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The US-India Business Council Comes of Age

The overflow crowd at the US-India Business Council's "Synergies Summit" annual conference in Washington, DC June 16-17, 2009 emphasized how positively different the Council has become from even a dozen years ago. Now seen as the main venue for networking on Indian business, there is a palpable enthusiasm for further enhancing relations on all fronts between the clichéd "largest [India] and oldest [US] democracies." To standing ovations, four cabinet members from the US and India described US-India cooperation at an all-time high, despite the looming threat of protectionist measures in this recessionary time. Secretary of State Hillary Rodham Clinton, ever popular among Indian-Americans, and who also writes in the Huffington Post, spoke of diplomacy and development, and bilateral US-India trade being about $43 billion. India, she said, is an anchor for regional security, alluding to India's large army, navy and air force that today have many collaborative programs with the US defense department, and India has committed $1.2 billion for Afghanistan's development. There are 90,000 Indian students in the US building bridges between the two nations.

She also included in her speech the serious issue of the rise of chronic diseases in both countries, and called for lower cost solutions that could be implemented in both countries. By mentioning the rise of chronic diseases as one area to work on, Hillary helps to eliminate the neglect of those diseases that are the major killers, indeed 60% of all deaths today are due to chronic diseases worldwide and they devastate families and communities. USIBC Chair Indra K. Nooyi spoke of India's globally competitive talent, and the growing two-way trade, and at the same time emphasized that an estimated 40-60% of Indian children are undernourished, necessitating urgent action.

Resumption of the WTO's "Doha Round" of Trade Negotiations
Onstage, there was tremendous bonhomie between Indian Commerce Minister Anand Sharma, US Commerce Secretary Gary Locke and US Trade Representative Ron Kirk, all holding Cabinet rank on commerce and trade, and much goodwill expressed about "resumption" of the World Trade Organization's Doha Round of trade negotiations that began in November 2001 and were abandoned in 2008. Incidentally, the calamitous and ill-fated Seattle World Trade Organization (WTO) conference in 1999 where massive demonstrations and pitched street battles paralyzed the city may have significantly damaged the WTO and prospects for an agreement. Ironically, Gary Locke was the Governor of the State of Washington when that WTO Conference took place in the State's major port city, Seattle. Minister Anand Sharma is a former President of the youth wing of the ruling Congress Party, and worked closely with the late Prime Minster Rajiv Gandhi who was earlier the party's General Secretary just as it is currently the role of his son Rahul. Thus his long association with the Gandhi family gives him a certain voice -- but the previous Commerce Minister Kamal Nath had that special relationship too. Thus, Ministers will speak pleasantly but at this time it is hard to imagine how the Doha Round can be concluded successfully. The negotiating positions prepared by the permanent staff of Commerce or Trade Ministries in India, Brazil, China, South Africa and other larger countries of the global South are entirely dependent on the US, Canada, Europe and Japan removing their massive agricultural subsidies to then discuss market access. Nothing short of a political earthquake will occur in all those Northern countries if those subsidies were eliminated. In Japan, it is likely that any government would fall -- and currently, there are other issues that appear irreversible such as the Japanese import ban on foreign rice because Japanese rice farmers are a major force in domestic, rural politics. Japan is the only country in the world where biriyani cannot be made with basmati rice. Such is the power of the domestic agricultural lobbies -- it exceeds anything that negotiators at the WTO can perhaps contemplate. Only longer term value generation in agriculture can alleviate the need for subsidies.

It is here that functional food and its effectiveness may play a role. If soy peptides can be scientifically documented to cut cholesterol risk, and bonito fish peptides can take care of hypertension - then value will accrue to the agriculture field beyond its current commodities focus. But there is little attention being paid to those wide-ranging steps that can wean nations away from subsidies that have been in place for generations. Nonetheless, eliminating subsidies is also the interest of fiscally-strapped Northern governments but they know that it is currently politically untenable. Hence, one need not hold one's breath expecting a speedy conclusion of the Doha Round. But the talks will restart, and there will indeed be an uptick in business for restaurants in Geneva, Switzerland where WTO is headquartered.

