India-US CEO meet: Modi-Obama chemistry is fine, but PM must deliver

The massive surge of good faith on display at the Modi-Obama joint interaction with the CEOs from India and US must soon translate into some concrete reality on the ground. It was very instructive to note the manner in which Obama made public before the CEO community Modi’s assurance to him that the ease of doing business will dramatically improve to help realise the largely unfulfilled potential of business engagement between the two countries. This should put more pressure on Modi to deliver. Modi also made a firm commitment that he will personally monitor important projects. In fact, when Modi informally met some of the American CEOs the previous evening at President Pranab Mukherjee’s banquet, the global head of a well known hospitality company bluntly told him it takes about 44 long drawn out clearances to establish a hotel in India. Another CEO told the PM that the bureaucracy hasn’t changed at all at the lower levels, especially at the state level. In short, the feedback Modi personally got was things hadn’t changed much at the bureaucratic level over the last eight months. One CEO even spoke about the arrogance or apathy shown by some Central ministers. [caption id=“attachment_2065253” align=“alignleft” width=“380”]  US President Barack Obama and Prime Minister Narendra Modi with Honeywell, chairman and CEO Dave Cote during India US CEO Forum in New Delhi on Monday. PTI[/caption] So there is still a wide gulf between intention and action. The NDA does not have much time before its current goodwill begins to wane. Indeed, if truth be told, some of the initial goodwill may already have evaporated as doubts have emerged about whether a India’s complex political economy will accommodate all the promises Modi has made to the global business community. For instance, the PM specifically promised the American businesses that he will take care of their Intellectual Property Rights concerns. Across India’s political spectrum, including in important sections of the Sangh Parivar, there is consensus that India’s Patent Regime should not be diluted at all. A top Swadeshi Jagran Manch(SJM) leader told me there were differences even on the setting up of a Working Group to comprehensively study the current IPR laws. “We know exactly which promises being made by Modi to global businesses are not going to be implemented,” said the SJM leader. The point is IPR laws are at the very centre of concerns raised by the US businesses. Which is why Modi and Obama both made specific mention of it in their interaction with the CEOs of both countries. In my view this will be the single most important question to be resolved between the two nations. This question will also impact other aspects of the Indo-US engagement such as the Bilateral Investment Agreement. One is more optimistic about the engagement between India and US on green investment and trade. Obama specifically stated that the US companies could invest $2 billion in green energy initiatives in the near future. The fact that he put a specific figure to new investment intention says a lot. My sense is Modi and Obama have already informally discussed a framework if cooperation on green energy which could actually translate into a bilateral treaty of the kind the US has entered with China some months ago. A strong hint of this came when Obama said The bulk of poor Indians who consume little or no fossil fuel could possibly leap frog to green sources of energy such as solar, LNG via US shale and nuclear. The US could agree to transfer of funds and technology to make these energy sources cheaper for the bottom 600 million Indians who have very little access to fossil fuel today. Obama believes this section could leap frog to avoid the “dirty technology”. In practical terms it seems Modi is far more keen on working with the US on solar energy and shale gas because operationalising nuclear power deals with the American companies will be very difficult from the cost and safety standpoint. The fineprint of the “understanding” to reach and agreement between India and US on civil nuclear deal is still not known. All we know is the Indian government will give a legal undertaking to the US that the American equipment supplier will be insulated from any future class action suit by the victims of an accident in a nuclear power plant. Many experts believe this may be open to legal challenge as Clause 46 of the Nuclear Liability Act, fully supported by BJP in Parliament, does give recourse to the victims to exercise Tort law. Danny Rodericks, the CEO of leading US nuclear power company, Westinghouse, has publicly stated he cannot say much before seeing the fine print of the “understanding” to reach an agreement between India and US. It appears to me that the actual commercialisation of a Indo-US nuclear partnership cannot happen as long as Clause 46 remains. It is possible that US government, which was earlier quite evangelical about mitigating the risk of American nuclear power companies, has now moved on to look at bigger gains from doing a broader bilateral green energy deals with India with greater accent on solar power, shale gas export through LNG route, green smart cities etc. Nuclear deal now serves only as an instrument to get India entry into export control clubs, which will enable free flow of technologies into our country. But again all these would become possible only if India is willing to sign an overarching package deal which will entail reexamining our current laws and procedures relating to IPRs, Banking, Insurance, multi brand retail etc. In short, mere chemistry between two leaders won’t resolve these tricky issues. The author is executive editor at Amar Ujala publications group. The views are personal.