PM's U.S. visit: CII sets $15 bn. FDI target

By Our Special Correspondent

NEW DELHI, SEPT. 3. In the backdrop of the Prime Minister's visit to the United States, the Confederation of Indian industry (CII) has finalised a report identifying 13 sectors with potential of increasing Indo-US economic cooperation. Apart from information technology, these include the financial sector, energy, environment, pharmaceuticals and even the social sector.

The CII has set a target of $ 15 billion of Foreign Direct Investment from the U.S. over the next five years with the identified sectors becoming a major draw for industry and investors. As for bilateral trade, it expects exports to the U.S. to jump to $ 15 billion by 2005.

The report says one of the important areas of cooperation is at the multilateral level of the World Trade Organisation (WTO). It feels the greatest success of Mr. Vajpayee's will be to find synergies that exist in the agendas of the two nations and find ways and means to accommodate the needs of both nations in each others' agenda.

On the multilateral level, the CII notes India has been pointing out that issues concerning environment and labour have to be kept out of the WTO. There will be no change in this position and the U.S. will have to accept this fact before coming to the negotiating table.

The report notes that the composition of India's exports has already undergone a change over the recent past. Exports to the U.S. have been rising mainly on account of increase in the exports of diamonds, textiles and readymade garments, machinery, carpets, footwear and leather products, dyes, iron and steel products, chemicals, edible fruit and nuts and spices, coffee and tea.

Six items - textiles and clothing, cut and polished non- industrial diamonds, carpets, shrimps and prawns, footwear, leather goods and cashew nuts - account for about 75 per cent of total Indian exports to the U.S. at present.

What is of concern to India is that the volume of Indo-U.S. bilateral trade remains a small fraction of U.S.'s global trade. While U.S. exports to India account for nearly 12 per cent of India's non-oil imports and U.S. is the destination of 18.9 per cent of India's exports, U.S. trade turnover with India constitutes less than 1 per cent of its global trade.

However, India's share in U.S. imports has been rising gradually and increased from 0.84 per cent in 1997 to 0.90 per cent in 1998. The U.S. is India's largest trading partner and export destination. The two-way trade at over $ 12.5 billion reflects an increase of nearly 100 per cent since 1992.

However, compared to the U.S. overall trade of over $ 1,750 billion for merchandise trade and $ 435 billion of service trade in 1999, the Indian performance is dismal. Even if the country aims at 10 per cent share of the U.S. market in the next 10 years, it will achieve a total export of $ 120 billion of merchandise and service exports. Which will translate into over $ 80 billion increase in exports to just one large market.

India, the CII is of the opinion, should at least export products worth $ 15 billion to the U.S. within the next five years and $ 25 billion within the next 10 years time. Meeting these targets will require a big push from both the industry and the Government. The biggest thrust has to be in the services sector, it is felt, since in merchandise goods the U.S. may not be completely open to a sudden surge in exports from one particular country.

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