24th Annual General Meeting of AmCham
Smart Infrastructure and Eco Systems – Foundation for Sustainable Growth
Statutory Annual General Meeting
Mr. Ajay Sighha, Executive Director, AmCham India, made welcome remarks followed by a detailed presentation of the annual report, which highlighted major programs held during the year.
Mr. Atul Dhawan, Honorary Treasurer and Secretary, AmCham and Regional Managing Partner, Deloitte, presented the detailed draft of audited statement of accounts. Mr. Ramkumar Ramamoorthy, Senior Vice President, Marketing, Corporate Affairs and Communications, Cognizant, proposed the passing of accounts and Mr. Richard Rekhy, CEO, KPMG in India, seconded it.
The election results for the NEB for 2016 – 2017 were announced. The composition of the board comprises of representation from the regional chapters, 9 elected members, and 2 honorary members from the U.S. Embassy. Mr. Phil Shaw, Chief Executive – India, Lockheed Martin India, proposed to pass the board of AmCham. Mr. Ashok Swarup, Managing Director, Corporate Affairs & Business Development, Citibank, seconded it.
The following board members were elected:
- Rekha M. Menon, Chairman, Accenture India
- Varun Khanna, Managing Director, Becton Dickinson India Private Limited
- Venkatesh Kini, President & CEO – India and South West Asia, Coca-Cola India Pvt. Ltd.
- Atul Dhawan, Regional Managing Partner, Deloitte Touche Tohmatsu India LLP
- Arun Kumar Jain, Managing Director, Fluor Daniel India Pvt. Ltd.
- Kaher Kazem, President and Managing Director, General Motors India Pvt. Ltd.
- Richard Rekhy, CEO, KPMG in India
- Nick Mitchell, Managing Director, Phenomenex India Pvt. Ltd.
- Krish Iyer, President and CEO, Wal-Mart India Private Limited
- Kiranmai Pendyala, CVP HR Greater Asia, AMD R&D Center India Pvt. Ltd.
- Madan Mohan Rao Yalamanchili, Executive Chairman, S&P Capital IQ (India) Pvt. Ltd.
- Pradip K. Dutta, Corporate Vice President & Managing Director, Synopsys (India) Private Limited
- Inderjit Sial, President & Managing Director, Textron India Pvt. Ltd.
- K. P. Sengupta, Chairman, Data Core (India) Pvt. Ltd.
- Gulshan Kumar Sachdev, Managing Director, Quaker Chemical India Limited
- Rustom J. Desai, Managing Director, Corning India and Telecom Operations
- Pratyush Kumar, President, Boeing India, Boeing International Corporation India Pvt. Ltd.
- Ramkumar Ramamoorthy, Senior Vice President, Marketing, Corporate Affairs and Communications, Cognizant Technology Solutions
- A. Viswanathan, Dy. Managing Director, BS&B Safety Systems India Limited
- Sukanti Ghosh, Managing Director, India, APCO Worldwide India Pvt. Ltd.
- Kaku Nakhate, President & Country Head (India), Bank of America N.A.
- Vanitha Narayanan, Managing Director – India / South Asia, IBM India Pvt. Ltd.
- John M. McCaslin, Minister Counselor for Commercial Affairs, U.S. Embassy
- George N. Sibley, Minister Counselor for Economic, Environment, Science and Technology Affairs. U.S. Embassy
Mr. Gulshan Kumar Sachdev, Vice Chairman, AmCham and Managing Director, Quaker Chemical India Limited, shared the vote of thanks to the past chairperson and to members of AmCham.
Ms. Vanitha Narayanan, Chairperson, AmCham, presented the theme and overview of the program. Vanitha mentioned that AmCham’s general purpose is to bring all the U.S. companies together. It was decided that the common goal of the organization was to drive American companies’ participation in a sustainable way that is good for India and for the company. Of all the programs the government has launched, AmCham’s aim is to contribute towards that national tailwind and to make an impact.
Last year the theme of the AGM was smart infrastructure for digital India which even covered social, physical and financial infrastructure. Vanitha said that this year the theme has been refined and focused on the areas where work is being done.
Vanitha explained that the first panel would be on agriculture and food processing – which was focused on in the budget. The second session would focus on infrastructure – highlighting the opportunities and the progress being made by American companies in that sector. Vanitha mentioned that although not many U.S. companies are focused on education, she encouraged everyone to also keep skill development and healthcare at the forefront of government discussions, as those core areas of social infrastructure need development for the nation to progress. She remarked that it has become increasing clear that new and emerging ecosystems have to come together to deliver these solutions.
