BREAKING NEW GROUND

Abstract:

The Indo-US ties went several notches up last month.

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The Indo-US ties went several notches up last month. Personal chemistry between US President Barack Obama and Prime Minister Narendra Modi cemented the relations further as Mr Obama wrapped up his over 50-hour India tour. Breaking the protocol, the prime minister received the Obamas at the airport and set the tone for the successful two-day summit.

The photographs of Mr Modi serving tea to Mr Obama in the sprawling Hyderabad House garden aptly captured the personal bonhomie between the two leaders of the world’s largest democracies. Mr Obama’s visit was significant in many ways. It was a first by the US president to grace the Republic Day celebrations as chief guest. It was also the first time that a US president in office visited India for the second time - Mr Obama had visited India earlier in 2010.

Getting down to business, both the countries managed to agree on many important deals, which can push the bilateral trade to greater heights from a minuscule $62 billion. The proposed $ 4-billion in investments and loans by US government agencies in India are a shot in the arm for the prime minister’s pet projects. The US financial support includes $2 billion of leveraged financing for renewable energy investments in India through the US Trade and Development Agency and $1 billion in loans for small and medium businesses across the country through the Overseas Private Investment Corporation.

The US president’s move to set up a high-level US-India strategic and commercial dialogue ensures that big plans on paper materialise on the ground.

Mr Modi’s reiteration of measures to ease business environment and usher in a predictable tax regime offers strong assurance to US investors of a changing business climate in the country. The summit has strengthened defence relations between the two countries with joint combat exercises and intelligence sharing mechanisms.

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Besides, joint manufacturing of four relatively modest military products and exploring development of two more high-end technologies are set to bolster India’s fledgling defence-industrial base.

The biggest takeaway of the summit, of course, is the seeming breakthrough in the Indo-US nuclear deal. The pact signed in 2005 has been in limbo for a decade now. The stumbling block is India’s Civil Liability for Nuclear Damage Act, 2010. Foreign nuclear power companies are miffed by a few clauses of the law, framed to ensure that victims of a nuclear accident get quick compensation.

Two such clauses make equipment suppliers along with nuclear plant operators liable to civil suits by accident victims and mandate them to offer compensation over and above the Rs 1,500-crore limit set by global conventions.

Ironically, these clauses were forced into the Act by the BJP when it was in opposition. The BJP government is now working around these clauses to operationalise the vital Act that can boost the country’s nuclear power. As a way out, India has proposed to set up an insurance pool of Rs 750 crore and remaining Rs 750 crore of the total Rs 1,500 crore to be provided by the government.

Experts, however, are sceptical if the solution can withstand judicial scrutiny. The Act will have to be amended to provide clarity and remove any misgivings. Then there are a lot of irritants before both the countries, such as intellectual property rights and high visa cost, among others. Of course, a single summit cannot address all sticky issues. The Modi-Obama meet has broken new ground in bilateral ties. Y ears to come will prove if the summit did sow the seeds of a new Indo-American era.


BUDDING MANAGERS

FEBRUARY 2015 ISSUE


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Author:  admin
Posted On:  Friday, 27 February, 2015 - 17:13

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