THE BLOG
06/10/2010 12:23 pm ET | Updated May 25, 2011

United States - India Business Council Celebrates Its 35th Anniversary

Hundreds of US and Indian participants celebrated the 35th anniversary of the US-India Business Council (USIBC) in Washington, DC on June 1 and 2. The sessions this year were focused on the themes of "Education, Infrastructure & Inclusive Growth." The word infrastructure, as defined, includes "hard" power plants, roads, bridges, and "soft" health, as examples.

In a nutshell, these three themes encompass the hopes and challenges facing millions in India and are central to US-India relations, and USIBC is wise to work on them. Further, in this information era, the USIBC event has become, in effect, a virtual component of the US-India strategic dialog, perhaps a more pertinent part than mere bilateral government to government talks, because it involves government and corporate leaders, think tankers, policy experts, academics and NGOs.

Inaugural Session
Opening the annual conference, USIBC President Ron Somers called attention to the rapidly growing membership of the organization, now at over 350 Fortune-500 and global Indian companies. He stressed how industry was ahead of the curve and plays a vital role in enhancing the relationship between US and India. To sustain growth at the current 8.5%, massive mobilization of capital will be required, including $1.5 trillion for infrastructure over the next decade. Further, creation of jobs and protection of the environment in both countries is a basis for the economic partnership. He urged industry to continue to provide leadership.

Outgoing USIBC Chair Indra Nooyi of Pepsico described how much the USIBC has grown since its founding in 1975 and its key role in facilitating understanding on the US-India nuclear deal. India has since joined the nuclear suppliers' group and has accepted International Atomic Energy Agency safeguards, but has refused to sign the Nuclear Non-Proliferation Treaty while presenting a pristine track-record on nuclear non-proliferation. She also recalled the horrific Mumbai attacks of 2008 when over 300 lives were lost, and how both the US and India came together to deal with the aftermath with the USIBC playing a key facilitating role.

Incoming USIBC Chair Terry McGraw of McGraw-Hill recalled his company's 40 year publishing joint-venture with Tata. He urged the government to lower tariffs, to lift the cap on foreign direct investment in the insurance sector, build a strong long-term debt market, and have a US-India bilateral investment treaty. He promised the support of the USIBC and its member companies in increased trade and investment, recalling US President Obama's goal to double exports in the next five years, and noted that President Obama will be the sixth US President to visit India.

India's middle-class is larger than the entire US population. Several speakers spoke about how 770 million people in India are below the age of 35, with 385 million people being under age 15, making India one of the few large non-aging countries in the world. Incidentally, China with its one-child policy has become the largest aging country of Asia, even outpacing Japan in that respect. Nevertheless, India has an enormous "inclusive education" challenge to ensure access to education and training. Projections include having to recruit 2 million teachers and build 6,500 "model" schools in less-developed areas. And generating employment through the private sector is another great challenge. This is why India's External Affairs Minister Mr. S.M. Krishna stressed the revolution of entrepreneurship, creativity and innovation and said that India has become a global hub for innovation, design & development and manufacturing. His credibility stems from having helped expedite the IT revolution while he was chief minister of Karnataka and for making Bangalore a world IT capital.

Mr. Krishna cited the example of State Bank of India's low cost "tiny branch" for banking in remote areas, costing a little over $300 per branch. The branch is comprised of a mobile phone and a finger-print scanner. The branch can hold data of up to 50,000 customers, record details in 11 languages and is operated by women recruited at the village level. Furthermore, the devices work on battery that is rechargeable using solar energy. State Bank of India hopes to install 250,000 of these tiny branches across Indian villages.

Another example he discussed was a non-profit rice husk based water purifier invented by a major Indian company. At a onetime cost of $20 and a recurring expense of $6 for every 3,000 litres, he said this is an example of an affordable innovation for safe drinking water across villages and middle class urban homes. Mr. Krishna said that products like the small car or a portable low cost ECG machine are other powerful examples of global capabilities applied to local needs, and have great potential in other markets. He added that around 200 Fortune-500 companies have set up research and development structures in India, and he opined that India looks to USA for its scientific output and the ability of converting this strength into wealth-generating innovations. India-US partnerships are now looking at providing low cost, efficient healthcare services to remote areas through mobile clinics, tele-medicine etc. Both countries can work together in streamlining health based IT solutions such as digitizing health records, joint research and collaboration in drug discovery, medical research and clinical trials.

Commentary on the US-India Strategic Partnership
Former Defense Secretary Bill Cohen explained that India has been recognized as one of the key centers of influence in the US National Security Strategy, commended the Singh-Obama 21st century Knowledge Initiative, and emphasized that it was not just national security but also food security and other components of human security that are at the core of the US-India relationship.

The Federation of Indian Chambers of Commerce and Industry's Dr. Amit Mitra spoke about how logistics and supply chain management had enhanced efficiency in Indian manufacturing, citing an example from the textile industry. With an estimated 40% of India's fruits and vegetables being lost due to the absence of appropriate storage and cold chain, Dr. Mitra called for enhanced foreign collaboration on this area, and also on finding sustainable health care models to ensure access for some 600 million people who lack it.

Dr. Vasant Narasimhan, Novartis Vaccines North America, said that his company was working to strengthen health care in rural India through private sector collaboration with the public system. John Wood of Room to Read spoke about his hope of creating 10,000 libraries in India. Brooks Entwistle, India country head of Goldman Sachs, discussed his company's efforts to support women entrepreneurs, and emphasized that access to capital was as important as business education. Some lending institutions are charging an exorbitant 27% interest rate to entrepreneurs.

