India shining?------
Doubts?
mm
Date: Wed, 22 Aug 2007 17:31:53 -0500From: [EMAIL PROTECTED]: [EMAIL
PROTECTED]: [Assam] India shining?
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
August 21, 2007
As Japan and India Forge Economic Ties, a Counterweight to China Is Seen
By HEATHER TIMMONS
NEW DELHI, Aug. 20 — When Prime Minister Shinzo Abe of Japan touches down in
India 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, Mitsubishi, Canon, Hitachi 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 and a fellow
at the Council on Foreign Relations. "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, 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 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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