President Obama, who has accepted Prime Minister Modi’s invitation to be the chief guest at India’s Republic Day parade event at Raj Path, is not alone. He will be accompanied by a strong US industry team, both looking for more business presence in India. The Indo-US dialogue may get mostly one-sided with US demands dominating the discussion. India’s demands are traditionally limited to US intervention to contain Pakistan as also Pakistan-sponsored terrorism and separatist movements in India, and job visa for its intellectual persons.

The US will seek more defence exports, nuclear sales, strategic cooperation to contain China in the Pacific and Indian Ocean regions and concessions for its industry and services sectors. The world’s largest foreign director investor (FDI) would like India open its market wider and relax its investment rules further for US companies to take larger control of economic activities. The US participation in Narendra Modi’s pet ‘Make-in-India’ programme will not come without a strong rider such as higher US equity stake, preferably up to 100 per cent.

It may be recalled that between 2000 and 2014, India’s gross FDI receipt was of the order of $342 billion. A large part of it came from the US. Some came directly, others via Mauritius. The US financial institutions (FIIs) are practically in control of India’s stock market, reinsurance market and PE funds. It would like to play a bigger role in India’s financial markets managing Indian savings such as pension funds, provident funds and insurance funds, general or life. The government has already promulgated an ordinance to allow up to 49 per cent foreign holding in insurance.

Preparations are afoot ahead of President Obama’s two-day visit of India on January 25-26. The US had concluded two very important high-level official meetings with India in Delhi before the New Year — one on bilateral economic issues and the other on trilateral strategic cooperation, involving some top Japanese officials. The US may also press India for dilution of the latter’s seemingly pro-Russian policy on the Ukraine issue and support western sanctions, knowing fully well that they won't cut much ice with India’s well-crafted foreign policy framework towards its old ally, Russia.

The US will be particularly pleased with the Indian government’s yearend ordinances to push fresh investment in India’s infrastructure, core and insurance sectors. The ordinances allowed higher FDI cap in insurance, open auction of coal blocks for mining and easier rules for land acquisition. Project investments worth over Rs.700,000 crore are held up due to land acquisition problems under the previous rules. Sloppy environment clearance and non-availability of coal for power generation for steel and cement production were the other factors responsible for the projects not taking off. Many of them are to be foreign funded.

The US will certainly raise the demand for a fresh bilateral safeguards agreement to complete final negotiations on the nuclear deal. These are in the nature of non-proliferation assurances, many of which have already been provided by India. The two countries are yet to complete the administrative arrangements to fully operationalise the Indo-Us civilian nuclear co-operation deal. This has taken over two years to complete, and despite a seemingly positive note from the first Modi-Obama summit in September, Indians are hard put to find 'problem-solvers' within the US system. There has already been an inordinate delay in the execution of 6,000MW nuclear power project by Westinghouse Electric Company in western Gujarat. The US insurance companies are banking big on insurance of liabilities concerning nuclear power plants in India.

Ahead of President Obama’s visit, US e-commerce giants such as Amazon and e-Bay have asked the Indian government to allow 49 per cent FDI in business-to-consumer (B2C) e-commerce at the first meeting of the inter-ministerial committee set up to fast-track investment proposals from the US. The government is unwilling to take such a measure as it will hurt the business of local companies. Amazon has announced that it would invest $2 billion in India. So far, Amazon has invested $300 million. The US will continue to press India for entry into multi-brand retail and 49 per cent foreign stake in on-line B2C trade.

Recently, some of the top US companies, including Amazon, Morgan Stanley, Ford and defence equipment major BAE Systems, met the secretary to the Department of Industrial Policy and Promotion (DIPP), Amitabh Kant, and presented a US wish list. While BAE wanted the offset policy be made broad based, Flextronics Technologies asked for 100 per cent FDI in Defence. The US will also press the government to snatch the freshly proposed VVIP helicopter supply contract, worth $550 million, which India had earlier placed on Italian defence manufacturer Finmeccanica but had it cancelled on graft charges.

The US is also likely to raise the issue of its bilateral trade deficit with India to push its business agenda in various spheres, including defence and nuclear. The two-way trade reached an all-time high at $63.7 billion in 2013, with a nearly $20 billion balance in India's favour. The trade deficit provides a handle to the US administration to especially push sales of US defence products to India and seek further concessions on trade and investment fronts.

President Barack Obama’s visit comes at a crucial time as the Modi government prepares to present its first full annual budget in February. The occasion is used to announce the government’s economic cum trade policies, defence outlook, development plans, including energy and infrastructure, and social sector programmes bringing about necessary changes in rules and regulations. It is unlikely that the government will make a sea change in its policies and programmes to accommodate the long US wish list. (IPA Service)