Panel Discussion on Agriculture and Food Processing
Mr. Atul Dhawan, Honorary Treasurer & Secretary, AmCham and Regional Managing Partner, Deloitte, in his opening remarks as moderator, emphasized that agriculture is not only about food, but food security and population welfare. It is a stepping stone to the industrial part of the economy and is in a very imperative stage where people are talking and realizing the importance of it. It is also evident from the fact that budget 2016 gave due importance to agriculture.
Dr. Ashok Gulati, Professor for Agriculture, ICREAR, giving an Indian world view, mentioned that understanding the demand and supply is very important and what is equally important is the pressure which is going to mount on providing food security and on the farmers by the consumers. An average Indian household, where the monthly food budget spend is 45%, and with the current GDP growth of 7% per annum and 6% growth in per capita income, the situation is going to manifold till 2021.
In the medium to long run, we are going to have massive demand for food, feed and fiber. High value agriculture products (milk, meat, proteins, and vitamins) are going to be in demand. The future of demand is not only wheat and rice or farming but is a value chain from a farmer to the consumer, plate to the plough, as consumer is the king and he will create the demand for production. Dr. Gulati said, in the 60’s and 70’s, people used to consume whatever was produced but now the end consumer is the king and he will demand what he wants to eat and industry will have to produce.
Better and cleaner policies are needed from reforming land leased markets and agricultural produce marketing committee (APMC) markets. Controls on rent seeking activities and stocking limit has to be cleaned. The Essential Commodities Act has to be eradicated to clean up the overall system. Dr. Gulati pointed out, the question is if our government is brave enough to carry out a broader agenda and clean up all this to be able to let the farmer earn his due credit and climb up the ladder of success.
Fasal Bima Yojna – an interesting scheme was launched by the government for farmers and we are eagerly waiting to see how it will unfold. Similarly the national agriculture market is created and is going in the right direction.
Also bringing back the focus on the consumer, a consumer should have a choice to access anything from anywhere. Dr. Gulati emphasized that India has the highest milk production in the world but what astonishes us is that we are still utilizing only less than 20% through organized sector, while 80% is still pending. This shows the potential India has and we have a long way to go. Various commodities can be discussed in a similar way.
In summation, Dr. Gulati said, massive amendments are needed – institutional changes, infrastructural changes in terms of FDI. All is happening, though at a slow pace but he was happy to share that India is on a right path. All we need is an optimistic approach for the same. Perseverance and bolder approach is the need of the hour and learning the value chain of processing, retailing, logistics and even execution holds the key. India has started Influencing nationally and internationally too.
Mr. Gokul Patnaik, Chairman, Global AgriSystem Pvt. Ltd., said that agriculture and the food processing industry were complimentary to each other and one could not be addressed without the other. He also brought out the important role private sector could play in increasing the growth of this sector in terms of productivity and how the companies could facilitate the chain of food processing. The Indian market has different rules in different states. To integrate all of it, it was important to implement – GST, APMC Act etc.
Mr. Patnaik discussed how more and more states face challenges in agriculture marketing and how there is little attempt at creating a national agricultural market. To create success, GST has to be in conjunction with the national agricultural market, together with the removal of interstate barriers to trade. A proper regulatory medium for soil and water need to be put in place also. Water policy is one of the most important policies that needs to be addressed. Infrastructure needs such as rural roads and electricity also needs to be addressed.
Mr. Ashwani Sharma, Chief Merchandising Officer, Wal-Mart India, emphasized that for an efficient farm to market process or consumer to farm process, the consumer should get farm produce which is the right quality at the right price. Consumers should be aware of all declarations (percentages, contents, certifications and agricultural processes) for the produce. Farmers in turn should get adequate remuneration and also have the ability to choose the market they want to sell to.
The private sector is very hopeful on the encouraging policies that have been put in place or have been announced or are in the process as it appears encouraging to the overall development in the food and agriculture sector.
