Obama’s Proposed U.S. Trade Representative Demonstrates Economic Shift Towards India
May 6 – The proposal by United States (U.S.) President Barack Obama to make Michael Fromen the new U.S. Trade Representative indicates a policy shift in American thinking, both in terms of trade and politics. Fromen, a Harvard graduate and former classmate of Obama, is also the U.S. Government’s chair of the U.S.-India CEO Forum, and is considered an India expert. Although the appointment is yet to be confirmed, Fromen’s nomination suggests U.S. economic policy is shifting away from China as it seeks to boost trade and ties with India.
“India is about 15 years behind China in terms of development,” says Chris Devonshire-Ellis, Founding Partner of Dezan Shira & Associates. “It is sometimes perceived as being hampered by its slow pace of reform. Yet it should be remembered that this is partly due to it being democratic, and with an independent judiciary and rule of law. India can and does offer many routes into the huge Indian market in ways that China cannot.”
An example of the meaning behind Chris’ comments can be found in the recent news that popular American children’s publications “High Five” and “Highlights” have been launched in India, crossing both the educational and publishing sectors, both of which are off limits in China to foreign investors.
“We are finally getting some positive traction from India,” Devonshire-Ellis further comments. “There are sound reasons why the likes of Unilever and IKEA are now spending billions of dollars in this market. India has demonstrated it is open for foreign investment with tax cuts and export incentives, all of which is making the Indian market far more attractive for foreign investors. With the World Bank and analysts predicting growth rates of up to 8%, India is finally poised to become the global foreign investment darling. Obama’s proposed U.S. Trade Representative underlines this shift in thinking and the demographic development reality.”
In further good news, there is talk of India finally being able to reach an agreement with the European Union (EU) over a long standing proposed free trade agreement (FTA). This FTA would further open the Indian market to EU companies. If both Fromen’s appointment and the EU deal are secured, the immediate future for India as a destination for foreign investment will begin to look very strong indeed.
Dezan Shira & Associates is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in emerging Asia. Since its establishment in 1992, the firm has grown into one of Asia’s most versatile full-service consultancies with operational offices across China, Hong Kong, India, Singapore and Vietnam as well as liaison offices in Italy and the United States.
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