The Hindu : Vital need of Indian business presence in U.S.

Online edition of India's National Newspaper
Wednesday, Nov 26, 2003

Business

Business

Vital need of Indian business presence in U.S.

By Our Special Correspondent

CHENNAI NOV. 25. India has for the first time achieved a share of one per cent of total U.S. imports in 2002 and improved its ranking from being the 22nd largest supplier to the American market to the 19th largest supplier.

At the same time, total Indian exports (merchandise plus services, mostly of information technology) to the U.S. have been increasing at a much faster pace than U.S. exports to India, with the result that the trade gap in India's favour has widened to $10.3 billion (about Rs. 47,000 crores) from $7.9 billion. (Indian exports to the U.S. last year totalled $17.5 billion, and imports $7.2 billion, as compared to exports of $14.5 billion and imports of $6.6 billion in 2001).

The trade gap is likely to result in greater U.S. pressure on India to open its market by lowering tariff barriers. At the same time, the U.S. offers the potential to supply India's needs in terms of high-technology products and services, particularly for building a world-class infrastructure and high quality services sectors.

It is against this background that Indian businesses, who were all along advised to have a physical presence in the U.S. (by way of a branch or subsidiary or joint venture) as the most effective way of penetrating the U.S. market, could in future use such a presence for sourcing of U.S. technologies or products, according to the President of the Tamilnadu Branch of the Indo-American Chamber of Commerce (IACC), G. Shanker.

Briefing presspersons on a one-day seminar on `Doing Business with USA', being organised by the chamber in Chennai on December 1, Mr. Shanker said the seminar, in which a U.S. attorney, Michael Kraus, of Smith, Gambrell, Russell LLP, would highlight possibilities of market entry and investing in the U.S., distribution of Indian products in the U.S., corporate structures, acquisition of U.S. businesses and setting up of joint ventures. However, in the current situation, the strategy of opening business entities in the U.S. for purposes of sourcing would be as important as for entering the U.S. market, he said. "The present tendency among buyers everywhere is to avoid total dependence on agents for purposes of procurement/import and to be present physically in the markets where goods and technologies are to be bought," Mr. Shanker said.

At the seminar, presentations would also be made by senior representatives of the Reserve Bank of India (RBI), Exim Bank of India, Export Credit Guarantee Corporation (ECGC) and R. Buhril, Additional Export Commissioner, Chennai, besides the U.S. Commercial Consul, Bruce Quinn. Vinay Kumar, Director, Centre for American Education, would deal with `cross-cultural challenges in working with the U.S.'.

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