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BW Businessworld

Forked Tongue Uncle Sam

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The hypocrisy of the US and Europe never ceases to amaze me. Even when their dominance of world economy is crumbling, they continue to demand more from emerging economies than they are willing to give.

Recently the lawmakers in US made an outrageous attack on India. They censured the Indian government's move to encourage domestic manufacturing of spohisticated communications and computing technology.

The preferential market access policy announced by the government last week seeks to encourage domestic manufacturing of hardware that has so far been largely imported. The policy wants foreign investors to partner with domestic companies to manufacture in India.

But have a look at the response of the US. The Congressional High Tech Caucus made up of 45 law makers feel that the policy would essentially halt the export of US made high-tech goods into the Indian market.

This caucus has asked the US Trade Representative to take action against India for violating WTO norms.

The irony is that the same lawmakers had bristled with rage and stopped the exports of similar hi tech products after the nuclear tests.

Amazingly, now they can't get enough of the Indian market and are upset that India wants to manufacture and not trade.

A country that has been promoting 'Buy American' for all its consumers is upset with the Indian move to boost its manufacturing. Even under the multi billion dollar stimulus programmes, the government of US had mandated that the money be spent only on US made products. They did not want the stimulus package be used for importing products.

Read this statement by the same caucus.  "We remain concerned that the PMA is designed to boost domestic manufacturing of information and communications technology (ICT) hardware through discriminatory, local content requirements, and more specifically, is aimed at forcing foreign ICT companies to establish manufacturing in India."

The audacity of this statement is laughable and shocking at the same time. The caucus is actually upset that India will force US companies to manufacture in India. At one level, Treasury Secretary Timothy Geithner comes to India and seeks deeper partnership. But at another the government and lawmakers work to undermine India's efforts in self reliance.

And this when the US and other countries in the EU have been busy blocking foreign companies from manufacturing and selling sensitive telecom equipment in their countries. All of them cite security concerns. But when it comes to selling their equipment to India, they carp about unfair treatment.

The duplicity is unbelievably blatant. Not surprisingly, the Telecom Equipment Manufacturers association (TEMA)  of India has fought back sharply against the US and other countries trying to pressurise Indian government to revise the policy.

TEMA has used equally strong words to say that foreign companies want India to remain dependent on imports.

India's policy of forcing joint ventures in critical sectors has helped create workd class manufacturing. The Indian auto sector is the best example. This policy was not detrimental to the foreign automobile  investors either. It gave them a low cost manufacturing base that allows them to be competitive.

The government of India has taken the right step in implementing the preferential market access policy. All government procurement must encourage domestic made telecom and high tech products. By allowing foreign investors to partner, the policy will ensure that there is collaboration in knowledge and competition in the market.

India needs more such polices that increase it's manufacturing capabilities.

(Pranjal Sharma is a senior business writer. He can be contacted at [email protected])