David Good, chief representative of Tata in North America, introduced US Education Secretary Arne Duncan who said that education is the only sure path out of poverty. Secretary Duncan mentioned the $300,000 initial grant to build US-India education cooperation modeled on the USIBC that he has made to the Institute of International Education, a non-profit entity with offices in the US and India.

India's Minister for Human Resource Development Mr. Kapil Sibal, a Supreme Court lawyer, spoke about education empowering people and disadvantaged communities to move forward. Humanism, collaboration and respect for the individual should be built on the shoulders of knowledge, he said. Globalization and innovation are concurrent themes. So too is the culture of tolerance. He called attention to the Right to Education Act, the first time in 62 years that it has been passed by the Indian parliament, granting children the right to go to court in the event of local bodies using any reason, such as lack of resources, to deny them education. The right is drawn from a Constitutional section. Intangible assets, he said, comprise the primary wealth of a nation, and creativity sows the seeds of future wealth. He presented the daunting challenge of the Indian education sector of having to set up 700 universities in about 12 years, and 35,000 colleges. 22% of people in the US are above 65 years of age and in 2015 that group will be 39%. The corresponding percentages for Europe will be 53% and for Japan, 67%. Thus, it is India that has the vibrant young population, and of course they must be educated.

David Rubenstein, co-founder of The Carlyle Group, a major private equity firm, predicted that India would become the third largest economy during this century, after China and the US, and described the US-India relationship as the second most important in the world, after the US-China one. Some others, on the sidelines, wondered if indeed because of the favorable age-pyramid that India has, whether in fact it might be the most important. Admiral Walter Doran, President of Raytheon Asia, discussed defense technologies that have spinoff benefits, including for maintaining internal security, and the value of investing in education, health infrastructure as well as the hard infrastructure of power plants, ports, airports, roads and bridges.

Prof. Raj Kumar, President of Jindal University, called for endowments to be created in the process of university development, describing it as a big difference with the US pattern of private universities having large endowments to support students and faculty. Ambassador Nick Burns of the Cohen Group described the Indian Ocean region as being the most important from a strategic sense, with the US, China, India, Japan, and South East Asian countries having core interests.

Yogi Deveshwar, Chairman of ITC, described the pioneering rural markets creation work that his company has undertaken to serve the "bottom of the pyramid" as enunciated by the late Prof. Prahalad. He discussed the triple financial, social and environmental bottom line of the modern corporation. In a press conference, new USIBC Chair Terry McGraw called for focus on corporate social responsibility, digital online learning tools, and the USIBC education initiative. Larry Summers, Director of the National Economic Council, described high quality Indian medical facilities that would increasingly attract patients from abroad in medical tourism. He recognized the Indian expatriate community's role in catalyzing change in perceptions in the US. He spoke about the momentous transformations in the global economy, with the G-8 losing relevance and being replaced, in effect, by the G-20 of which India and the US are leading members. Prime Minister Dr. Manmohan Singh had asserted that he would not attend any more G-8 summits as a supplicant, and sure enough, the G-20 has become the major venue for global consultation.

The Supreme Court Decision in June 2010 on the Bhopal Industrial Disaster of 1984
Amidst the euphoria of the follow-up of the USIBC event, the long-delayed Indian Supreme Court ruling on June 7, 2010 concerning the Bhopal industrial disaster of 1984 has had a sobering effect.

In December 1984, an explosion at Union Carbide's pesticide plant caused an estimated 40 tons of lethal methyl isocyanate gas to escape into the city of Bhopal exposing some 500,000 people and causing an estimated 15,000 deaths. Six safety measures designed to prevent a gas leak had either malfunctioned, were turned off or were otherwise inadequate. Further, the safety siren, intended to alert the community should a catastrophe occur at the plant, was turned off. The failure to compensate most of the thousands of victims and their families even after 26 years is undoubtedly a disgrace. The disaster is etched into the minds of corporate chieftains in India and their foreign partners, and safety and quality control have since 1984 become foremost on their minds. Further, the media has become far more watchful.

Corollary -- New Japanese Government Installed, India and USIBC can be Examples
On June 8, 2010 yet another Japanese government was installed, that of new Prime Minister Mr. Naoto Kan, nine months after the previous Hatoyama government was elected in a landslide amidst ecstatic scenes, making Mr. Kan the fifth Japanese Prime Minister in the past four years.

The ostensible reason was Dr. Hatoyama's inability to convince the US on the Futenma military base matter, that had been a campaign pledge. It was handled so very differently from how India approached the US on the nuclear power issue, where India did not budge and it was the US that gradually came to understand India's position and altered its own laws. Further, Indian Prime Ministers generally resign only when the ruling coalition loses its majority in the lower house of Parliament as is specified in the Constitution.

Since India is the world's largest parliamentary democracy, Japan would do well to learn from both the ruling Indian National Congress and its coalition partners, and indeed the opposition Bharatiya Janata Party and its coalition partners, on how parliamentary democracy can work without endless, damaging political instability as is happening in the world's second largest economy of Japan. In all of the confabulations on the US-India nuclear deal, the USIBC did a fabulous job of building understanding on both sides of the other country's positions and concerns. There is no equivalent organization for US-Japan, and it is worth having one for India-Japan. Needless to say, much of the USIBC's success has been built on the passion and dedication of its inspiring President Ron Somers and successive high-profile Chairs such as Pepsico's Indra Nooyi and now McGraw-Hill's, Terry McGraw, and it is not easy to replicate that sort of leadership skill and commitment.