California has been the driver of US-India relations: Policy Guru Richard Rossow

Ritu Jha-

“I think overall California has been a driver of the US-India relationship,” said Richard Rossow, Senior Fellow/ Wadhwani Chair in U.S. India Policy Studies at the Center for Strategic and International Studies (CSIS) in Washington, DC.

Rossow was one of the speakers on the panel named ‘Regional insights into India Performance and Outlook’, held Feb 23 and 24, organized by US-Asia Technology Management Center and Institute for Competitiveness held at Stanford University.

Rossow spoke to indica on the sidelines of the conference. He said tech firms were the first ones to find out the value proposition India offered for backend services and as a source for talent to come out here. “I think for Stanford to pick up and take a leadership role in trying to bring some more into your content for folks that otherwise may not be paying attention. When I was working for the US India Business Council [USIBC] every minister had to come to Silicon Valley.”

He said this event will hopefully will begin to rebuild that platform “because sometimes you just need to sit down with senior government officials and have a conversation about what’s next.”

On Apple’s India expansion plans, Rossow cautioned, “Cannot start celebrating because of Apple. Apple was there earlier; it is getting more interesting now.”

On China, Rossow said, “This is a tricky space. This is where our governments right now are trying to find out ways that they can help companies move supply chains out of China. Not for basic stuff but for critical technologies, for rare earths, for pharmaceutical ingredients that both Indian industry and American industry thrive on. Not every well-meaning government official that comes together for these meetings, whether it’s US India or the Quad, has that root understanding about how the private sector works. There needs to be a deeper level of partnership between private companies in areas like critical technology, and rare earths because ultimately if our governments sit down hatching plans that aren’t rooted in what the private sector needs China will continue to run the table in the future.”

He added, “Governments need to figure out what is role governments can play to open up new opportunities for the private sector. They’re not always good at that typically when you say that it’s about signing a tax agreement or a free trade agreement. We already have a tax agreement and I don’t think anybody believes that there’s a real chance US and India are going to do a free trade agreement anytime soon. We’re going to have to carve out something brand new on cooperation in the areas where we’re both concerned about China’s domination. We’re still really early in that process.”

He feels at present only a few state governments in India like Telangana, Gujarat, and Maharashtra are aggressively pursuing foreign investments. But they also need to get the mechanics right. I mean we talk about India getting manufacturing supply chain investments. The manufacturers need access to a flexible labor force and most of that is guided by state governments. You need to be able to acquire land from the state governments. There’s almost nothing that the Modi government can do about land acquisition business permits and regulations. Almost all the regulations and permits you need to get, which is a mind-boggling exercise, are all done at the state level. There are very few permits that manufacturers need to get at the national level. A lot of hard decisions the state governments will have to take to build roads, ports, and rail connectivity,” he said.

On manufacturing companies leaving India and returning to the US, Rossow said: “Companies like Harley Davidson were never manufacturing here, it was just a sales opportunity and Ford was trying to sell cars of a size and type that the Indian market just wasn’t quite ready for. They tried to alter and change, but India’s got terrific domestic auto manufacturers so I guess they never found the market share and profitability here that they were expecting to. I don’t now if they’re going to be returning to India anytime soon. Auto component companies are here and certainly will be growing to service the Indian firms. Of course, there are also a lot of great Indian auto component firms as well.”

“If the US companies are going to show up in India with the same products and services they sell worldwide, there is a market for that in India too but it’s narrow. They will need to make alterations and adjustments to hit a larger market share but if they really want to tap into the 1.4 billion populace, they got a rethink from top to bottom, bring down cost, and bring up functionality. India is going to call for something new and most of the growth in the rest of the world in the next 50 years is going to come from places that look more like India so it’s a great pivot point where you’ve got English, you’ve got friends, you’ve got common law, and a pivot point for US manufacturers to think that they can build stuff here for the world and I hope they do.”

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