Mr. Scott Sindelar, Minister Counselor for Agricultural Affairs, U.S. Embassy, said that agriculture and food processing still seem to be a neglected part of the industrial sector, especially for a country like India where agriculture can be a more political issue. However, U.S. – India relations have come a long way in the agriculture sector. The USDA participated in the strategic and commercial dialogue, trade policy reforms, and the USDA Secretary brought a delegation to India and had many senior level engagements with the GOI. This has exceeded expectations in terms of policy reforms and the government to government relationship. Scott mentioned that with the signing of a new MOU with the Ministry of Agriculture in India, it has helped to address the challenges of the agriculture sector. This kind of MOU is a stepping stone in commercial dialogue and the start of a new phase.
U.S. exports in agriculture and food products to India has increased $1 billion, a milestone, and particularly in 2015, U.S. exports to India as a whole grew by 14% as compared to a decline in U.S. exports in the rest of the world. Scott said there are still a number of challenges which continue to impact the relationship in agriculture, such as legacy policies and regulations from the 50’s and 60’s. Agriculture policies intended to support farmers are in fact resulting in misallocation of land and water resources, and ultimately distort cropping patterns. India’s trade policies to protect farmers are instead misallocating Indian natural resources. India cannot reach its full potential as an agricultural power house because of these old trade policies, which result in the suffering of farmers.
Scott emphasized that U.S. – India relations are at a very positive state and that has created a window to capture some of the opportunities and partner with private sector on issues related to climate change and food safety.
Panel Discussion on Infrastructure
The opening remarks were made by Mr. Richard Rekhy. He said that India is the fastest growing economy ahead of China, yet infrastructure development remains the biggest challenge. With supporting dynamics such as good monsoon, GST, and getting some of the efficiencies back into the economy it can propel the country towards double digit growth. The GOI in the current budget has made an allocation of 2.2 trillion rupees into infrastructure, mainly into roads and railways. Richard emphasized that in order to leverage the private sector, there needs to be transparent public-private partnership models, predictable regulatory environments, stable tax regimes, and strong intellectual property protection that helps draw foreign investments.
Funding of infrastructure projects continues to be a challenge in the country, Richard said. Banks have their limitations and cannot be always counted on to fund mega infra projects and often large infrastructure companies have to bear huge burden of NPAs (non- performing assets) despite having built iconic mega structures such as modern airports. The municipal bond market, which could support infrastructure, is non-existent in India. The other challenge is in the digital space. Disruption caused by technology driven platforms will augment growth but the challenge will be to see how secure the environment can be made considering cyber security is emerging as serious challenge to ensuring confidentiality and securing personal information and data.
The key will be to develop differentiated PPP models; government announcements need to percolate to policy; land acquisition laws need transparency and better regulation and overarching all these is the necessity of enabling the ease-of-doing business environment. A lot of development has been seen in roads and highways and the smart cities program is a big push in the development of roads, highways, ports, railways, coastline and inland waterways, renewable energy development etc.
The keynote address was given by Mr. Raghav Chandra, Chairman, National Highways Authority of India. He pointed out that the Indian highway and road infrastructure sector is facing a huge challenge because of the huge infrastructure deficit. The government has floated several measures and proposals to rebuild investor confidence that will help ease investment flow into the sector. The RBI and government have recognized highway infrastructure as a priority.
The NHAI has initiated work on 35,000 kms of national highways and has about 250 projects going across the length and breadth of the country. One particular project in Kashmir will reduce the travel time between Jammu and Srinagar by four and half hours, and will have eight tunnels, one of which will be about 9 kms. Mr. Chandra continued on to say, a huge task lies ahead for NHAI, with about 60,000 kms of 2-way highways that need to be made into 4-way highways, and another 20,000 kms of roads need to be converted to 4 lanes. New stretches need to be identified to connect critical cities and the earlier golden quadrilateral and the north-south-east-west corridor needs to be fortified further. Interstate bottlenecks need to be removed, adequate feeder networks have to be developed and a well-connected grid structure of roads connected to highways is needed.
Mr. Chandra explained that more than a 100 projects will be started this year and about 8,000-9,000 kms of roads. For realizing these ambitions, NHAI will prepare detailed project reports by tying up with technology providers for use of spatial technology for monitoring and managing national highways.
Public-private partnerships have been largely successful and about 60% of NHAI’s work in the past has been done in the PPP model. New models such as EPC and the hybrid annuity model are being adopted and effort is being made to reduce time taken to switch to alternate modes. The present government has simplified the procedure for allowing changes in model concession agreement to provide further traction to projects. This has led to substantial enthusiasm among industry stakeholders. The challenge of financing remains, the NHAI draws its finances largely from the cess that the government imposes on sale of fuel, on toll collections and also on bonds. This is seen as an area of opportunity as this year NHAI expects to raise about 60,000 crores worth of bonds.