Pharmaceutical Intellectual Property Rights (IPR) Issues
David Simmons, President of the Established Products Division of Pfizer, Raj Gandesha, Counsel with the US global law firm White and Case LLP who was the principal author of the Report on incremental pharmaceutical innovation, and Greg Kalbaugh, USIBC Counsel, addressed a press conference to release the Report. India's Dua Consulting also contributed, as did the Pharmaceutical Research and Manufacturers of America (PhRMA). Simmons, Gandesha and Kalbaugh discussed the regulatory and intellectual property bottlenecks in imposing an expensive clinical trial requirement for demonstrating significantly enhanced efficacy of the active substance as a basis for any additional patent protection. This 3(d) section of the Indian Patents Act was written keeping in mind the prevailing concern that IPR for incremental innovation is tantamount to "evergreening," in effect the attempt to overcome patent expiration on a drug by claiming additional patent protection for sometimes minor modifications in the active substance. The counterpoint is that unless there is IPR protection, no one will readily invest shareholder capital on R&D in incremental innovation, some of which is indeed medically substantial, leaving over-20-year old generics and on-patent drugs on the market. Because patent infringement can only be proven in-country, and as long as Section 3(d) remains in the Indian Patents Act, patented incremental innovation on a generic anywhere in the world can be rapidly reverse-engineered & incorporated into production and such medicines distributed in the galloping Indian medicines market by the plethora of Indian companies with no fear of patent infringement. That is a legitimate fear of global multinationals because India is the only country in the world having the section 3(d) provision in the Patents Act. But is that fear entirely justified? Those of us who have practiced medicine in India have always used the brand names of quality producers like Pfizer, a company that has been in India since 1950, as the sole guarantor of reliability and safety. Injecting local anaesthetic lignocaine for minor surgery and seeing no effect, for instance, even when the producer was a State pharma company, was sufficient reason to insist on a product from a reliable manufacturer. And that is a bond of trust that is not easy to replicate by most companies. Therefore, it is not solely an IPR route that makes sense but also a brand management and marketing strategy.

Irrespective of the merits of the arguments, greater domestic Indian support to eliminate the Section 3(d) of the Indian Patents Act is likely to be possible only when IPR issues are treated in conjunction with enhanced access (see here and here ) through rationalizing procurement, volume discounts, virtual aggregation of demand and indeed increased investment in R&D, quality manufacturing and supply chain technologies that I have advocated for over a decade, even with the encouragement of the then-US Treasury Deputy Assistant Secretary. Indians, in general, do not care whether an "Indian" multinational mostly owned these days by an individual family plus many foreign institutional investors, or a global multinational benefits from revenue for a particular medicine - but they would like it to be price sensitive and of superior quality. And that is possible given that total revenue for the successful company is potentially stratospheric, as of course revenue = unit price multiplied by volume of sales to patients within the burgeoning Indian population.

34th USIBC "Synergies Summit" in a Nutshell
The tightly-orchestrated and efficiently organized USIBC Summit started off with a witty speech by Vikas Swarup, the Indian diplomat on whose book Q&A the Oscar-winning film Slumdog Millionaire is based, and a musical recital by Aashish, Pranesh and Sahir Khan. USIBC President Ron Somers highlighted shared prosperity. Minister Anand Sharma said that Indian industry has invested $106 billion in the US and has created more than 300,000 jobs in the US between 2004 and 2007. He announced that 450 million people had cast ballots in the recent parliamentary election. He repeated the call from Prime Minister Dr. Manmohan Singh for $500 billion in infrastructure investment. Indian Ambassador Meera Shankar recalled how far India has come from the time of Indian independence when the life expectancy for women was under 30. She stressed the importance of the agricultural and food processing sectors and infrastructure. Billionaire Azim Premji, Chair of WIPRO and the Azim Premji Foundation, described how he was in the right industry at the right time and with the right profile and that IT is repositioning business worldwide, including the growing popularity of telecommuting. He predicted sharp decline in business travel as teleconferencing facilities become vivid. He described how 50% of the growth of US business is coming from revenue growth outside the US, a major change from the past, and how demography is shaping that trend. David Mulford, now back in Credit Suisse after his stint as US Ambassador to India, described the exciting changes transforming the Indian rural economy. He also estimated that the civilian nuclear deal would create a $100 billion industry. US Trade Representative Ron Kirk said that 97 percent of all US exporters are small- to medium-sized businesses with 500 or fewer employees and that is a good story for trade.

In Conclusion
For his enthusiastic and tireless efforts over many years, especially when US-India relations were deeply impacted by the 1998 nuclear tests that brought matters to a virtual standstill, and for her years of behind-the-scenes efforts on US-India, both USIBC President Ron Somers, and Chair Indra K. Nooyi, the Chair and CEO of Pepsico, deserve high national recognition in the US and India. In India, at present Presidential honors such as the Padma Shri and Padma Bhushan are reserved for Indian citizens. However, for such individuals, those artificial restrictions should be relaxed.

The US-India Business Council has done a remarkable job of always reliable advocacy and of helping to tap into both communities to take the partnership to a new high, something that indeed people in both countries had for long wanted.

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