The Hindu Business Line : PM's open invitation

THE ECONOMIC HIGH point of the Prime Minister, Dr Manmohan Singh's visit to the US was his request to American corporate heads gathered at the New York Stock Exchange to invest $150 billion in the next few years in infrastructure projects in India, especially power, communications, airports and urban amenities. Emphasising the Herculean task before India in garnering the resources, he added that even the $150 billion investment estimate was "conservative". That the scale of the Prime Minister's invitation to American investors is nothing short of an economic bombshell is indicated by the fact that, according to the US Commerce Department, the total American FDI (foreign direct investment) in India at end-2002 was just $3.7 billion, and that too after rising around $900 million since the end of last year.

No doubt the American CEOs must have been suitably impressed by Dr Singh's invitation, though their response may neither be automatic nor favourable. For one, a large number of the honchos were from banks and financial institutions which already have an exposure in India, though not in infrastructure. Responding in volume to the Prime Minister's request would mean a sea change in the US investment profile in India which, however,cannot happen at the drop of a hat. For another, the present size of the Indian presence in the US trade matrix is not significant enough for such a makeover to happen on the investment front; last year, American exports to and imports from India totalled $5 billion and $13.1 billion respectively, putting India 24th on the US' buyers list and the 18th largest supplier to that country.

Against this backdrop, it would appear that Dr Singh deliberately meant his request to be treated as a message to the US (and the world) investor community that India was open to foreign investments, even after the change of guard in New Delhi. Indeed, in view of the dust kicked up over the FDI limit in the insurance, telecommunications and civil aviation sectors, perhaps the Prime Minister wanted to make use of the US visit (to attend the UN General Assembly session) to drive home the point that foreign investors were still as welcome as during the previous regime. And in inviting investments in infrastructure, perhaps he was merely being cautious for, as of now, there has been no major differences among the UPA partners on the role of foreign funding in core sector development.

Of a piece with this focus on reassuring the international investor community was Dr Singh's decision to visit the New York Stock Exchange — the first by an Indian Prime Minister — and, perhaps more important, make the statement that he had respect for such institutions which had played an "active role" in "the processes of wealth creation and in ensuring that the fruits of this development reach out to more and more people". Certainly calculated to make many see red back home. But considering the pressing need to tap the huge stock of external (foreign) savings to fuel domestic development, the Prime Minister cannot be faulted for his words. Anyway, in these times of heightened international competition, foreign investors need to be welcomed with open arms so long as national security is not compromised.