US seeks billions in mly deals with India: Report

NEW YORK The US is aiming to sell up to $5.8 billion of military-transport aircraft to India and secure other major deals when President Barack Obama travels to New Delhi early next month, The Wall Street Journal reported Monday. The newspaper said Obamas visit will seek to alter the tenor of an increasingly tense commercial relationship between the two countries. During a brief meeting with President Obama at a reception on the margins of the UN General Assembly last month, Foreign Minister Shah Mahmood Qureshi renewed an invitation to the US leader to visit Pakistan. But whether Obama makes a side trip to Pakistan, its close ally in the war on terror, remains to be seen. Meanwhile, India is set to buy 10 Boeing Co C-17 transport aircraft in the countrys largest military transaction yet with the US, the Journal said, citing people familiar with the matter. The exact price is still to be determined. The total value of deals agreed to during the trip could reach $10 billion to $12 billion, including pacts for India to buy military jet engines from General Electric Co, freight locomotives and reconnaissance aircraft. Obamas trip from Nov 5 to 9 is meant to deepen Americas ties with an Asian ally whose economic and military rise has made it a strategic counterweight to China, The Wall Street Journal said. The US also must balance relations between India and Pakistan, traditional enemies, both of which hold significant regional influence as the US plans for a post-war Afghanistan. India has been warming to American defence suppliers in the past several years, the paper said. It is planning to spend tens of billions of dollars over the next several years to modernise its military and replace aging Russian-made equipment. Seeking the most advanced military technology, India is turning to American contractors and also those from France, the UK and elsewhere. Boeing and Lockheed Martin Corp are among the bidders for a planned $10 billion purchase of 126 multirole combat aircraft. The visit comes as some Western companies that have made big bets in India - or plan to - are growing increasingly frustrated with restrictive regulations in sectors such as energy, technology, retail, health care and banking. The government also hasnt enacted long-planned reforms such as allowing greater foreign participation in the insurance and retail industries. Obama is likely to raise concerns about market access - among other issues - during his visit, a White House spokesman said Sunday. He declined to provide further details. Indias stock market is sizzling, attracting billions in foreign funds, the newspaper noted. Bilateral trade with the US has risen in recent years and now stands at $37.6 billion annually. Yet there is a growing perception among US and other foreign businesses that India isnt living up to its hype as a destination for foreign direct investment and that India is using the attraction of its close-to-9pc annual economic growth to dictate the terms of entry. Indias pretty cocky right now, Charles Maddox, a professor of corporate law at the Jindal Global Law School outside New Delhi, who studies foreign direct investment in India, was quoted as saying. Theyre playing a brinksmanship game with the United States. Topping the list of US concerns ahead of Obamas trip is the countries teetering civil nuclear-energy partnership, the Journal said. Though a 2008 deal ended US sanctions against India imposed after its past nuclear-weapons tests, US firms including GE arent selling nuclear technology here yet. They are worried about a recently passed Indian law that exposes them to accident liability, deviating from the practice in most countries, where nuclear plant operators assume all liability. We will not be able to support nuclear programmes in countries where the nuclear liability regime is not consistent with international norms, Michael Tetuan, a spokesman for GE, was quoted as saying. High-level discussions within the Indian government and between the US and India are continuing, it said. India is hoping to assuage US firms through the regulations it writes to implement the law, but US officials and companies want the law revised and the liability provision stripped-a political non-starter in New Delhi, where it would be seen as caving to US pressure. Indias Commerce Department also is weighing a plan to give greater scrutiny to foreign investments in health care, a sector now open to 100pc foreign ownership. The department is debating rules that would force foreign drug makers to license patents to generics makers. Theyre saying, 'Whenever were unhappy with the price, we can issue a compulsory license and expropriate the technology, Greg Kalbaugh, director and counsel at the US India Business Council, which lobbies for American firms in India, was quoted as saying. That has created vast uncertainty among investors. A lot of people are uncomfortable.

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