LLC from MWW Group where he served as a Senior Vice President and Strategic Counsel, managing the business portfolios and developing business leads for the privately-held and politically-active public affairs firm. Prior to his engagement with Cheniere, Mr. Desai held senior stations with the Health Information Center, an organization designed to promote the Affordable Care act, and with the life science venture capital firm Third Security, where he acted as Managing Director of the firm’s corporate communications and public relations enterprises.

Sandra E. Safro (Speaker & Moderator)
Ms. Sandra Safro is an associate at K&L Gates ,Washington, D.C. office. She focuses her practice on regulatory, policy, and transactional issues related primarily to natural gas, liquefied natural gas (LNG), and oil. Ms. Safro regularly advises on matters related natural gas commodity and pipeline transportation issues, as well as issues related to the import and export of LNG, including commercial agreements related to terminal capacity, developments on Capitol Hill, and proceedings before the Federal Energy Regulatory Commission (FERC) and the Department of Energy (DOE).

To read the related Press Release, click here

To read the related media coverage of the event, click here

To see the event pictures, click here

To know more about USINPAC’s role in expediting LNG exports to India, visit www.usinpac.com/LNG-Initiative/

What then is common between former Indian Prime Ministers Rajiv Gandhi, Atal Bihari Vajpayee and Manmohan Singh? They have all addressed joint sessions of the Congress. And that surely is monumental and an occasion to cherish. With the confirmation of Prime Minister Narendra Modi’s visit to the US, what one is looking forward to is simply an encore. Apart from his meeting with President Barrack Obama in the last week of September, this is the single most event which will give the relations between India and US a definite boost.
Now the relationship between Prime Minister Modi and US has seen its degree of friction and controversies over the years. The prime reason for the equation to go kaput was the visa issue. Mr Modi as Chief Minister of Gujarat did not have the required permission to visit US for almost a decade. And the prime reason for this little known law to stop him from coming was only ever used against one politician in the world and that unfortunately was Narendra Modi.
But now that the relations have seen an upswing and as the Modi victory campaign promised ’Acche din aane wale hai’ , it’s time to understand how can this association be taken to levels which are fruitful to both the countries. US India Political Action Committee (USINPAC) along with some other representatives of the Indian American community have come up with a unique proposal which suggests that the BJP-led Government should issue infrastructure bonds for the NRI community to tap the goodwill of the Indian diasporas.
The announcement of the bond can be made by Prime Minister Narendra Modi on his visit to US. Sanjay Puri, Chairman, (USINPAC), said “USINPAC has had extensive discussions with top financial institutions in the US and members of the Indian diasporas in several countries on the market viability of the proposed bonds and have received an overwhelmingly positive response on the same. We have suggested that the infrastructure bonds can also be used to fund the ambitious Ganga conservation mission”.
The USINPAC on its part has suggested naming the bond `Vibrant India Bonds’ in order to leverage the brand awareness of `Vibrant India’. This goes in tandem with the ‘Vibrant Gujarat’ campaign with Modi had launched as the Chief Minister of the State and a `Vibrant Gujarat Global Investment Summit’ that takes place every two years.
Coming back to the event of Modi addressing a joint session of Congress, USINPAC is working with members of US Congress to build momentum for an address by Modi. Over 40 Congressmen and 20 Senators have already informed the US Speaker of their wish to hear an address by him.
USINPAC is additionally working towards organizing a luncheon meeting with US Senators for Modi and a meeting with top US CEOs. As Sanjay Puri says’ “It is only through such meetings that the US approach to tricky issues such as IPR, visa for professionals and supply of natural gas to India can be changed”.
As a matter of fact, Vibrant India bonds can turn out to be the kind of idea for Modi’s visit, like the US-India nuclear deal was for former Prime Minister Manmohan Singh. India’s financial requirement which stands at $ 1.5 trillion can get a really big boost in terms of infrastructural needs and it is this endeavor which should do the trick.
The wait then begins…

The new government which is just two months into its term is changing the economic future of the country, and bringing about significant changes in the Geopolitical and strategic scenario.

There is optimism in the stock market, whose turnaround in the last 3-4 months has been nothing less than spectacular, coinciding as it has with the rising trend in the American markets. Foreign Institutional Investors have invested heavily in both debt & equity. The Current Account Deficit ( CAD) is at a historic low level and general upward sentiment has stabilised the Rupee to Rs 60 to a dollar against Rs 68 last year. The positive sentiment is also reflected in the latest IIP ( index of industrial production) which grew at a 19 month high of 4.7% in May.