Expressways are also being prioritized and NHAI has awarded the eastern peripheral expressway in Haryana connecting Kondli to Manesar. This will have the best automated traffic management systems. DPR for the Vadodara – Mumbai expressway is ready for being bidded out. Mr. Chandra invited participation from U.S. companies to bid and given the robust experience of U.S. in highway construction, he felt it will be a suitable match of requirements from both sides. A number of financial incentives for concessionaires are being evolved by NHAI including encouraging divestment of equity of existing concessionaire so that they can unlock their equity to participate in their core competency of road development and to allow others to benefit.
Mr. Rustom J. Desai, Managing Director, Corning India and Telecom Operations, talked about the state of the Indian telecom sector and the challenges and opportunities. He stated that the telecom infrastructure industry is quite akin to the road infrastructure industry, the only difference being that the information telecom industry carries data and networks which still need to be built. Telecom infrastructure in India is quite robust and growing strongly. A lot of investments from private companies have come to build 4G networks in India. Some companies like Reliance have engaged in building an entire green field operation which not only will have 4G LTE but also fiber to home which is the ultimate technology in data connectivity.
A lot of work has been done by the government side especially in smart cities and digital India and the telecom industry is looking at a period of robust growth and investment in the next 5 years. The government’s clarification of the M&A regulations in the country has allowed for consolidation in the service space. This will result in increasing pool revenue per user i.e. the money collected from the customers ultimately helping to cover some of the spectrum cost.
Mr. John M. McCaslin, Minister Counselor for Commercial Affairs, U.S. Embassy, elaborated on how U.S. companies are looking at the reforms agenda unleashed by the Indian government and the challenges that U.S. companies are facing as they invest or do business in India. He stated that U.S. government is quite bullish on the Indian economy and PM Modi has done an excellent job in marketing the opportunities and raising the profile of India globally. The U.S. Embassy is doing their best to bring more companies to India, find the opportunities and also help them navigate the challenges.
John also mentioned that the reforms that the PM is trying to drive through is quite laudable. There has been some incremental progress made. However, certain challenges in terms of requirement of legislation still persist. Some of the challenges that remain are the need for open, transparent and predictable process when it comes to companies and the government. On infrastructure projects, robust interactions with the governments are needed.
John concluded by highlighting that all infrastructure projects at the end of the day, have to be commercially viable projects and the company has to make money, which is well understood by government, but it is not easy to implement.
Mr. Arun Kumar Jain, Managing Director, Fluor Daniel India Pvt. Ltd. during his talk stated that 70% of infra projects in India are failed projects in terms of compliance with the schedule and cost and there are several factors which contribute to this. One of the many factors is the irrational bidding process by largely Indian companies.
Arun touched on the lack of rigor for risk identification, risk allocation and how risk mitigation leads to either the project coming to grief or the companies coming to grief. He also informed that very few companies invest in construction assets and they only engage in subcontracting. All these factors are currently not being evaluated in the bidding process.
Another aspect which hurts the construction process is the amorphous focus on construction planning. Construction productivity in India is one fourth of what can be achieved. Other factors to add to this are low premiums for safety, housekeeping and facilities for workers as well as transportation of workers. He strongly feels the issue lies in the bidding system as well as the companies that bid. If companies from the U.S. which have better management are allowed to play a greater role, it will definitely help improve the situation.
Mr. Ajay Singha, Executive Director, AmCham, gave the opening remarks for the luncheon session. Welcome remarks were made by Ms. Vanitha Narayanan, Chairperson, AmCham and Managing Director – India/South Asia, IBM India Pvt. Ltd. Vanitha mentioned that Ambassador Verma heads one of the largest U.S. missions in the world and has played a crucial role in enhancing the U.S. – India relationship. Vanitha led the AmCham door knock delegation to Washington DC last year, where she met with Congressmen and Senators from both political parties, and she emphasized that the discussions were extraordinarily positive on both sides of government. She gave a brief summary of the previous two panel discussions.
Chief guest Mr. Richard Verma, U.S. Ambassador to India, gave a special thank you to Amitabh Kant because every American company that comes to India wants to meet Amitabh first because of his ability to push for change. Ambassador Verma thanked him for driving change in the U.S. – India bilateral relationship.
