India: A Study in Contradictions

by Congressman Aaron Schock, 18th Congressional District

Don’t drink anything with ice. Don’t open your mouth in the shower. Only brush your teeth with bottled water. These were the most common pieces of advice I received before visiting India earlier this spring. Soon to be the most populated country on the planet, India holds a rising status as a marketplace with heavy rewards for investors; yet, lack of basic infrastructure and sanitation necessitated the above advice. As I would learn during my visit, India is in many ways a study in contradictions. Domestically, the ability of U.S. companies to invest and sell their goods in emerging markets like India correlates directly to their ability to hire, expand and grow here at home. Yet the challenges India faces as a growing economic power—and how its leaders choose to meet those challenges—will have ramifications for the United States and the rest of the world.

This was my first trip to India, and from the start I was unsure what to expect. After a 15-hour flight, I landed in Delhi ready to engage with the leaders of the region known as Gujarat. Over the last several years, Gujarat, with a population larger than Texas and California combined, has experienced an impressive 10-percent annual economic growth. What I took away from meeting with officials in Gujarat trying to explain this success was their ardent focus on eliminating corruption in the region, which continues to plague the country as a whole. Their policies to increase transparency, eliminate “pay-to-play” politics, and "cut the red tape while rolling out the red carpet" were refreshing to hear. During a meeting with the leadership of companies like Ford and Tata Motors, who are investing billions in new factories in Gujarat, I was impressed to learn that these policies are being implemented in good faith and with the cooperation of American companies. These companies chose specifically to invest in this region of India because government was honest, transparent and open. When the Gujarat government promised to build a road to help them move goods to market, it delivered.

Unfortunately, while success stories can be found in Gujarat, much of the rest of the country has not followed. With all the rewards seemingly in reach for companies who choose to invest in India—a stable democracy; the fastest growing market base in the world, with access to important trade routes; and an educated population in need of medicines, services, know-how and goods—many are still rightfully hesitant to undertake major investment here.

Rampant government corruption has companies worried about local officials knocking at their door looking for a handout. A protectionist domestic sourcing regime has multinationals afraid to produce goods in a country that might ultimately sock them with new fines. Pharmaceutical companies fear bringing life-saving drugs to market, only to have their patents thrown out by a slow-moving judicial system that always sides with domestic interests over foreign multinationals. Large manufacturers are afraid to invest the resources needed for large-scale operations in a country whose transportation system makes the gridlock in DC look like a Sunday summer cruise. Finally, U.S. technology companies and investors fear putting resources into a country with a discriminatory market access policy that favors any domestic business interests over the rule of international trade law.

On the flight back to Illinois, I tried to think how I would best summarize the contradictory aspects of India’s business outlook, political landscape and overall potential for growth. At best, it’s clear that great opportunity exists, yet significant challenges remain. At worst, one wonders if other emerging markets will replicate the “India model” of international business behavior, taking close note of the response from the international community to these impediments to foreign investment. As a member of the House Ways and Means Committee and its Subcommittee on Trade, I was pleased that our first hearing this year focused on some of these challenges—because how these issues are dealt with has consequences for American companies and our economy here at home.

In the end, the more the U.S. can do to work with India to eliminate the necessity of the advice I received at the onset of my trip, and instead help promote good government policies of transparency and fighting corruption, the better it will be for the people of India, their global partners, and for job-seeking Americans here at home. iBi

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