Smart cities to investment treaties: What you should expect from Obama's India visit

With US President Barack Obama scheduled to visit India on 25 January, preparations for the high-profile visit are entering final stages. India-US ties are set to move to a transformative level,  with talks on a range of issues, including defence, energy, education and economic cooperation.

The two leaders have met thrice already in the recent past - in Washington during a bilateral meet in September last year, in Myanmar during the East Asia Summit and in Brisbane during the G20 in November. But the latest visit will be an "important summit" meeting in that it will seek to give a more concrete shape to many of the decisions, outlined in the joint statement issued last year in Washington.

While the government has been tight-lipped about the details of Obama's visit, speaking in Gandhinagar last week at the Vibrant Gujarat Summit, US secretary of state John Kerry said the Obama-Modi discussions will broadly focus around climate change, defence, civil nuclear cooperation and economic partnership.

Here's what you can expect from Obama's visit: 

1. Defence:  Both sides are set to ink a new 10-year defence framework agreement that would take defence cooperation to a higher level. The United States aims to secure agreements with India to start pilot projects for joint production of drones as well as equipment for transport planes.

Talks on developing a next generation aircraft carrier and the co-production of defence equipment are also on the agenda. The US is keen to replicate in part the kind of defence cooperation that India and Russia share, especially on the lines of the BrahMos missiles that are jointly developed by the two countries. The US is also set to cooperate with a planned National Defence University to be set up by India.

2. Smart cities: US involvement in the Smart Cities project for Ajmer, Allahabad and Vishakhapatnam will also to get a push during the talks. The relevant authorities have already been in contact over past few months to settle on the basics. According to the agreement between the two countries, the US participating in the three cities as knowledge partner in the areas of traffic management, solid waste management, garbage disposal, recycling waste water and in water storage.

According to a report in the Economic Times, top American business houses have already formed a consortium to assist these smart city projects and Cisco, IBM, 3M, EMC, GE, Honeywell, KPMG, Otis, Timken and Louis Berger are part of it.

 Smart cities to investment treaties: What you should expect from Obamas India visit

Representational image.

"The consortium has been set up to collectively look at business opportunities in various sectors including smart cities, and aims at identifying and bidding for projects across the country. Large projects require strong Indian partners along with financing solutions to realistically move forward," Amcham executive director Ajay Singha was quoted as saying in the report.

3. Economic ties:  That the US views the Modi government as business-friendly is evident from the fact that an 80-member team from the US, including 12 CEOs, and led by US Secretary of State John Kerry, attended the Vibrant Gujarat Summit in Gandhinagar. The US is hoping to build on the Modi government's bold policy initiatives like Make in India, Smart Cities, Skilling India and renewable energy.

After an assurance by Modi to foreign companies that red tape would be cut away, more investments have been flowing into India from the US. More concrete movement on the Modi government's Digital India initiative as well as India's proposal to establish the Global Initiative of Academic Networks (GIAN, or Knowledge) will also be seen during the summit.

As part of cooperation under GIAN, which is part of the joint statement, India is to invite and host up to 1,000 American academics each year to teach in centrally-recognized Indian Universities, at their convenience. While the American teachers are to be reimbursed by their parent universities, India will be looking after their stay in the country and also pay a token amount.The process of identifying the universities on both sides is underway.

4. Civil nuclear deal: The stalled civil nuclear deal is also expected to get a major push with contact groups from both sides having held two rounds of talks so far. Issues over India's liability laws are expected to be ironed over.

Sources were quoted as saying in DNA that India has offered a proposal to set up a nuclear insurance pool to compensate suppliers in case of a nuclear accident.And since the liability law cannot be tampered with as it was an Act approved by Parliament, the insurance pool is the best available option .

5. Investment Treaty: Progress has also been reported on negotiations for an investment treaty that protects the intellectual property rights of American businesses. The US has been pitching for negotiations for a Bilateral Investment Promotion and Protection Agreement since 2010, a condition that US businesses are demanding to transact in India.

"The government agrees that an early conclusion of the BIT negotiations will significantly improve the investment sentiments. But the US is well aware of our problems. We are revising the model BIT agreement to do away with investment-state disputes [related to telecom multinationals whose licences were cancelled]. Once that is finalised, we will be in a position to resume negotiations," a senior official was qupted as saying by the Business Standard. But since the US is not willing to wait any further, it has been putting pressure on the Modi government to conclude talks and ink an pact on ensuring protection for investments as well as intellectual property rights.

6. Health: The talks will also see forward movement to cooperation in the health sector, especially in developing affordable vaccines for dengue, malaria, tuberculosis and also in cancer research.

7. Energy: India is also likely to press the United States to remove Indian oil companies from a list naming firms doing business in Iran, and to seek priority access to US LNG exports. The US Government Accountability Office (GAO) listed three Indian companies as having commercial activity in Iran's energy sector in a report last week, potentially making it difficult for them to do business with other countries, mainly the United States.This (mention in the list) could hit Indian companies' plans to invest in other countries, particularly in America.

India is also likely to seek preferential access to US exports of liquefied natural gas (LNG), even though India does not have a free-trade agreement (FTA) with the United States.

Clearly, the US can see that Modi has given business a central focus in policymaking which has never been done in the past.

As Seema Sirohi rightly points out in this Economic Times blog post, "Obama accepted the invitation with ease because the India Story was resonating once again. The US bureaucracy is not deaf. The positive sentiment has trickled up to the White House and it is beginning to trickle down through the system. At the very least, the Americans do not want to be left out of the game. They can see the interest among other countries — nothing like a herd instinct to get people talking and thinking."

With inputs from Agencies


Updated Date: Jan 23, 2015 14:57:35 IST