Ambassador Verma has travelled all over India. He has learned a lot and seen a lot. He has seen factories, manufacturing plants, visited AmCham member companies and met the staff; he has seen the impact of CSR projects, and has had the privilege to be at meetings with Prime Minister Modi and President Obama. He has seen their increasing alignment in many issues, specifically the climate agreement reached in Paris last year. The commercial side of the U.S. – India relationship was elevated in the first ever both strategic and commercial dialogue between the two countries. He has witnessed the increase in trade and the barriers that have come down.
He reflected on the progress made thus far:
- 2015 displayed the highest ever recorded two-way trade, approaching $108 billion
- Most Indian students studying in the United States at 140,000
- Broke records for the number of Indian companies in the U.S., number of U.S. companies operating in India, FDI of Indian companies in the U.S.
- Volume of agriculture trade was over $6 billion
- Defence trade exceeded $14 billion
- Number of visas issued was over 1.1 million
Ambassador Verma expounded on the breadth of the U.S. – India relationship across sectors. On a government to government level there are 38 dialogues at the assistant secretary level or higher. These dialogues are deepening trust and strengthening the relationship between both governments.
Massive urbanization is taking place across India at historic levels. There are better transport networks, communication networks are better, cities are providing more higher paying job opportunities, increased education while rural area opportunities are drying up. With India’s urban population expanding at the fastest rate ever recorded in history, India needs to construct a new city of Chicago every year for the next 15 years. The question is now, how do we deal with it and assist the government and help people live better, more efficient lives.
There are investment opportunities in smart cities and infrastructure. Smart cities have become a pillar in the strategic and commercial dialogue. It is one of the first things that Secretary Pritzker asks Ambassador Verma about. A number of U.S. agencies are engaged in the work — USTDA, USAID, Department of Transportation and even the Army Corp of Engineers. The Deputy Secretary of the U.S. Commerce Department led a very successful trade mission of 40 executives from 18 companies that travelled to Delhi, Mumbai and Vizag. There has been a reverse trade mission to the U.S. also that went to New York and San Francisco. This has resulted in sharing of best practices in areas such as water sanitation and disaster preparedness.
The Ambassador mentioned that the AmCham Infrastructure Capability Deck was a milestone in getting the word out about what U.S. companies can do and it features more than two dozen companies. The USG wants to see the private sector succeed. Financing is an area where everyone has to work together more. It will take creative public/private partnership models to get projects off the ground. The Ambassador said that the embassy, as well as Washington, are supportive of the smart cities initiative and look forward to working together.
Vanitha introduced the other chief guest, Mr. Amitabh Kant, Chief Executive Officer, Niti Aayog, and emphasized his ability to make every stakeholder feel important and how he has played a vital role in strengthening the U.S. – India relationship.
In his address, Mr. Kant said that the bilateral trade can be pushed to a greater height. The relationship is not fully tapped and there are more things that can be done in the Indo – U.S. landscape. India needs to grow at 9-10% per annum for three decades or more. If India grows, naturally this relationship will be strengthened also. India needs to become a very easy and simple place to do business. Some of the current rules and processes are antiquated. The GOI is committed to making things easier. The central government has been working to make business easier at the state level also. Ease of doing business is critical.
Mr. Kant said that India must understand that this is a globalized world in which India must be an integral part of the global supply chain. Over the last several months India has opened its economy to vast sectors such as railways, defense, medical devices, etc. The FDI has gone up by almost 48%. The largest amount of FDI has come from the American Tower Corporation which will control about 57,000 mobile towers in India. He said that their technology will ensure less dropped calls.
According to Mr. Kant, India has been a very reluctant urbanizer. India’s challenge is that in the next 2 decades 330 million people will become urbanized. The challenge is to create 2.5 Americas to compensate for the population growth. Technology can be used to leap ahead. Companies like Cisco, AECOM, CH2M Hill will help India embed first class technology in cities. Mr. Kant mentioned that America has mastered the art of innovation from its academic institutions and universities. India must also embrace free markets and free trade to expand manufacturing and export across the world. In turn, America must open up its services sector to allow Indians to go and work there. This will allow the Indo – U.S. relationship to flourish.
On this occasion, the AmCham CSR Compendium Happily Going Miles for Their Smiles, a compendium of CSR activities of U.S. companies in India 2015-2016, was released. The vote of thanks was given by Mr. Richard Rekhy, Vice Chairman, AmCham and CEO, KPMG in India.