While not abandoning the earlier government’s social sector schemes, the budget has a multi-pronged approach to encourage manufacturing, real estate, infrastructure, tourism and to pursue disinvestment with a new zeal. A lot of emphasis is being laid on FDI and Public Private Partnership (PPP) for development of infrastructure, specially the railways.

The budget has had its hits and misses:

1. The optimist target of fiscal deficit as proposed by the earlier UPA is being retained at 4.1% with an aim to reduce it to 3% by the year 2017. That seems to be a tall order.

2. It has reiterated the government’s commitment to come out with a clear road map for implementation of Goods and Services Tax ( GST) by the end of the current year. Most economists are of the opinion that as and when implemented it would be a game changer.

3. The budget has increased the Foreign Direct Investment (FDI) limit from 26% to 49% in the areas of Defence manufacturing and Insurance sectors. India is one of the largest importers of arms. In fact, for a couple of years it has been the largest. The indigenisation of defence manufacturing has been a long-standing goal of policymakers, mainly because it is believed that in its absence India cannot hope to become a great power. Another reason for discouraging the arms imports is that it leads to substantial outflow of foreign exchange thereby adding to India’s generally high CAD. It is widely believed that increased FDI limit in Insurance sector would eventually lead to money flowing into cash starved Infrastructure and real estate sectors.

4. The budget also proposes to set up an infrastructure trust to help provide long term finance for the sector.

5. The Real Estate Investment Trusts (REITs) should be operational in eight months to a year. This measure is expected to give a fillip to the sector, which is more or less unorganised at present.Though a pass through in terms of taxation has been allowed on rental income, there are still a number of clarifications required on other taxes such as estate duty, Service tax etc.

6. The budget proposes 100 smart cities. To encourage this, the built-up area and capital conditions for FDI have been reduced from 50,000 square meters to 20,000 square meters and from $10 million to $5 million respectively with a three year post lock in.

7. The disinvestment in the PSU banks is proposed by the Finance Minister. This is expected to be achieved through public offering with a twin objective, to the benefit of retail investors and to meet the capitalization requirement as per BASEL III norms.

8. To boost tourism, facility of Electronic Travel Authorization ( e-Visa) would be introduced in a phased manner at nine airports in India within the next six months. Some tax concessions have also been given to tour operators.

9. There has been no clarification on the General Anti- Avoidance Rules ( GAAR) which kick in from 1 April 2015. This acted as a temporary dampener for the stock market. These are provisions designed to check tax evasion. The government should have come out with unambiguous and transparent provisions in this regard in order to assure the markets.

10. The governments stand on retrospective taxation leaves a lot to be desired. When BJP was in opposition they described it as Tax Terrorism. This could be a big stumbling block for new foreign investments into India.

11. Filing an appeal against a customs, excise or service tax order passed by a lower authority will now require one to deposit at least 7.5% of the amount demanded by the department with the amount rising to additional 10% for second stage appeal. These provisions are regressive, as in most cases the demands confirmed by lower authorities are set aside by higher authorities.

Whereas the budget makes a sincere attempt to revive the Indian economy, at the geopolitical level, the Modi government appears to be courting China. There have been four senior-level interactions with China. First Mr Wang, foreign Minister of China, visited India, followed by the Vice President of India and later the Chief of Army visiting China and now Mr Modi meeting Mr Xi Jinping at the BRICS meet in Brazil. The meet led to the announcement of the setting up of BRICS bank with an authorised capital of $ 100 billion and a paid up capital of $ 50 billion, equally subscribed by the members. The bank would operate on the principle of one country one vote. In addition, there would be a $100-billion Currency Reserve Arrangement (CRA). For CRA, China will contribute the largest amount at $41 billion, followed by India, Russia and Brazil with $18 billion each and South Africa with $5 billion. The stated aim is to have a positive precautionary effect, help countries forestall short-term liquidity pressures, promote BRICS cooperation as also strengthen the global financial safety net. The bank is to be headquartered at Shanghai with the first president to be an Indian with a six year term.

Rather than challenging the might of IMF & World Bank, the intention behind the establishment of the BRICS bank seems to be of encouraging the emerging economies to set up parallel institutions to supplement the Bretton Woods institutions established under the leadership of Americans and other developed countries. India has generally had a favourable experience of borrowing from these institutions in the 1980s and 1990s, and therefore needs to positively engage with them. A BRICS bank may act as a catalyst to quicker reforms on voting and shareholding pattern of the IMF and World Bank – a long standing demand of emerging economies, including India.

  -Raman Chadha