U.S. opportunities grow despite 1986 export drop - India

U.S. Opportunities Grow Despite 1986 Export Drop Although U.S. exports there declined in 1986, India continues to be an attractive market. The country appears to be moving toward development of its much-talked-about potential. Economic growth is at a more than satisfactory rate; market-liberalization measures remain in effect; and the consumer-oriented middle class is rapidly expanding. Together these conditions have created new opportunities for U.S. companies, especially those willing to consider transferring technology and/or investing in India.

GNP is projected to increase 4.5 percent for the 1986-87 Indian fiscal year (April 1-March 31). Although short of the planning target, this growth should provide modest increases in per capita income. Industrial production is expected to rise 6.5 percent in this fiscal year, and agricultural output should be up 2.5 percent.

The quest for increased market efficiency and higher growth rates has led the government to ease import controls somewhat on many high-tech items, capital goods, and intermediate inputs. Along with slightly lower tax rates and greater flexibility in rules governing production, these measures should improve the competitiveness of India's economy and provide a wider range of opportunities for U.S. business.

Nonetheless, U.S. merchandise exports to India fell by 6.4 percent in calendar year 1986 to $1.54 billion, while U.S. imports from India fell by 0.5 percent to $2.47 billion. Major U.S. exports include chemical fertilizers, specialized industrial machinery, scientific and control equipment, inorganic chemicals, aircraft and related parts, and steel scrap. Major U.S. imports from India include garments, diamonds, naphtha, cashews, spices, and coffee.

The following areas are considered best prospects for U.S. firms interested in direct sales, equity investments, and technology transfer: oil and gas equipment and services; power generation, transmission, and distribution equipment; pollution control equipment and systems; telecommunications equipment and services; mining and excavation machinery; computers and peripherals; electronic products and components; machine tools; medical instruments and health care equipment; printing and graphic arts equipment; and alternative energy equipment.

The United States continues to lead in the number of foreign collaborations. In 1986, some 183 Indo-U.S. collaborations were granted government approval. Some of the major areas of collaboration include mainframe computers; precision aluminum slitting lines; gas turbines; pens and related products; monitors, process sensors, and process control equipment; safety and safety relief valves; and electric machiner and furnace ovens.

Foreign investment is normally limited to 40 percent of total equity, but higher levels are permitted for priority industries if the technology is sophisticated and not available in the country, or if the venture is largely export-oriented. For industries completely export-oriented, 100 percent foreign equity is allowed.

U.S. firms interested in the Indian market should consider participating in Commerce Department-sponsored and/or supported trade events. Those planned for 1987 feature Telecommunications (Seminar Mission, May); Agricultural Machinery and Chemicals (Catalog Show, June); Medical Instruments and Equipment (Catalog Show, August;; Electronic USA 87 (Trade Fair, September/October); Renewable Energy (Seminar Mission, October); Marine Port and Shipbuilding (Catalog Show, November/December); and High Technology (Trade Mission, December). In addition, the Department will participate in a series of "Doing Business in India" seminars to be held in eight U.S. cities across the United States in late May.

For more information, contact the International Trade Administration's India desk officer at (202)377-2954.

COPYRIGHT 1987 U.S. Government Printing Office
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