India's policy decisions dampen investment climate: US envoy

American and Indian businessmen in Washington have voiced their concerns over high tariff and non-tariff barriers, restrictions on foreign investment, lack of transparency and defence offset requirements in India, says the US ambassador

Chennai: Several recent policy decisions by India have caused "significant concern" and "dampened sentiment" about its investment climate, US Ambassador to India Nancy J Powell said on Monday, reports PTI.

"The adoption of manufacturing policies discriminatory to foreign companies and the inclusion of retroactive tax provisions in the Finance Bill are two examples," Powell said, addressing members of the Indo American Chamber of Commerce (IACC) and American Chamber of Commerce (AMCHAM).

Voicing concern over challenges to trade and investment, she also called for a level playing field for US companies doing business with India.

Powell said she was committed to ensuring that US companies can compete on a level playing field in India and operate in the same open and fair environment that Indian firms enjoy in the US.

Powell said she had met US and Indian businessmen in Washington before her arrival, and they voiced their concerns over high tariff and non-tariff barriers, restrictions on foreign investment, lack of transparency and defence offset requirements.

Recently, US Treasury Secretary Timothy Geithner met with Finance Minister Pranab Mukherjee encouraging him to reassure foreign investors that India would continue to welcome foreign capital by "advancing important economic reforms," she said.

On the economic opportunities between the two, Powell said both India and the US were "poised to sign an additional $8 billion in direct commercial and foreign military sales," through which India would assume a larger leadership role in the region and effectively respond to security concerns and humanitarian relief operations.

Noting US-India partnership in the defence sector has experienced one of the highest growth rates in the region, she said, "With the C-17, C-130J sale, we have more than doubled our total Foreign Military Sales and posted sales making India the third largest FMS market for 2011." .

The US envoy said Air India's purchase of the Boeing 787 Dreamliner aircraft would be a significant boost for US jobs and exports and the Indian aviation sector.

"The fuel-efficient Dreamliners are a key component of Air India's restructuring plan as India positions itself to become a global aviation hub," Powell said.

Observing that the total bilateral trade in goods and services was expected to reach $100 billion this year, she said both countries were engaged in technical discussions on a Bilateral Investment Treaty (BIT) that would help foster investment opportunities.

She said Washington's recent announcement of a new model BIT has contributed to the active advancement of BIT negotiations between the two countries and "we are expecting a new round to kick off very soon".

"A BIT would enhance transparency and predictability to investors, and support economic growth and job creation in both our countries," she said.

India has become one of the fastest growing sources of investment in the US, creating well-paid jobs for tens of thousands of Americans, she said, adding, nearly 50% of the high-tech Start-ups in Silicon Valley and Washington are owned by Indians or Indian-Americans.

Citing a McKinsey report, which said India needed $143 billion investments in health care, $392 billion in transportation infrastructure and $1.25 trillion in energy production by 2030, Powell said that by reducing barriers to foreign investment, US companies can help India accomplish these ambitious goals.

Bolstering bilateral trade and investment, expanding defence cooperation, enhancing ties in international fora, counter-terrorism and global threats were her objectives, she said.


