By Arun Kumar, IANS
Washington : The India-US business climate has been only marginally affected by the sub prime mortgage crisis in America or the unprecedented appreciation of rupee against the dollar, according to a business advocacy group.
The Indo-American Chamber of Commerce (IACC) painted this promising picture with a new business survey at a two-day conference on “Doing Business with India” it organised with the Centre for American and International Law in Dallas, Texas.
The IACC’s Indo-US Business Confidence Index (IUBCI), measuring the tempo of economic cooperation and the level of business and entrepreneurial confidence, was released at the conference by Indian embassy’s Minister (Commerce) Banashri Harrison.
“Despite the perceived view that the recent developments in both countries had their toll on the tempo of business activities between the two countries, IUBCI has dipped only by a marginal two points,” said Farokh Balsara, IACC president.
The marginal decline in the index from peak 219 in December 2006 to 217 in 2007 was attributed to deceleration in the growth of export of services from India due to a variety of reasons including appreciation of rupee and slowdown in the US economy.
Significantly, merchandise trade between the two countries registered an increase with imports from the US up by 35.49 percent and exports by 11.5 percent in 2007 as compared to the previous year, the survey noted.
The increase in imports from the US was mostly due to enhanced market opportunities to the US exporters particularly in electronics, avionics, aerospace and life sciences space.
Increase in military equipment sale to India, including the recently concluded $1 billion aircraft purchase deal between the Indian government and a US firm, also contributed to increase in imports from the US.
Exports of jewellery, pearls and precious stones were the main components that enhanced India’s exports to the US. The lone segment that showed declining trend in India’s exports was apparel and accessories.
However, export of services by the Indian MNCs to the US registered a fall of 12.3per cent in value terms compared to the preceding year and has been the key contributor behind the marginal dip of the index.
Significant appreciation of the rupee vis-à-vis greenback made services exports from India less competitive. FDI, remittances inflow from the US, along with most bilateral trade numbers, either fell or were static, the survey said.
Sampled companies revealed decline in profitability numbers with much of the fall witnessed by firms belonging to financial services and the IT fraternity, thereby providing credence to the hypothesis that the sub-prime did have some impact on the US financial sector affected the performance of Indian software companies.
The conference also featured discussions on outsourcing issues, protection of intellectual property rights, private equity transactions, employment issues and the employment of expatriates, networking opportunities, “how to” advice from Indian lawyers and business leaders and a discussion about opportunities and pitfalls for US business interests.