[Assam] India shining?

[Ram Sarangapani]

This from the New York Times.

I know, columns like this give heartburns to a few naysayers on the net, but
hopefully, they realize that even a country like Japan, does not want to be
left behind when it comes to investments in India. :).
 Without resorting to rah-rahs, while a few diehards on the net may want it
otherwise, India is fast developing into a major economic power. Last night,
at the Charlie Rose Show, Larry Summers (of Harvard, economist, and former
Treasury Secy) was also talking about the huge developmental (and
distributional) strides both China and India have been experiencing.

--Ram

 <http://www.nytimes.com/>
------------------------------
August 21, 2007
 As Japan and India Forge Economic Ties, a Counterweight to China Is Seen By
HEATHER TIMMONS <http://query.nytimes.com/search/query?ppds=bylL&v1=HEATHER
TIMMONS&fdq=19960101&td=sysdate&sort=newest&ac=HEATHER
TIMMONS&inline=nyt-per>

NEW DELHI, Aug. 20 — When Prime Minister Shinzo
Abe<http://topics.nytimes.com/top/reference/timestopics/people/a/shinzo_abe/index.html?inline=nyt-per>of
Japan<http://topics.nytimes.com/top/news/international/countriesandterritories/japan/index.html?inline=nyt-geo>touches
down in
India<http://topics.nytimes.com/top/news/international/countriesandterritories/india/index.html?inline=nyt-geo>this
week, it will be the highest-level step yet in what analysts say is a
long-term effort to balance, if not contain, China's growing economic and
political might.

As Beijing's influence in Asia and around the world has grown, their common
interests have forced Tokyo and New Delhi to begin warming their
historically chilly relationship and to start forging closer economic ties.
"The key issue facing the whole region is how to accommodate the rise of
China," said Suman Bery, the director general of the National Council of
Applied Economic Research, a New Delhi research group. Indian economists
estimate that Japanese investment in India will reach $5.5 billion by 2011,
compared with just $515 million in the 2006 fiscal year.

Mr. Abe is on his first trip to India. He and his Indian counterpart,
Manmohan Singh, are expected to unveil public-private partnerships and new
business initiatives. Leading the agenda will be a $100 billion
infrastructure project to create a high-tech manufacturing and freight
corridor between New Delhi, India's capital, and Mumbai, its port and
financial center. It would be the most expensive development project in
India, and a third of the bill would be paid by Japanese public and private
money. Mr. Abe and Mr. Singh are expected to announce that the two
governments have reached formal agreement on the deal.

Japanese business leaders traveling with Mr. Abe will disclose similar deals
this week — on natural gas, transportation, currency swaps and Japanese
investment in Indian educational projects, Indian officials said. Chief
executives from
Toyota<http://topics.nytimes.com/top/news/business/companies/toyota_motor_corporation/index.html?inline=nyt-org>,
Mitsubishi<http://www.nytimes.com/mem/MWredirect.html?MW=http://custom.marketwatch.com/custom/nyt-com/html-companyprofile.asp&symb=MSBHF;MSBHY>,
Canon, Hitachi<http://www.nytimes.com/mem/MWredirect.html?MW=http://custom.marketwatch.com/custom/nyt-com/html-companyprofile.asp&symb=HIT>and
others have joined a new India-Japan business leader forum, which will
meet for the first time on Wednesday in New Delhi.

Consultants are trying, so far in vain, to coin the catchphrase, like "the
Samurai and the Swami," that will sum up the nascent strategic economic
relationship between the countries.

Courting India has come slowly for the Japanese, who were highly critical of
India's surprise nuclear weapons test in 1998. While Japan is a large lender
to India, until now it has not been a major investor or business partner.
Instead, Japan has virtually sat on the sidelines while countries from
Switzerland to Brazil cemented business alliances in India, where economic
growth is about 9 percent a year.

Japan's trade with India was about $6.5 billion in 2006, according to the
Indian government — about 4 percent of Japan's trade with China. "Whatever
doubts Japan had for so long, now India is smelling like roses," said
Jagdish N. Bhagwati, an economist and a professor at Columbia
University<http://topics.nytimes.com/top/reference/timestopics/organizations/c/columbia_university/index.html?inline=nyt-org>and
a fellow at the Council
on Foreign Relations<http://topics.nytimes.com/top/reference/timestopics/organizations/c/council_on_foreign_relations/index.html?inline=nyt-org>.
"They want to get in before it is too late."

For Japan, India is an attractive market, both for its growing consumer
spending and cheap labor. Tokyo also has an interest in diversifying its
Asian trading partners and reducing its dependence on China. As an
increasingly confident China has flexed its muscle regionally and globally,
anti-Chinese sentiment has been rising in Japan, as has anti-Japanese
sentiment in China.

"India is a much safer bet, in business terms," because it lacks the
historical baggage, said Richard Tanter, professor of international
relations at the Royal Melbourne Institute of Technology in Australia.

Then there is the straightforward economics. Japanese and other automakers,
for instance, view India as a potential manufacturing center that could
offer lower labor costs than China. But India's manufacturing and export
potential are still crippled by an inability to move goods in and around the
country.

The proposed New Delhi-Mumbai industrial corridor could address that
problem. The nearly 1,500-kilometer corridor would include a high-speed
freight line and nine 200-square-kilometer investment regions dedicated to
industries like chemicals and engineering, as well as three ports and six
airports.

Infrastructure projects like the industrial corridor are "the kind of thing
Japanese companies are particularly good at — roads and harbors and ways to
get into developing countries," Mr. Bhagwati said. Japanese companies were
heavily involved in the construction of New Delhi's clean, efficient subway
system.

India, which desperately needs more power generation, could be a
particularly fertile market for
Toshiba<http://www.nytimes.com/mem/MWredirect.html?MW=http://custom.marketwatch.com/custom/nyt-com/html-companyprofile.asp&symb=TOSBF>,
which bought the nuclear power plant manufacturer Westinghouse last year.

Any deals between India and Toshiba would be far in the future, though.
India's government is still deeply divided over a deal with the United
States that allows India access to civilian nuclear technology, and Japan
may not support the United States-India nuclear deal, given Tokyo's aversion
to nuclear proliferation.

Still, on Monday, Mr. Singh stressed India's commitment to nuclear energy
during the opening of a new research center in New Delhi, calling oil
imports an "unbearable burden."

The most successful India-Japan business partnership to date is a venture by
the automakers Suzuki<http://www.nytimes.com/mem/MWredirect.html?MW=http://custom.marketwatch.com/custom/nyt-com/html-companyprofile.asp&symb=SZKMF>and
Maruti, which has become one of India's leading carmakers after a
troubled start in the early 1980s. Sales of its reliable, zippy and cheap
Marutis were up 17 percent in the quarter that ended in July from a year
ago, to 1.6 million units.

Toyota's India partnership, Toyota Kirloskar Motors, which dates back to
1999, makes about 60,000 units a year. But, last month Toyota executives
said they expected the unit to produce 10 times its current capacity by
2015.

Culturally and economically, Japan and India remain far apart, a fact that
government officials and economists said could complicate building a
stronger relationship. Speaking Monday during a meeting in a New Delhi hotel
to discuss the Japanese prime minister's visit, Mr. Bery, the director of
the New Delhi research group, said Japan's manufacturing is "state of the
art," which has "not been our strong suit."

Minutes later, the five-star hotel fell victim to one of New Delhi's
frequent power disruptions, the lights flickered out and the meeting carried
on in the dark.
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