Life Exclusive
Staff training has its rewards

Impromptu meetings called by the management were a learning experience for all. The 36th part of a series describing the unknown triumphs and travails of doing international business
The hotel industry is based on the ability of the staff to give best and memorable customer service as possible. This is the backbone of hospitality that everyone in the industry must learn and employ at every stage of their activities.
Once in a while, the staff at the Courtyard would have meetings at short notice when senior managers would be present. The human resources director, aided by the front office manager, would simply play back some of the taped telephone conversations that the front desk associates had with a customer, who had called seeking help, assistance and guidance! Of course, the person answering the phones, as a matter of route job, did not know that his/her telecon was being actually recorded! This was known as “telephone audit”, a widely accepted practice in the industry. Both our successful handling of the caller, or the botched up call was discussed and those who ‘failed’ to please the customer was separately called in for special training or advice as to how they should improve themselves for the future! It was always a learning experience all the time!
In addition to this, was the guest commentary cards that were filled in and left by the guests during their stay. Of course, on the top of this, randomly picked guests would also get an email questionnaire for them to fill in their experience of their recent stay. Every single unfavourable comment was investigated; the person concerned was given additional training to improve, suitable letters of apology written to the guest and thanking them for the trouble they took in bringing such matters to the notice of the management.
Rosemary, our director of housekeeping, had been brought to the Front office, for her not only to get cross training, but to feel the direct impact of the customer’s concerns about the house keeping work. In my case, I was assigned to work with Victoria, popularly known as Vicky, for handling the actual housekeeping job; this meant to spend half a day, simply watching her do all the chores involved in cleaning a room—changing of beds, bringing in new linen, remove used toiletries and replace with fresh materials, towels and even washing the bathroom completely.
Vicky could do this generally in 22 to 25 minutes, while the maximum time given was 30 minutes per room. I think it took me about three days of practice to be able to reach some 40 minutes per room, which still was a good speed, considering my being a greenhorn, while she was a veteran with years of experience!
Our sales management had landed an airline contract; which meant a guaranteed allocation of some eight rooms per night; and they had the option to ask for another four more at the same special price! Not only these had to be kept all the time, we had to ensure their collection and delivery back at the airport by our coach, at short notices. They were nice, friendly, smiling and courteous in dealing with one and all.
On one occasion, I had taken the crew members to the airport and had just returned back, parked the van in the portico, and got inside the front desk, when the airhostess, whom I had dropped, was frantically asking for me. I spoke to her, she wanted me to hurry back and see if she had left her small handbag in the seat to the right of the driver, in the third row! I rushed back to find that the handbag was lying just below the seat! I answered the call, and told her that I was rushing back to deliver the same. When I did, she opened her bag to show the money, all her documents that she was supposed to deliver to the bank the next morning!  She gave me a big hug and a thank you note to the management followed immediately thereafter.
My other colleagues in the hotel, like Andrea, Robi and Maria were kind and supportive. The teamwork was fantastic.
As a guest relations associate, one had to anticipate the customer’s needs. We had to place ourselves in the shoes of the customer and be prepared to assist them, so that every single act of the staff leaves a memorable feeling in the minds of the guest. Most of the guests would come in and ask for stamps so that they can mail the letters, which they probably wrote in the flight. I found we were running short of these, and I made it a point to get stamps not only for local mails, but also overseas, as we had a great number of clients who came from Europe and Latin America.
Likewise, there were some others, who came to town, and stayed with us, always left part of the baggage and laundry. This was taken care, and invariably we would have them delivered in their preset rooms just before they actually checked in!
Most of the hotels had USA Today, the national daily, delivered to their rooms, on a complimentary basis; but living in Virginia and across the river Potomac was Washington DC, the home of Washington Post!  I took up the issue with the GM during one of our meetings and from next day, we had on sale in the front desk.
Our coach service not only covered trips to the airport and back, but also the nearby eateries and the Crystal City Metro. Very often on these runs, I had the occasion to see some other guests waiting for a pick up. On one occasion, I heard the two waiting guests complaining that in spite of their calls their van had not turned up. When I enquired where they were heading for, they replied that they were put up in Hyatt, which was actually next door to us. I invited them to join us, and dropped them at their hotel first, and suggested to them that they might consider staying with us the next time they are in the city!  I did explain to them that sometimes, the traffic was so bad on the roads, that even the best of drivers would find it difficult to make the runs!   
I was now permanently assigned to the afternoon shift, though occasionally my services were utilized in the mornings as well. Krista called me in to have a chat, and when I did, I was pleasantly surprised to know from her that I had a fair chance to be promoted to the supervisory position in the Alexandria Sheraton Suites, a member unit of the Starwood Hotels, subject to my being interviewed and selected by their front office manager.
The interview took place a couple of days later, on my day off; I met Chad Couture, a young and bright manager, who was friendly and knowledgeable.  My knowledge of computers was limited, as it was then, and he emphasised that the system in use in Sheraton was quite different from the one employed by Courtyard by Marriott, and he made it abundantly clear that it was not easy to master it! My initial training would last for a week in the morning shift, after which, I would be assigned to the evening shift for at least two weeks before a final decision made for my work timings.
Without much ado, I was simply transferred to the Sheraton Suites the following week and notification put up in the Courtyard on the day of my joining duty, as we had to train another person to join the front desk, though, we had already groomed an existing staff member to take over my shoes as guest relations associate.
We had already moved into our own townhouse in Chimney Wood Court, my new hotel was less than four miles from my home. And I looked forward to making a long innings with the Starwood Hotels.

(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce and was associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts. From being the advisor to exporters, he took over the mantle of a trader, travelled far and wide, and switched over to setting up garment factories and then worked in the US. He can be contacted at [email protected].)


It’s not Europe: Credit issues in emerging markets

In emerging markets both the banks and the regulators are often subject to the whims of the state. So the size of the credit problems that actually lurk on their balance sheets may eventually make Europe’s problems look quite small

It’s all about Europe. Every day we read and hear in a never-ending stream about the problems in Greece. If the story is not about Greece, then it is about bad debts in the periphery countries of the EU (European Union) including Spain, Portugal, Italy and Ireland. The sovereign debts of these countries are supposed to be shaky and the holders of their debt, including many banks, could be in real trouble.
Isn’t it all a bit passé? I mean we have been hearing about this since I wrote my first column over two years ago. One has to ask whether these problems were any better or worse six months ago last fall? I doubt it. Despite the European problem markets all around the world have done rather well. The S&P index has increased over 10% even with its recent correction. The German index, the DAX, is up 23% since its lows of last September. There are debt problems lurking in the world economy, but they are somewhere else.
The best way to track a potential credit crisis is to look for a recent credit splurge. A good place to start would be Asia. Asia certainly has had its share of credit recently. It helped fund a period of exceptionally high growth, but like the housing bubble in Spain, high growth tends to mask problems.
To find the largest problems it is perhaps best to start with the region’s largest economy, China. China’s real estate bubble has been threatening for a long time. It has between 10 to 65 million vacant properties. Whole cities are vacant and unused. In addition, there are an estimated $464 billion worth of bad loans to local governments. Bad debt ratios for Chinese banks could be as high as 30%. But China is not alone.
The Chinese economy has an enormous impact throughout Asia especially on commodities producing countries like Australia. According to Societe Generale strategist, (uber-bear) Albert Edwards, “Australia, at its simplest, is a credit bubble built upon a commodity boom dependent for its sustenance on an even greater credit bubble in China.” Australia has not had a recession since 1991. Like the housing bubble in the US, Australians have assumed that the past growth in housing prices will continue indefinitely into the future. The result is house prices have risen 300% since 2000, 100% more than in the US at its peak. Unlike the US, Australian house prices have not corrected.
But it is not just East Asia. India’s problems with high commodities prices, a falling rupee, and high interest rates are severe. According to a survey of 100 bankers by the Reserve Bank of India (RBI), bad loans are the most significant risk to the financial system. No bank is more exposed than India’s largest bank, the State Bank of India. Like other state-owned banks in emerging markets it invested in infrastructure at the encouragement of its political owners. Infrastructure is invariably a pit of corruption and waste.
The economic boom in Brazil has slowed, but the credit growth of over 25% per year has left many problems. Last year Brazil reported the highest default rate in nine years. One of the largest Brazilian banks, Itaú Unibanco, increased its provisions for bad debts by 38%.
Turkey’s credit has been growing at more than 30% which helped fuel its economic expansion. But now households are stuck with a debt to disposable income ratio that has risen from 35% to 45% in the past two years.
Not to leave anyone out, last year the Russian state and a large state-owned bank bailed out the Bank of Moscow to the tune of $14 billion. Even in Kenya credit to private households has increased by 32% in 2011, creating another potential credit bubble in one of the world’s poorest countries.
This is a globalized world. So a problem in Asia or in emerging markets is not just a problem for local banks. Citigroup in the US gets more than half of its profits from emerging markets. The Spanish bank, Banco Santander, has a large presence in Latin America and recently had a 32% surge in loan losses in Brazil. Both Standard Charter and HSBC have large exposures to Asia.
Many analysts are quick to assure investors that banks in emerging markets are well capitalized and there isn’t anything to worry about, but how do they know? Banks in Europe have gone through two stress tests to determine their risks, yet estimates of bad loans keep rising. The regulators in Europe are reasonably honest and independent from politicians. In addition, they are regulating mostly private banks. In emerging markets both the banks and the regulators are often subject to the whims of the state. So the size of the credit problems that actually lurk on their balance sheets may eventually make Europe’s problems look quite small.

(William Gamble is president of Emerging Market Strategies. An international lawyer and economist, he developed his theories beginning with his first hand experience and business dealings in the Russia starting in 1993. Mr Gamble holds two graduate law degrees. He was educated at Institute D'Etudes Politique, Trinity College, University of Miami School of Law, and University of Virginia Darden Graduate School of Business Administration. He was a member of the bar in three states, over four different federal courts and has spoken four languages. Mr Gamble can be contacted at [email protected] or [email protected]).


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